As filed with the Securities and Exchange Commission on May 5, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TRAVELCENTERS OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 5541 36-3856519
(State or other jurisdiction (Primary Standard (IRS Employer
of incorporation or Industrial Identification No.)
organization) Classification Code Number)
---------------------------
AND ITS SUBSIDIARY GUARANTORS
TA OPERATING CORPORATION NATIONAL AUTO/TRUCKSTOPS, INC.
(Exact name of registrant (Exact name of registrant
as specified in its charter) as specified in its charter)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
5541 5541
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
34-1747077 36-3853982
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
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24601 CENTER RIDGE ROAD, SUITE 300
WESTLAKE, OHIO 44145-5634
(216) 808-9100
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
---------------------
JAMES W. GEORGE
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
TRAVELCENTERS OF AMERICA, INC.
24601 CENTER RIDGE ROAD, SUITE 300
WESTLAKE, OHIO 44145-5634
(216) 808-9100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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WITH A COPY TO:
CARL L. REISNER, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED
SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER
THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
---------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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Calculation of Registration Fee
===============================================================================================================
Title of each class Proposed Proposed maximum
of securities to be Amount to be maximum offering aggregate offering Amount of
registered registered price per unit(1) price(1) registration fee
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 1/4% Senior Subordinated
Notes due 2007............ $125,000,000 98.75% $123,437,500 $37,405.30
- ---------------------------------------------------------------------------------------------------------------
Guarantees of the 10 1/4% Senior
Subordinated Notes due 2007.. (2) (2) (2) None
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 promulgated under the Securities Act of 1933,
as amended and based upon the average of the bid and asked prices on April
28, 1997 of the Company's outstanding 10 1/4% Senior Subordinated Notes due
2007.
(2) No separate consideration will be received for the Guarantees. Pursuant
to Rule 457(n) under the Securities Act of 1933 as amended, no separate fee
is payable for the Guarantees.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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CROSS REFERENCE SHEET
ITEM IN FORM S-4 LOCATION IN PROSPECTUS
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<S> <C>
1. Forepart of Registration Statement and Outside Front Cover of
Prospectus............................................................. Forepart of the Registration Statement; Outside
Front Cover Page of the Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus............................................................. Inside Front Cover Page of Prospectus; Outside
Back Cover Page of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information...................................................... Summary; Risk Factors; Selected Consolidated
Financial Data
4. Terms of the Transaction................................................ Summary; The Exchange Offer; Description of
New Notes; Certain United States Tax
Considerations; Plan of Distribution
5. Pro Forma Financial Information......................................... Summary; Unaudited Pro Forma Financial
Information
6. Material Contracts with the Company Being Acquired...................... Not Applicable
7. Additional Information Required for Reoffering by Persons and
Parties Deemed to be Underwriters....................................... Not Applicable
8. Interests of Named Experts and Counsel.................................. Not Applicable
9. Disclosure of Commission Position on Indemnification for
Securities Liabilities................................................. Not Applicable
INFORMATION ABOUT THE REGISTRANTS:
10. Information with Respect to S-3 Registrants............................. Not Applicable
11. Incorporation of Certain Information by Reference....................... Not Applicable
12. Information with Respect to S-2 or S-3 Registrants...................... Not Applicable
13. Incorporation of Certain Information by Reference....................... Not Applicable
14. Information with Respect to Registrants Other than S-3 or S-2
Registrants............................................................. Summary; Risk Factors; The Refinancing, the
Combination Plan and the Capital Program;
Capitalization; Selected Consolidated Financial
Data; Management's Discussion and Analysis
of Results of Operations and Financial
Condition; Business; Management; Security
Ownership; Certain Transactions; Financial
Statements
INFORMATION ABOUT THE COMPANY BEING ACQUIRED:
15. Information with Respect to S-3 Companies............................... Not Applicable
16. Information with Respect to S-2 or S-3 Companies........................ Not Applicable
</TABLE>
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<TABLE>
<CAPTION>
ITEM IN FORM S-4 LOCATION IN PROSPECTUS
---------------- ----------------------
<S> <C>
17. Information with Respect to Companies Other than S-2 or S-3
Companies.............................................................. Not Applicable
VOTING AND MANAGEMENT INFORMATION:
18. Information if Proxies, Consents or Authorization
Are to Be Solicited.................................................... Not Applicable
19. Information if Proxies, Consents or Authorizations Are Not to Be
Solicited or in an Exchange Offer...................................... Management; Security Ownership
</TABLE>
ii
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 5, 1997
TRAVELCENTERS OF AMERICA, INC.
OFFER TO EXCHANGE ITS 10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), FOR ANY AND ALL OF ITS
OUTSTANDING 10 1/4% SENIOR SUBORDINATED NOTES DUE 2007,
FULLY AND CONDITIONALLY GUARANTEED TO THE EXTENT
DESCRIBED HEREIN, BY
TA OPERATING CORPORATION and NATIONAL AUTO/TRUCKSTOPS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME ON , 1997, UNLESS EXTENDED.
TravelCenters of America, Inc., a Delaware corporation (the "Company") hereby
offers to exchange up to $125,000,000 aggregate principal amount of its 10 1/4%
Senior Subordinated Notes due 2007 (the "New Notes") for a like principal amount
of its 10 1/4% Senior Subordinated Notes due 2007 outstanding on the date hereof
(the "Existing Notes" and, together with the New Notes, the "Notes") upon the
terms and subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"). The terms of the New Notes are identical in all material respects to
those of the Existing Notes, except for certain transfer restrictions and
registration rights relating to the Existing Notes. The New Notes will be issued
pursuant to, and entitled to the benefits of, the indenture, dated as of March
27, 1997 (the "Indenture"), among the Company, TA Operating Corporation (the "TA
Subsidiary"), National Auto/Truckstops, Inc. (the "National Subsidiary" and,
together with the TA Subsidiary, the "Subsidiary Guarantors") and Fleet National
Bank, as trustee, governing the Existing Notes. The Existing Notes and New Notes
outstanding under the Indenture at any time are referred to collectively as the
"Notes."
The Notes will be unsecured and subordinated in right of payment to all existing
and future Senior Indebtedness (as defined) of the Company. The Notes will rank
PARI PASSU with any future Senior Subordinated Indebtedness (as defined) of the
Company and will rank senior to all other subordinated indebtedness of the
Company. The Notes will be guaranteed (the "Subsidiary Guarantees") on an
unsecured, senior subordinated basis by the Subsidiary Guarantors, the Company's
major operating subsidiaries. The Company is a holding company that derives
substantially all of its operating income and cash flow from the Subsidiary
Guarantors. The Subsidiary Guarantors have guaranteed the Credit Facilities (as
defined) and the Senior Notes (as defined) and are jointly and severally liable
on a senior basis with the Company for all obligations thereunder. Obligations
under the Credit Facilities and the Senior Notes are secured by pledges of all
the capital stock of the Subsidiaries (as defined), and security interests in,
or liens on, substantially all other tangible and intangible assets of the
Company and the Subsidiaries. See "Description of Senior Indebtedness" and
"Description of New Notes." The Indenture governing the Notes permits the
Company to incur additional indebtedness, including Senior Indebtedness, subject
to certain restrictions. See "Description of New Notes." As of December 31,
1996, after giving effect to the Transactions (as defined) and the application
of the net proceeds therefrom, (i) the aggregate amount of the Company's
outstanding Senior Indebtedness would have been $165.5 million (exclusive of
unused commitments), all of which would have been Secured Indebtedness (as
defined), (ii) the Company would have had no Senior Subordinated Indebtedness
outstanding other than the Notes and no indebtedness that is subordinate or
junior in right of repayment to the indebtedness represented by the Notes and
(iii) the outstanding Senior Indebtedness of the Subsidiary Guarantors,
consisting entirely of Guarantees of the Senior Indebtedness of the Company
incurred under the Credit Facilities and the Senior Notes, would have been
$165.5 million. See "Description of New Notes--Ranking."
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company and the Subsidiary Guarantors contained in the
Exchange and Registration Rights Agreement, dated March 27, 1997 (the
"Registration Rights Agreement"), among the Company, the Subsidiary Guarantors
and Chase Securities Inc., as the initial purchaser (the "Initial Purchaser") of
the Existing Notes, with respect to the initial sale of the Existing Notes.
The Company will not receive any proceeds from the Exchange Offer. The Company
will pay all the expenses incident to the Exchange Offer. Tenders of Existing
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date (as defined) for the Exchange Offer. The Company expressly
reserves the right to terminate or amend the Exchange Offer and not to accept
for exchange any Existing Notes not theretofore accepted for exchange upon the
occurrence of any of the events specified under "The Exchange Offer--Conditions
to the Exchange Offer." If any such termination or amendment occurs, the Company
will notify Fleet National Bank (in such capacity, the "Exchange Agent") and
will either issue a press release or give oral or written notice to the holders
of the Existing Notes as promptly as practicable. The Exchange Offer will expire
at 5:00 P.M., New York City time, on [ ], 1997, unless the Company, in its sole
discretion, has extended the period of time for which the Exchange Offer is
open. In the event the Company terminates the Exchange Offer and does not accept
for exchange any Existing Notes with respect to the Exchange Offer, the Company
will promptly return such Existing Notes to the holders thereof. See "The
Exchange Offer."
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal (as defined) states
that by so acknowledging and by delivery of a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Existing Notes where such Existing Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the Existing
Notes. The Company currently does not intend to list the New Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system and no active public market for the New Notes is currently
anticipated. There can be no assurance that an active public market for the New
Notes will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange pursuant to the Exchange Offer.
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SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS THAT
HOLDERS OF EXISTING NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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The date of this Prospectus is May 5, 1997.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE SUBSIDIARY GUARANTORS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE NEW NOTES OR
EXISTING NOTES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR
SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR THE EXCHANGE PROPOSED TO BE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF. UNTIL , 1997, ALL DEALERS EFFECTING TRANSACTIONS
IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THE DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS.
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AVAILABLE INFORMATION
The Company and the Subsidiary Guarantors filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form S-4
(together with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement") under the Securities Act with respect to the New Notes
being offered hereby. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement. For further information with respect to the Company and the New
Notes, reference is made to the Registration Statement. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete, and, where such contract or other document is an exhibit
to the Registration Statement, each such statement is qualified in all respects
by the provisions in such exhibit, to which reference is hereby made. Copies of
the Registration Statement may be examined without charge at the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and the Commission's Regional Offices located at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or
any portion of the Registration Statement can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, upon payment of certain fees prescribed by the
Commission. The Commission maintains a World Wide Web site (http://www.sec.gov)
that contains such material regarding issuers that file electronically with the
Commission. The Registration Statement has been so filed.
The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Upon
completion of the Exchange Offer, the Company will be subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file periodic reports and other information with the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of any material so filed can
be obtained from the Public Reference Section of the Commission at the address
set forth above, upon payment of certain fees prescribed by the Commission.
Pursuant to the Indenture, the Company has agreed to provide the Trustee
and holders and (upon their request) prospective holders of the Notes with
annual, quarterly and other reports at the times and containing in all material
respects the information specified in Sections 13 and 15(d) of the Exchange Act
and to file such reports with the Commission.
ii
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION, RISK FACTORS AND HISTORICAL
AND PRO FORMA FINANCIAL STATEMENTS, INCLUDING THE RELATED NOTES, APPEARING
ELSEWHERE IN THIS PROSPECTUS. ALL REFERENCES IN THIS PROSPECTUS TO (I) THE
"COMPANY" MEAN TRAVELCENTERS OF AMERICA, INC. (FORMERLY, NATIONAL
AUTO/TRUCKSTOPS HOLDINGS CORPORATION) OR TRAVELCENTERS OF AMERICA, INC. TOGETHER
WITH ITS SUBSIDIARIES, AS APPLICABLE AND (II) THE "NETWORK" MEANS THE COMPANY'S
NETWORK OF TRAVEL CENTERS AFTER GIVING EFFECT TO THE COMBINATION PLAN (AS
DEFINED). UNLESS OTHERWISE INDICATED, ALL MARKET DATA PRESENTED IN THIS
PROSPECTUS IS BASED ON THE COMPANY'S RESEARCH AND ESTIMATES.
THE COMPANY
OVERVIEW
The Company owns, operates and franchises more travel centers in the
United States than any of its competitors, with 168 network sites nationwide,
including 135 Company-owned locations. The Company's travel centers (the
"TravelCenters") are full service facilities offering a broad range of fuel and
nonfuel products, services and amenities to trucking fleets, professional truck
drivers and other motorists. In addition to diesel fuel and gasoline
(collectively, "Fuel"), the TravelCenters provide truck maintenance and repair
services and products, full service and fast food dining, travel and convenience
stores, telecommunications services and various hospitality and rest-related
amenities (collectively, "Nonfuel"). This broad range of products and services
distinguishes the TravelCenters from traditional truckstops, which focus on the
sale of diesel fuel, and provides diverse revenue sources for the Company. For
the twelve months ended December 31, 1996, the Company sold 967.8 million
gallons of diesel fuel and had pro forma consolidated net revenues and EBITDA
(as defined) of $1,033.5 million and $63.4 million, respectively.
The Company is the only travel center or truckstop network operator in the
United States able to provide such comprehensive services and facilities to
long-haul truck drivers and fleets on a nationwide basis. The Company's
strategically positioned TravelCenters, which are located at key points on
interstate highways in 36 states, enable trucking fleets and drivers to utilize
the Company's TravelCenters as their supplier of choice for Fuel and Nonfuel
products and services on major trucking routes. The Company's integrated
information systems for billing and truck maintenance and repairs further
enhance operating efficiencies for the Company's large fleet customers and
strengthen these important relationships. Management believes that the Company's
broad range of products and services together with its comprehensive geographic
coverage has enabled the Company to become the largest supplier of diesel fuel
to the three largest and five of the six largest long-haul trucking fleets in
the United States. The Company's position as a leading supplier of diesel fuel
to major trucking fleets positions it to continue to increase its sales of
higher margin Nonfuel products and services to fleets, their drivers and
independent drivers.
The Company owns and operates two separate travel center networks, each of
which has operated for more than 30 years: the TA network, with 48 sites (40
Company-owned and operated sites and eight Franchisee-Owner Sites (as defined)),
operating under the Company-owned "Truckstops of America" and "TA" trademarks
(the "TA Network" or "TA"), and the National network, with 120 sites (31
Company-owned and operated sites, 64 Leased Sites (as defined) and 25
Franchisee-Owner Sites), operating under the licensed "Unocal 76" and related
trademarks (the "National Network" or "National," and together with the TA
Network, the "Existing Networks"). Historically, under the Company's ownership,
each of the Existing Networks has been separately managed and financed. The
Company believes it has identified a significant opportunity to improve its
operating results by combining the premier locations and long-standing fleet
relationships of the larger National Network with the strong brand image,
complementary strategic locations, established fleet relationships and proven
management expertise of the TA Network within a single Network operating under
the well-regarded "TA" brand (the "Combination Plan").
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In connection with the Combination Plan, the Company is pursuing a
business strategy which management believes will increase diesel fuel volume (in
particular with fleets), expand the sale of higher margin Nonfuel products and
services, increase operating efficiency and continue to broaden the Company's
customer base (see "--Business Strategy"). This business strategy is consistent
with the strategy that the TA management team successfully implemented at TA
since 1993. The existing TA management team, which has recently assumed control
of both Existing Networks, will manage the combined Network. From 1993 to 1996,
the TA strategy has resulted in a 10% increase in diesel fuel volume, a 14%
increase in Nonfuel revenues and a 32% increase in EBITDA at TA. In 1996,
Company-owned and operated TA sites sold an average of 8.7 million gallons of
diesel fuel and had average Nonfuel revenues of $4.6 million, while
Company-owned and operated National sites sold an average of 5.6 million gallons
of diesel fuel and had average Nonfuel revenues of $2.8 million. Based on its
experience at TA, management believes there are opportunities to improve the
operating performance of the National locations joining the combined Network.
The Company intends to capitalize on these opportunities through the
implementation of its business strategy and the Capital Program described below.
The Company has initiated a capital program (the "Capital Program") to
upgrade, rebrand, reimage and increase the number of the combined Network's
TravelCenters. Under this Capital Program, the Company intends to invest
approximately $200 million in the Network's sites by the end of 2001, with
approximately $110 million to be spent by the end of 1998. In addition, pursuant
to the Combination Plan, the Company expects to rationalize the combined Network
by selling 23 Company-owned National sites (seven of which are Company-operated)
and terminating the franchise relationships with an additional 21 National
sites. Since March 24, 1997, the Company has terminated franchise relationships
with respect to two former National Franchisee-Owner Sites. Upon completion of
this rationalization, the Network is expected to be comprised of 124 TA branded
facilities in 36 states versus 168 TA and National branded facilities in 36
states today. For a description of the specific components of the Combination
Plan and the Capital Program, see "The Refinancing, the Combination Plan and the
Capital Program."
The United States travel center and truckstop industry is fragmented and
the ability of industry participants to add new sites is hindered by the limited
availability of suitable locations along or near interstate highways and the
substantial capital costs associated with constructing new full service
facilities (approximately $6 million to $10 million per site). In the United
States, there are generally two types of facilities designed to service the
trucking industry: pumper-only truckstops, which provide fuel, typically at
discounted prices, with limited additional services, and full service travel
centers, such as those in the Company's networks. Company research indicates
that in general only one of every three stops a truck driver makes on a long
distance route is for fuel. By offering a wide variety of Nonfuel products and
services, a full service network operator such as the Company positions itself
to capture the maximum revenue possible at both fueling and nonfueling stops.
Based on industry data, the Company believes that there are approximately 2,500
travel centers and truckstops nationwide, of which approximately 500 are full
service travel centers. Only ten travel center or truckstop chains in the United
States have 25 or more locations, which the Company believes is the approximate
minimum number required to provide regional coverage. Only six of these chains
(including TA and National) currently operate 25 or more full service travel
centers. The Company is the only travel center network operator offering full
service on a nationwide basis.
COMPETITIVE ADVANTAGES
The Company believes that the following competitive advantages provide it
with an attractive foundation upon which to implement the Combination Plan and
the Capital Program, further improve its marketing strength and operating
performance and strengthen its position as an industry leader:
o LARGEST FULL SERVICE TRAVEL CENTER NETWORK. Upon completion of the
Combination Plan, the Company will operate the nation's largest and only
nationwide network of full service travel centers with 124 sites in 36 states,
of which 112 will be Company-owned. The Company is the only travel center
network operator that offers truck maintenance and repair services at virtually
every location. In addition, the Company is the only industry participant with a
centralized procurement, warehousing and distribution
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system. These factors, among others, have positioned the Company to offer its
products and services at competitive prices throughout the United States, which
is particularly attractive to long-haul trucking fleet customers. The Company
believes that the unique combination of its size and the comprehensive scope of
products and services it offers would be difficult for any competitor to
replicate.
o STRATEGIC LOCATIONS. The Company's TravelCenters are located at
convenient intervals and will enable drivers to make stops within the same
network system across the country. Management believes that the strategic
geographic distribution of the Company's TravelCenters enhances the operating
efficiency of its fleet customers and positions the Company to continue to
increase fleet business. Most of the Existing Network properties were purchased
15 to 20 years ago when real estate along the interstate highway system was more
readily available than it is today. Management estimates that the cost of
duplicating the average Network site would be approximately $6 million to $8
million. Management believes that the Company's Network of sites could not be
easily duplicated due to the limited availability of well-situated locations,
increasingly restrictive zoning regulations and significant construction costs.
o STRONG FLEET RELATIONSHIPS. The Company sells more diesel fuel to the
three largest and five of the six largest long-haul trucking fleets than any
other travel center or truckstop operator, primarily due to the size of its
networks and the broad range of services the Company provides to these fleets,
including centralized billing, volume discount pricing, truck and cargo security
and other driver amenities. In addition, the TA Network currently offers an
industry leading 24-hour truck maintenance and repair service and a warranty
program honored system-wide. As part of the Combination Plan, the National
Network truck maintenance, repair and warranty program will be upgraded to the
TA standard. Fleet relationships provide directed diesel fuel volume to the
Company, reducing its dependence on individual customers. Fleet relationships
also increase Nonfuel related revenues as fleet drivers are generally required
by their employers to stop for diesel fuel and truck maintenance and repair
services only at facilities where the fleet maintains an account. The Company
estimates that fleet accounts represented approximately 75% and 60%,
respectively, of the TA Network's and the National Network's total diesel fuel
volume sold in 1996, although no single fleet accounted for more than 8% of
either TA's or National's total diesel fuel volume. TA and National together
currently have supply relationships with each of the 25 largest long-haul
trucking fleets, and only one fleet represents one of the ten largest customers
of both TA and National.
o DIVERSIFIED REVENUE AND EARNINGS SOURCES. In 1996, TravelCenters owned
and operated by the Company derived 36% of their total revenues and 74% of their
gross profit from their broad array of Nonfuel products and services. The
relationship between revenues and gross profit arose because in 1996, the
Company-operated TravelCenters earned gross margins of approximately 57% on
Nonfuel revenues compared to approximately 11% on diesel fuel revenues. This
diversity of gross profit sources among various profit centers distinguishes the
Company from pumper-only competitors that rely heavily on profits generated by
diesel fuel sales and often are unable substantially to expand their Nonfuel
offerings due to real estate constraints at their sites or other factors.
o NATIONALLY RECOGNIZED BRANDS. The TravelCenters feature a variety of
well recognized national brands which attract professional truck drivers,
motorists and other customers who often satisfy both Fuel and Nonfuel needs at
the same stop. The Company's nationally recognized fast food and motel brands
include Burger King, Dunkin' Donuts, Kentucky Fried Chicken, Long John Silver's,
Pizza Hut, Sbarro, Subway, Taco Bell, DayStop, HoJo Inn and Travelodge. The
Company also offers such well recognized gasoline brands as BP, Exxon, Mobil,
Shell and Unocal 76. This portfolio of brands strongly appeals to what market
research indicates are customers' priorities of quality, convenience and
consistency of product offerings, as well as cleanliness and safety.
o STRONG MANAGEMENT TEAM. The Company's senior management team, led by
Edwin P. Kuhn, the President and CEO, has an average of over 21 years of
experience in the travel center, truckstop and related industries. From 1993 to
1996, the TA strategy has resulted in a 10% increase in diesel fuel volume, a
14% increase in Nonfuel revenues and a 32% increase in EBITDA at TA.
3
<PAGE>
BUSINESS STRATEGY
The Company's strategy is to enhance its operating margins and strengthen
its position as a leading owner, operator and franchisor of travel centers in
the United States. In managing the integrated Network, the Company intends to
implement across the larger National Network the same strategy which it
successfully employed at the TA Network. The key components of this strategy
include the following initiatives:
o INCREASE DIESEL FUEL VOLUME. By more competitively pricing its diesel
fuel, TA has increased its diesel fuel volume. By implementing a similar pricing
strategy, the Company believes it can increase diesel fuel volume at National
sites that join the Network. At Company-owned and operated National sites,
management is currently implementing TA's pricing strategy by selectively
reducing posted prices and negotiating fleet business at greater discounts. The
Company intends to offer its franchisees that operate National sites more
competitive wholesale fuel pricing and certain other incentives. Although the
Company cannot establish the prices at which its franchisees sell diesel fuel,
the Company expects these incentives to result in consistently reduced diesel
prices across the Network. The Company also believes that multiple visits to
TravelCenters by drivers initially attracted by competitive diesel fuel pricing
enhances driver loyalty toward the Company's Nonfuel offerings. As part of its
business strategy, the Company plans to extend to all Network locations TA's
"Loyal Fueler" program, which is similar to airline frequent flyer programs and
which encourages drivers to select the Company's TravelCenters for their Fuel
and Nonfuel stops. The increase in customer traffic associated with Fuel patrons
provides the Company with an additional opportunity to sell higher margin
Nonfuel products and services.
o EXPAND NONFUEL PRODUCTS AND SERVICES. The Company intends to expand its
offering of higher margin Nonfuel products and services in order to maximize the
Nonfuel revenue captured from each customer stop at a Network TravelCenter. In
addition to its existing broad range of Nonfuel products and services, the
Capital Program will allow the Company to add additional fast food kiosks and
food courts, expand and reformat travel and convenience stores, improve truck
maintenance and repair shops at National sites which join the Network and
construct new stand-alone truck maintenance and repair shops at selected
locations.
o INCREASE OPERATING EFFICIENCY. The Company has established a cost
reduction program at TA through which TA is realizing decreased labor costs by
investing in systems such as fuel island automation and by reducing overtime
expenses through improved labor scheduling. TA has also created operating
efficiencies by utilizing centralized purchasing and distribution. The current
management team reduced operating expenses as a percentage of Nonfuel revenues
for TA from 59% in 1993 to 54% in 1996, representing annual savings of
approximately $9 million based on TA's 1996 Nonfuel revenues. Management expects
to realize further operating efficiencies by implementing these initiatives at
the Company-operated National sites joining the Network and to achieve corporate
overhead savings by consolidating National's headquarters (historically located
in Tennessee) into TA's Westlake, Ohio headquarters. The Company expects to
realize corporate overhead savings, before one-time transition charges, of up to
$3.0 million in 1997, increasing to up to $6.0 million by 1999.
o BROADEN CUSTOMER BASE. The Company is in the process of expanding its
offering of nationally recognized, branded products and reimaging and upgrading
its sites (primarily National sites joining the Network) in order to attract
additional non-trucking customers, such as interstate motorists, recreational
vehicle travelers, long distance bus operators and their passengers and local
residents. The Company's market research indicates that these customers' primary
priorities are quality, convenience and consistency of product offerings as well
as cleanliness and safety, rather than price. By prominently featuring
nationally recognized brands which convey these qualities, the Company expects
to improve its appeal to these relatively price insensitive customers.
4
<PAGE>
TRANSACTIONS RELATED TO THE OFFERING
On March 27, 1997 (the "Closing Date") the Company was recapitalized and
restructured pursuant to a series of transactions in which (i) the Company
issued $85.5 million principal amount of its Senior Secured Notes, $35.5 million
principal amount of which consisted of its fixed rate Series I Senior Secured
Notes due 2002 (the "Series I Senior Notes") and $50.0 million principal amount
of which consisted of its floating rate Series II Senior Secured Notes due 2005
(the "Series II Senior Notes" and, together with the Series I Senior Notes, the
"Senior Notes"), in exchange for all of the National Subsidiary's (as defined)
then outstanding 8.76% Senior Secured Notes due 2002 and all of the TA
Subsidiary's (as defined) then outstanding 8.63% Senior Secured Notes due 2002
(collectively, the "Old Senior Notes"), other than $4.5 million principal amount
of the TA Subsidiary's Old Senior Notes (the "Redeemed Notes"), and paid accrued
interest on the Old Senior Notes, in cash, on the Closing Date, (ii) the Company
obtained an $80.0 million eight-year senior secured term loan facility (the
"Term Facility") and a $40.0 million senior secured revolving credit facility
(the "Revolving Credit Facility" and, together with the Term Facility, the
"Credit Facilities"), (iii) the Company issued the Existing Notes (as defined),
(iv) the proceeds of the Term Facility and the Existing Notes were advanced to
National Auto/Truckstops, Inc. (the "National Subsidiary") and TA Operating
Corporation (the "TA Subsidiary") to enable them to repay all amounts then
outstanding under the Old Credit Facilities (as defined) and Old Subordinated
Notes (as defined), to enable the TA Subsidiary to repay all amounts then
outstanding under the Redeemed Notes, and to fund, in part, capital expenditures
and an inventory investment being made in connection with the Combination Plan
and the Capital Program, (v) the TA Subsidiary and the National Subsidiary
guaranteed the Company's obligations under the Credit Facilities, the Senior
Notes and the Existing Notes (the transactions described in items (i) through
(v) being referred to collectively as the "Refinancing") and (vi) the Company's
subsidiaries were restructured such that the Company directly owns its three
subsidiaries, the National Subsidiary, the TA Subsidiary and TA Franchise
Systems Inc. ("TAFSI") (the "Restructuring" and, together with the Refinancing,
the "Transactions"). See "The Refinancing, the Combination Plan and the Capital
Program," "Use of Proceeds," "Certain Transactions--Certain Indebtedness
Formerly Held by Stockholders and Related Transactions" and "Description of
Senior Indebtedness."
5
<PAGE>
The following table sets forth the sources and uses of funds on the
Closing Date in connection with the Transactions:
SOURCES: (Dollars in Millions)
Excess Cash.......................................... $ 21.1
Term Facility(1)..................................... 80.0
Senior Notes......................................... 85.5
Existing Notes....................................... 125.0
------
Total Sources of Funds.................... $311.6
======
USES:
Refinance Existing Debt(2)........................... $236.4
Pre-Funded Capital Expenditures(3)................... 50.0
Inventory Investment(4).............................. 10.0
Transaction and Other Costs.......................... $ 15.2
------
Total Uses of Funds........................ $311.6
======
- -----------
(1) The Company has available $40.0 million under its Revolving Credit
Facility, of which $1.5 million was utilized at closing for letters of
credit. See "Description of Senior Indebtedness."
(2) Principal amounts outstanding under the Old Credit Facilities, the Old
Senior Notes and the Old Subordinated Notes, together, in each case, with
interest accrued thereon, were repaid with proceeds from the Term Facility
and the Existing Notes and the issuance of the Senior Notes, as well as
cash on hand.
(3) Pre-funded capital expenditures are being made in connection with the
Capital Program. See "The Refinancing, the Combination Plan and the
Capital Program."
(4) The Company intends to make a one-time investment in inventory at both
its central distribution center and at certain Company-operated National
TravelCenters as part of the Combination Plan and the Capital Program.
See "The Refinancing, the Combination Plan and the Capital Program."
OWNERSHIP AND MANAGEMENT
The Company is owned by an institutional investor group (the "Investor
Group") organized by affiliates of The Clipper Group, L.P. ("Clipper"), a New
York City based private investment firm, certain National franchisees and
certain members of the Company's management. See "Security Ownership." The
Company is managed by its President and CEO, Edwin P. Kuhn, President and CEO of
TA since 1994, and the management team that prior to January 1997 managed the TA
Network. The Company acquired the National Network from a subsidiary of Unocal
Corporation (together with its subsidiaries, "Unocal") in April 1993 (the
"National Acquisition") and acquired the TA Network from subsidiaries of The
British Petroleum Company p.l.c. (together with its subsidiaries, "BP") in
December 1993 (the "TA Acquisition" and, together with the National Acquisition,
the "Acquisitions."). See "Management."
6
<PAGE>
THE EXCHANGE OFFER
Securities Offered.......................... Up to $125,000,000 aggregate
principal amount of 10 1/4% Senior
Subordinated Notes due 2007 (the
"New Notes"). The New Notes will be
guaranteed on an unsecured, senior
subordinated basis by each of the
Subsidiary Guarantors. The terms of
the New Notes and those of the
Company's outstanding 10 1/4%
Senior Subordinated Notes due 2007
(the "Existing Notes" and, together
with the New Notes, the "Notes")
are identical in all material
respects, except for certain
transfer restrictions and
registration rights relating to the
Existing Notes.
The Exchange Offer.......................... The New Notes are being offered in
exchange for a like principal
amount of Existing Notes. Existing
Notes may be exchanged only in
integral multiples of $1,000. The
issuance of the New Notes is
intended to satisfy obligations of
the Company and the Subsidiary
Guarantors contained in the
Registration Rights
Agreement.
Expiration Date; Withdrawal of Tender....... The Exchange Offer will expire at
5:00 p.m., New York City time, on
[ ], 1997, or such later date
and time to which it is extended
by the Company. The tender of
Existing Notes pursuant to the
Exchange Offer may be withdrawn at
any time prior to the Expiration
Date. Any Existing Notes not
accepted for exchange for any
reason will be returned without
expense to the tendering holder
thereof as promptly as practicable
after the expiration or
termination of the Exchange Offer.
Conditions to the Exchange Offer............ The Exchange Offer is subject to
certain customary conditions,
which may be waived by the Company.
The Company currently expects that
each of the conditions will be
satisfied and that no waivers will
be necessary. See "The Exchange
Offer--Conditions to the Exchange
Offer."
Procedures for Tendering Existing
Notes.................................... Each holder of Existing Notes
wishing to accept the Exchange
Offer must complete, sign and date
a Letter of Transmittal, or a
facsimile thereof, in accordance
with the instructions contained
herein and therein, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile,
together with such Existing Notes
and any other required
documentation, to the Exchange
Agent (as defined) at the address
set forth herein. See "The Exchange
Offer--Procedures for Tendering
Existing Notes."
Use of Proceeds............................. There will be no proceeds to the
Company from the exchange of Notes
pursuant to the Exchange Offer.
Exchange Agent.............................. Fleet National Bank is serving as
the Exchange Agent (in such
capacity, the "Exchange Agent") in
connection with the Exchange Offer.
7
<PAGE>
CONSEQUENCES OF EXCHANGING EXISTING NOTES
PURSUANT TO THE EXCHANGE OFFER
Based on certain no action letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company believes that New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any holder who is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act or (ii) any broker-dealer that purchases Notes from the Company to resell
pursuant to Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended
(the "Securities Act") or any other available exemption) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of the holder's
business and such holders have no arrangement or understanding with any person
to participate in a distribution of such New Notes and are not participating in,
and do not intend to participate in, the distribution of such New Notes. By
tendering, each holder will represent to the Company in the Letter of
Transmittal that, among other things, the New Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder, that
neither the holder nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes, that
neither the holder nor any such other person is participating in or intends to
participate in the distribution of such New Notes and that neither the holder
nor any such other person is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company. Each broker-dealer that receives New Notes for
its own account in exchange for Existing Notes must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. See "Plan
of Distribution." In addition, to comply with the securities laws of certain
jurisdictions, if applicable, the New Notes may not be offered or sold unless
they have been registered or qualified for sale in such jurisdiction or an
exemption from registration or qualification is available and complied with. The
Company has agreed, pursuant to the Registration Rights Agreement and subject to
certain specified limitations therein, to register or qualify the New Notes for
offer or sale under the securities or blue sky laws of such jurisdictions as any
holder of the Notes reasonably requests in writing. If a holder of Existing
Notes does not exchange such Existing Notes for New Notes pursuant to the
Exchange Offer, such Existing Notes will continue to be subject to the
restrictions on transfer contained in the legend thereon. In general, the
Existing Notes may not be offered or sold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. See "The
Exchange Offer--Consequences of Failure to Exchange; Resales of New Notes."
The Existing Notes are currently eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.
Following commencement of the Exchange Offer but prior to its consummation, the
Existing Notes may continue to be traded in the PORTAL market. Following
consummation of the Exchange Offer, the New Notes will not be eligible for
PORTAL trading.
8
<PAGE>
THE NEW NOTES
Issuer...................................... TravelCenters of America, Inc.
Securities Offered.......................... $125,000,000 aggregate principal
amount 10 1/4% Senior
Subordinated Notes due 2007.
Maturity.................................... April 1, 2007.
Interest Payment Dates...................... April 1 and October 1 of each year,
commencing October 1, 1997.
Sinking Fund................................ None
Optional Redemption......................... Except as described below, the
Company may not redeem the New
Notes prior to April 1, 2002. On or
after such date, the Company may
redeem the New Notes, in whole or
in part, at the redemption prices
set forth herein together with
accrued and unpaid interest, if
any, to the date of redemption. In
addition, at any time and from time
to time on or prior to April 1,
2000, the Company, at its option,
may redeem up to 35% of the
original aggregate principal amount
of the Notes, with the net cash
proceeds of one or more Public
Equity Offerings (as defined) by
the Company, at a redemption price
equal to 110.25% of the principal
amount to be redeemed, together
with accrued and unpaid interest,
if any, to the date of redemption,
provided that at least 65% of the
original aggregate principal amount
of the Notes remains outstanding
immediately after each such
redemption. See "Description of New
Notes--Optional Redemption."
Change of Control........................... Upon the occurrence of a Change of
Control (as defined), (i) the
Company will have the option, at
any time on or prior to April 1,
2002, to redeem the New Notes, in
whole or in part, at a redemption
price equal to 100% of the
principal amount thereof plus the
Applicable Premium (as defined),
together with accrued and unpaid
interest, if any, to the date of
redemption and (ii) if the Company
does not so redeem the New Notes or
if such Change of Control occurs
after April 1, 2002, the Company
will be required to make an offer
to repurchase the New Notes at a
price equal to 101% of the
principal amount thereof, together
with accrued and unpaid interest,
if any, to the date of purchase.
See "Description of New
Notes--Change of Control."
Subsidiary Guarantees....................... The New Notes will be guaranteed
on an unsecured, senior
subordinated basis by each of the
Subsidiary Guarantors. See
"Description of New Notes--
Subsidiary Guarantees."
9
<PAGE>
Ranking..................................... The New Notes will be unsecured and
subordinated in right of payment to
all existing and future Senior
Indebtedness (as defined) of the
Company. The New Notes will rank
PARI PASSU with any future Senior
Subordinated Indebtedness (as
defined) of the Company and will
rank senior to all other
subordinated indebtedness of the
Company. The Subsidiary Guarantees
will be general, unsecured
obligations of the Subsidiary
Guarantors, subordinated in right
of payment to all existing and
future Senior Indebtedness of the
Subsidiary Guarantors. At December
31, 1996, after giving effect to
the Transactions, including the
issuance and sale of the Existing
Notes and the application of the
net proceeds therefrom, (i) the
aggregate amount of the Company's
outstanding Senior Indebtedness
would have been $165.5 million
(exclusive of unused commitments),
all of which would have been
Secured Indebtedness, (ii) the
Company would have had no Senior
Subordinated Indebtedness
outstanding other than the Existing
Notes and no indebtedness that is
subordinate or junior in right of
repayment to the indebtedness
represented by the Existing Notes,
(iii) the outstanding Senior
Indebtedness of the Subsidiary
Guarantors, consisting entirely of
guarantees of the Senior
Indebtedness of the Company
incurred under the Credit
Facilities and the Senior Notes,
would have been $165.5 million and
(iv) all liabilities of the
Subsidiaries (including Senior
Indebtedness and trade payables,
but excluding the Subsidiary
Guarantees) would have been
approximately $202.7 million. See
"Description of New
Notes--Ranking."
Restrictive Covenants....................... The indenture under which the New
Notes will be issued (the
"Indenture") restricts (i) the
incurrence of additional
indebtedness by the Company and its
Restricted Subsidiaries (as
defined); (ii) the payment of
dividends on, and redemption of,
capital stock of the Company and
its Restricted Subsidiaries and the
redemption of certain subordinated
obligations of the Company and its
Restricted Subsidiaries; (iii)
investments; (iv) sales of assets;
(v) certain transactions with
affiliates; (vi) the sale or
issuance of capital stock of
Restricted Subsidiaries; (vii) the
creation of liens; (viii) the lines
of business in which the Company
and its Restricted Subsidiaries may
operate; (ix) sale and leaseback
transactions and (x)
consolidations, mergers and
transfers of all or substantially
all of the Company's assets. The
Indenture also will prohibit
certain restrictions on
distributions from Restricted
Subsidiaries. However, all of these
limitations and prohibitions are
subject to a number of important
qualifications and exceptions. See
"Description of New Notes--Certain
Covenants; --Merger and
Consolidation."
Certain United States Tax
Considerations........................... The exchange pursuant to the
Exchange Offer should not be a
taxable event for federal income
tax purposes, and the holder
should not recognize any taxable
gain or loss as a result of the
exchange. See "Certain United
States Tax Considerations."
10
<PAGE>
RISK FACTORS
Holders of Existing Notes and prospective purchasers of New Notes should
carefully consider all of the information set forth in this Prospectus and, in
particular, should evaluate the specific factors set forth under "Risk Factors"
in connection with the Exchange Offer.
11
<PAGE>
SUMMARY SUPPLEMENTAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth summary historical financial and pro forma
data for the Company that is supplemental to its consolidated audited financial
statements included elsewhere in this Prospectus. In such audited financial
statements, as a result of the Company's decision to pursue the Repurchase (as
defined), the Company's investment in TA was presented as net assets of
subsidiary held for disposition for the period from January 1, 1994 to September
30, 1996. Furthermore, TA's results of operations were excluded from the
Company's consolidated results of operations until December 31, 1994, and
subsequently included therein as a single amount in the Company's consolidated
income statement. Effective September 30, 1996, the decision was made to retain
TA and, subsequently, the Company chose to pursue the Combination Plan in order
to improve its operating results by combining the Existing Networks. As a
result, beginning October 1, 1996, TA's results were reconsolidated into the
Company's financial statements. The supplemental presentation below for the
years 1994 through 1996 sets forth the consolidated results of operations and
financial position of the Company as though TA had not been held for disposition
and had instead been fully consolidated. The pro forma consolidated financial
data have been derived from the Unaudited Pro Forma Financial Information and
the related notes thereto included elsewhere in this Prospectus. The pro forma
information does not purport to represent what the Company's results would have
actually been if the Transactions and the application of the proceeds therefrom
had occurred on the dates indicated nor does such information purport to project
the results of the Company for any future period. The summary financial data
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Unaudited Pro Forma
Financial Information" and the audited financial statements and related notes
thereto included elsewhere in this Prospectus.
12
<PAGE>
<TABLE>
<CAPTION>
THE COMPANY
-----------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------
Pro Forma
1994(1) 1995(1) 1996(1) 1996
--------- --------- --------- ----------
(Dollars in Thousands)
Income Statement Data:
<S> <C> <C> <C> <C>
Revenues:
Fuel.............................................. $ 603,719 $ 590,398 $ 752,266 $ 752,266
Nonfuel .......................................... 187,712 201,533 239,449 239,449
Rent.............................................. 48,424 47,840 41,762 41,762
--------- --------- ---------- ----------
Total revenues ................................... 839,855 839,771 1,033,477 1,033,477
Cost of revenues (excluding depreciation)............ 634,595 632,822 801,665 800,381
--------- --------- ---------- ----------
Gross profit (excluding depreciation) ............... 205,260 206,949 231,812 233,096
Operating expenses .................................. 100,990 101,620 128,773 128,773
Selling, general and administrative expenses ........ 35,361 43,198 42,349 40,899
Refinancing, transition and development costs(2) .... 5,529 1,866 2,687 2,687
Depreciation and amortization ....................... 20,348 22,611 26,970 27,210
Other (income) expense, net(3)....................... (215) 247 1,324 1,324
--------- --------- ---------- ----------
Income from operations .............................. 43,247 37,407 29,709 32,203
Interest (expense), net.............................. (20,537) (20,867) (20,827) (25,916)
--------- --------- ---------- ----------
Income before provision for income taxes ............ 22,710 16,540 8,882 6,287
Provision for income taxes........................... 9,029 6,614 3,349 2,311
--------- --------- ---------- ----------
Net income........................................... $ 13,681 $ 9,926 $ 5,533 $ 3,976
========= ========= ========== ==========
BALANCE SHEET DATA (END OF PERIOD):
Cash................................................. $ 35,839 $ 15,617 $ 23,779 $ 70,754
Total assets ........................................ 420,196 413,366 429,742 479,685
Total debt (net of unamortized discount) ............ 244,218 226,351 224,435 290,500
Mandatorily redeemable preferred stock(4) ........... 41,315 46,195 51,075 51,075
Total shareholders' equity .......................... 67,341 71,212 72,243 62,544
Working capital(5) .................................. 49,144 38,512 23,766 104,016
OTHER FINANCIAL AND OPERATING DATA:
EBITDA(6)............................................ $ 68,909 $ 62,131 $ 60,690 $ 63,424
Cash flows (used in) provided by:
Operating activities.............................. $ 32,322 $ 27,407 $ 39,475 $ 38,398
Investing activities.............................. $ (19,564) $ (29,488) $ (28,476) $ (28,476)
Financing activities.............................. $ (5,446) $ (18,141) $ (2,837) $ 46,663
Capital expenditures(7).............................. $ 20,841 $ 32,183 $ 27,089 $ 27,089
Total diesel fuel sold (thousands of gallons) ....... 959,652 948,156 967,756 967,756
Ratio of EBITDA to interest expense, net(8)(9) ...... 2.4x
Ratio of net debt to EBITDA(10) ..................... 3.8x
Ratio of earnings to fixed charges(11) .............. 2.0x 1.7x 1.4x 1.2x
SITES (END OF PERIOD):
Company-Owned and Operated Sites .................... 39 46 58 58
Company-Owned and Leased Sites ...................... 96 89 77 77
Franchisee-Owner Sites............................... 41 38 35 35
--------- --------- ---------- ----------
Total TravelCenters.................................. 176 173 170 170
========= ========= ========== ==========
</TABLE>
See Notes to Summary Supplemental and Pro Forma Consolidated Financial Data
13
<PAGE>
The following table sets forth the TA Subsidiary's historical
financial data for the years 1994 through 1996 and has been derived from the TA
Subsidiary's audited financial statements included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
The TA Subsidiary
----------------------------------------
Year Ended December 31,
----------------------------------------
1994 1995 1996
------------ ------------ -----------
(Dollars in Thousands)
Revenues:
<S> <C> <C> <C>
Fuel................................................... $ 206,971 $ 214,250 $ 284,378
Nonfuel................................................ 167,830 172,201 182,488
------------ ---------- -----------
Total revenues......................................... $ 374,801 $ 386,451 $ 466,866
============ ========== ===========
Gross profit (excluding depreciation)........................ $ 131,354 $ 130,452 $ 143,230
EBITDA(6).................................................... $ 25,036 $ 26,040 $ 27,306
Total diesel fuel sold (thousands of gallons)................ 295,875 306,255 344,803
Sites at end of period....................................... 46 47 48
</TABLE>
The following table sets forth the National Subsidiary's historical
financial data for the years 1994 through 1996 and has been derived from the
National Subsidiary's audited financial statements included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
The National Subsidiary
----------------------------------------
Year Ended December 31,
----------------------------------------
1994 1995 1996
------------ ------------ -----------
(Dollars in Thousands)
Revenues:
<S> <C> <C> <C>
Fuel.................................................... $ 396,748 $ 376,148 $ 467,888
Nonfuel................................................. 19,882 29,332 56,961
Rent.................................................... 48,424 47,840 41,762
------------ ----------- -----------
Total revenues.......................................... $ 465,054 $ 453,320 $ 566,611
============ =========== ===========
Gross profit (excluding depreciation)......................... $ 73,906 $ 76,497 $ 88,582
EBITDA(6)..................................................... $ 44,399 $ 36,259 $ 34,120
Total diesel fuel sold (thousands of gallons)................. 663,777 641,901 622,956
Sites at end of period........................................ 130 126 122
- -----------
</TABLE>
(1) See Note 20 to the audited financial statements of the Company included
elsewhere in this Prospectus. The amounts set forth in this supplemental
presentation for the years 1994, 1995 and 1996 which represent the TA
Subsidiary's results of operations (as well as those representing the
National Subsidiary's results of operations) were derived from the audited
financial statements included elsewhere in this prospectus.
(2) "Refinancing, transition and development costs" represent non-recurring
costs, and certain development costs, associated with, among other things,
(i) the Repurchase and related refinancing efforts, (ii) pursuit of
potential acquisitions, (iii) expenses incurred as TA transitioned to a
stand-alone operation apart from BP and (iv) the design of the TA
TravelCenter prototype. Management expects to incur additional
non-recurring transition expenses pursuant to the Combination Plan.
(3) "Other (income) expense, net" primarily represents gains and losses on
sales of property and equipment.
(4) "Mandatorily redeemable preferred stock" is comprised of two series of
convertible preferred stock which accumulate dividends semi-annually at a
compound annual rate of 13.5%. Both series are mandatorily redeemable in
2008 and are held by certain members of the Investor Group.
(5) "Working capital" is defined as current assets minus current liabilities.
(6) "EBITDA" is defined herein as income from operations plus the sum of
depreciation; amortization; refinancing, transition and development costs;
and other (income) expense, net and is presented because it is commonly
used by certain investors and analysts to analyze and compare operating
performance, and to determine a company's ability to service and incur
debt. EBITDA should not be considered in isolation from, or a substitute
for, net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance
with generally accepted accounting principles or as a measure of
profitability or liquidity.
(7) Over the past three years capital expenditures have averaged approximately
$27 million and have been generally comprised of (i) maintenance capital
expenditures (which are expected to be $8 million to $12 million per
annum), (ii) underground storage tank upgrades which are required to be
completed by December 1998 and (iii) development projects. Development
projects include new sites, fast food installations, stand-alone truck
maintenance and repair shop additions and systems upgrades, such as fuel
island automation.
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(8) Pro forma "Interest (expense), net" is net of $1.2 million of interest
income actually earned in 1996. Pro forma "Interest (expense), net" does
not include any interest income on the approximately $50 million of excess
proceeds to be raised in the Refinancing to pre-fund certain capital
expenditures in connection with the Capital Program.
(9) The pro forma ratio of EBITDA to "Interest expense, net" set forth is
different than the Consolidated Coverage Ratio (as defined in the
Indenture). See "Description of Notes--Certain Definitions." The
Consolidated Coverage Ratio, giving effect to the pro forma adjustments as
described in the Notes to the Unaudited Pro Forma Financial Information
included elsewhere in this Prospectus (See "Unaudited Pro Forma Financial
Information"), is 2.4x.
(10) Net debt is calculated by deducting from total debt the $50.0 million of
pre-funded capital expenditures in connection with the Capital Program to
be held in cash following the Refinancing. Pro forma for the Refinancing,
including such $50.0 million and $10.0 million anticipated to be used to
invest in inventory, cash will total $70.8 million.
(11) For purposes of computing this ratio, earnings consist of income from
operations before income taxes and fixed charges. Fixed charges consist of
interest expense, amortization of debt discount and one-third of rental
expense.
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RISK FACTORS
SET FORTH BELOW ARE THE PRINCIPAL RISK FACTORS INVOLVED IN AN EXCHANGE OF
OR INVESTMENT IN THE NOTES. HOLDERS OF EXISTING NOTES AND PROSPECTIVE PURCHASERS
OF THE NEW NOTES SHOULD CAREFULLY CONSIDER THESE RISK FACTORS AS WELL AS THE
OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS, WHICH MAY AFFECT A
DECISION TO ACQUIRE THE NEW NOTES. FOR A DISCUSSION OF CERTAIN POTENTIAL TAX
CONSEQUENCES OF SUCH AN INVESTMENT, SEE "CERTAIN UNITED STATES TAX
CONSIDERATIONS."
SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS
The Company is highly leveraged. As of December 31, 1996, on a pro forma
basis after giving effect to the Refinancing (and the use of proceeds therefrom)
as if they had occurred on such date, the Company and its consolidated
subsidiaries would have had an aggregate of $290.5 million of outstanding
indebtedness. The Indenture permits the Company to incur additional
indebtedness, including indebtedness that is senior in rank to the Notes
("Senior Indebtedness"), subject to certain restrictions. The degree to which
the Company is leveraged could have important consequences to holders of the
Notes, including the following: (i) the Company's ability to obtain additional
financing for working capital, capital expenditures, acquisitions or general
corporate purposes may be impaired; (ii) a substantial portion of the Company's
cash flow from operations must be dedicated to the payment of interest on the
Notes and other indebtedness, thereby reducing the funds available to the
Company for other purposes; (iii) the indebtedness under the Credit Facilities
and the Series II Senior Notes is at variable rates of interest, which may cause
the Company to be vulnerable to increases in interest rates; (iv) all of the
indebtedness outstanding under the Credit Facilities and the Senior Notes is
secured by substantially all the assets of the Company and the Subsidiary
Guarantors, and will mature prior to the Notes; (v) the Company is substantially
more leveraged than certain of its competitors, which might place the Company at
a competitive disadvantage; (vi) the Company may be hindered in its ability to
adjust rapidly to changing market conditions; and (vii) the Company's
substantial degree of leverage could make it more vulnerable in the event of a
downturn in general economic conditions or in its industry or business. See
"Capitalization," "Description of Senior Indebtedness" and "Description of New
Notes."
The Company's ability to pay the interest on and retire principal of the
Notes and the Company's other indebtedness is dependent upon its future
operating performance, which in turn is subject to general economic conditions
and to financial, business and other factors, many of which are beyond the
Company's control. In the event that the Company is unable to generate cash flow
that is sufficient to service its obligations in respect of the Notes and its
other indebtedness, the Company may be forced to adopt one or more alternatives,
such as reducing or delaying capital expenditures, attempting to refinance or
restructure its indebtedness, selling material assets or operations or selling
equity. There can be no assurance that any of such actions could be effected on
satisfactory terms, that they would enable the Company to satisfy its debt
service requirements or that they would be permitted by the Credit Facilities,
the Senior Notes or the Indenture. The failure to generate such sufficient cash
flow or to achieve such alternatives could significantly adversely affect the
market value of the Notes and the Company's ability to pay principal of and
interest on the Notes.
SUBORDINATION OF NOTES; ASSET ENCUMBRANCE; HOLDING COMPANY STRUCTURE
The payment of principal of and interest on, and any premium or other
amounts owing in respect of, the Notes will be subordinated to the prior payment
in full of all existing and future Senior Indebtedness of the Company, including
all amounts owing under the Credit Facilities and the Senior Notes. In addition
to being contractually subordinated, the Notes are unsecured and thus, will
effectively rank junior to any secured indebtedness of the Company or the
Subsidiary Guarantors, including the indebtedness outstanding under the Credit
Facilities and the Senior Notes, which is secured by liens on substantially all
of the assets of the Company and the Subsidiary Guarantors. As of December 31,
1996, on a pro forma basis after giving effect to the Transactions (and the use
of proceeds therefrom), the aggregate amount of such Senior Indebtedness of the
Company would have been approximately $165.5 million, all of which would have
been secured. Consequently, in the event of a bankruptcy, liquidation,
dissolution, reorganization or similar
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proceeding with respect to the Company, assets of the Company will be available
to pay obligations on the Notes only after all Senior Indebtedness has been paid
in full, and there can be no assurance that there will be sufficient assets to
pay amounts due on all or any of the Notes. Similarly, the Indebtedness
evidenced by the Subsidiary Guarantees of the Notes by the Subsidiary Guarantors
will be subordinated to the prior payment in full of all existing and future
Senior Indebtedness, including all amounts owing pursuant to the Subsidiary
Guarantors' guarantees of the indebtedness outstanding under the Credit
Facilities and the Senior Notes. Furthermore, the Subsidiary Guarantors'
guarantees of the Credit Facilities and the Senior Notes are secured by liens on
substantially all of the assets of the Subsidiary Guarantors and, along with
other Secured Indebtedness of the Subsidiary Guarantors, will effectively rank
senior to the Subsidiary Guarantees, which are unsecured. All Senior
Indebtedness of the Company outstanding after giving effect to the Transactions
will be guaranteed pursuant to the secured guarantees by the Subsidiary
Guarantors of the Credit Facilities and Senior Notes. See "Description of New
Notes--Ranking and Subordination" and "--Subsidiary Guarantees."
The Company is a holding company whose only material assets are its
investments in its subsidiaries. The Company conducts no business and is
dependent on distributions from its subsidiaries to service its debt
obligations, including the payment of interest and principal on the Notes. There
can be no assurance that such distributions will be adequate to fund the
interest and principal payments on the Credit Facilities, the Senior Notes and
the Notes when due.
RESTRICTIVE COVENANTS IN THE CREDIT FACILITIES AND SENIOR NOTES
The agreements providing for the Credit Facilities and the exchange of the
Senior Notes include a number of covenants that, among other things, restrict
the ability of the Company and its subsidiaries to dispose of assets, incur
additional indebtedness, incur guarantee obligations, prepay, redeem or
repurchase other indebtedness or amend certain other debt instruments, pay
dividends, create liens on assets, enter into sale and leaseback transactions,
make investments, loans or advances, make acquisitions, engage in mergers or
consolidations, change the business conducted by the Company or its
subsidiaries, make capital expenditures or engage in certain transactions with
subsidiaries and affiliates and otherwise restrict certain corporate activities.
In addition, under the Credit Facilities and Senior Notes, the Company is
required to comply with specified financial ratios and tests, including minimum
interest coverage ratios, maximum leverage ratios, a minimum working capital
requirement and a minimum net worth test. There can be no assurance that these
requirements will be met in the future. If they are not met, the senior lenders
could declare all amounts borrowed under the Credit Facilities and the Senior
Notes to be due and payable, together with accrued and unpaid interest, and the
commitments of the senior lenders to make further extensions of credit under the
Credit Facilities could be terminated. If the Company were unable to repay its
indebtedness to its senior lenders, such lenders could proceed against the
collateral securing such indebtedness as described under "Description of Senior
Indebtedness." If the indebtedness under the Credit Facilities and Senior Notes
were accelerated, there could be no assurance that the assets of the Company
would be sufficient to repay in full such indebtedness and the other
indebtedness of the Company, including the Notes.
COMPETITION
The travel center and truckstop industry is highly competitive and
fragmented. The Company competes in a large number of markets in which its
competitors offer both Fuel and Nonfuel products and services. Certain of the
Company's competitors offer diesel fuel at discount prices (in some cases
reflecting discounts on street prices greater than those offered by the
Company), which has caused severe price competition in certain of the Company's
markets, and from time to time certain of the Company's competitors may adopt
pricing strategies which the Company and its franchisees will be unwilling to
match. Due principally to competitive conditions within the truckstop and travel
center industry, retail diesel fuel margins have declined in recent years, both
industry-wide and at the Company. Certain of the Company's competitors also have
greater financial resources than the Company and are less financially leveraged.
The Company believes that fleets, which comprise a large part of its and its
franchisees' business, satisfy a significant portion of their diesel fuel needs
through their own terminals. Fleets often
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have their truck maintenance performed at dedicated fleet garages. While such
facilities do not compete directly with the Company as travel centers or
truckstops, pricing decisions for diesel fuel and repair services cannot be made
without considering their existence and capacity for expansion.
CONDITION OF THE TRUCKING INDUSTRY; RELIANCE ON FLEET ACCOUNTS
The Company's business is dependent upon the trucking industry in general
and upon long-haul trucks in particular. In turn, the trucking industry is
dependent on economic factors, such as the level of domestic economic activity
and interest rates, as well as operating factors such as the availability of
fuel supply, government regulation of fuel composition, prices and taxes and
regulation of permitted daily driving time, over which the Company has no
control and which could contribute to a decline in truck travel. The long-haul
trucking business is also a mature industry that has grown slowly in recent
years and has been susceptible to recessionary downturns. Available data
indicate that diesel fuel consumption by the trucking industry has grown more
slowly than trucking ton-miles as the fuel efficiency of diesel trucks has
continued to increase. That trend is expected to continue as engine technology
is refined and older trucks are retired and replaced with newer models. Any
sustained decline in operations in the trucking industry would adversely affect
the Company.
The Company derives a significant percentage of its revenues as a result
of relationships with fleet accounts, under which it provides diesel fuel,
products and services to fleet vehicles. The Company estimates that fleet
accounts represented approximately 75% and 60%, respectively, of the TA
Network's and the National Network's total diesel fuel volume sold in 1996,
although no one fleet accounted for more than 8% of either TA's or National's
total diesel fuel volume. Travel center and truckstop chains compete
aggressively for fleet account business and any significant reduction in fleet
accounts or sales to those accounts would adversely affect the Company. No
assurance can be given as to the continuation of the current level of sales to
fleets. See "Business--Sales and Marketing."
DEPENDENCE ON NETWORK MEMBERS
In 1996, the Company derived 23% of its gross profit from rent, franchise
royalties and other Nonfuel payments made by Operators (as defined) and
Franchisee-Owners (as defined). The Company is therefore substantially dependent
on the stable financial condition of the Operators and Franchisee-Owners, which
condition is subject to economic and industry factors, as well as other factors
affecting individual Operators and Franchisee-Owners, that are beyond the
Company's control. The Company has no opportunity to increase the rent it
charges the Operators, beyond an annual adjustment for inflation, until renewal
of the leases governing Leased Sites. As of December 31, 1996, the average
remaining term of the Operator leases was in excess of three years. In addition,
as part of the Combination Plan, the Company is offering new lease and franchise
agreements to Operators of Leased Sites that are being offered the opportunity
to convert from the National Network to the Network. The new leases reduce the
fixed rent paid by Operators offered such lease by an average of $96,000 per
site annually (as compared to 1996 rents) and extend the lease terms of such
Operators by an average of between one and two years. The reduction in lease
payments is expected to be offset by increased franchisee royalty payments under
the new franchise agreements, although there can be no assurance that such
increases will be realized.
For the twelve months ended December 31, 1996, the Company derived 4% of
its gross profit from sales of Fuel to Operators and Franchisee-Owners in the
National Network. The Company does not currently sell Fuel to TA franchisees.
The Company expects to continue to derive a significant percentage of its gross
profit from sales made to the Operators and Franchisee-Owners. Each of the
Operators and Franchisee-Owners is an independent business person, whose selling
and pricing decisions the Company does not control.
The Combination Plan contemplates significant changes in the leasing,
franchising and Fuel sale relationships with the National Operators and
Franchisee-Owners. There can be no assurance that these changes will be
implemented at all or consistently by such Operators and Franchisee-Owners.
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See "--Certain Franchisee Matters," "Business--Business Strategy" and "The
Refinancing, the Combination Plan and the Capital Program."
DEPENDENCE ON MOTOR FUEL SUPPLY AND SALES
In 1996, the Company derived 22% of its gross profit from sales of Fuel
both to Operators and Franchisee-Owners and from Company-operated TravelCenters.
The volume of Fuel sold by the Company and the profit margins associated with
these sales are affected by numerous factors outside of the Company's control,
including the condition of the long-haul trucking industry, the supply of and
demand for Fuel and the pricing policies of its Operators and Franchisee-Owners
and their respective (and the Company's) competitors.
The Company purchases Fuel from various suppliers at rates that fluctuate
with market prices and reset daily, and resells Fuel to its Operators and
Franchisee-Owners and to the public at rates that the Company resets daily.
Although price increases can be reflected rapidly in the prices charged, such
increases have historically tended to lead to temporary declines in retail fuel
sales volumes, which could negatively impact the Company's revenues. The Company
keeps only limited inventories of Fuel and consequently is susceptible to price
increases and interruptions in supply. Interruptions in supply may be caused by
local conditions, such as a malfunction in a particular pipeline or terminal,
that could prevent the Company's suppliers from supplying a specific geographic
location. The Company has attempted to reduce the impact of local interruptions
by entering into contractual arrangements with alternative sources of supply.
Interruptions in supply may also be caused by national or international
conditions, limitations on sales to Fuel wholesalers such as the Company imposed
by the limited number of Fuel suppliers and government agency regulation. A
material decrease in the volume of Fuel sold for an extended period of time or
instability in the prices of Fuel would have a material adverse effect on the
Company.
Each of the Company's Fuel suppliers has established credit lines in favor
of the Company to fund such purchases. Generally, these supply agreements
provide that the credit line may be revised by the supplier in various
circumstances, including at any time the supplier determines that the financial
condition of the Company has become impaired or is otherwise unsatisfactory. No
assurance can be given that the Transactions, future refinancings or a future
downturn in operating results will not cause the Company's suppliers to reduce
or eliminate such credit lines, which could have a material adverse effect on
the Company.
ENVIRONMENTAL LIABILITIES
The Company's operations and properties are subject to extensive federal,
state and local laws, regulations and ordinances relating to environmental
matters, particularly those that (i) govern activities and operations that may
have adverse environmental effects, such as discharges to air, soil and water,
as well as handling, storage and disposal practices for petroleum products and
other hazardous and toxic substances ("Hazardous Substances") or (ii) impose
liability and damages for the costs of remediating sites affected by, and for
damages resulting from, past spills and disposal or other releases of Hazardous
Substances ("Environmental Laws"). Pursuant to certain Environmental Laws, a
current or previous owner or operator of real property may be liable for the
costs of removal or remediation of Hazardous Substances on, under or in such
property. Environmental Laws typically impose liability whether or not the owner
or operator knew of, or was responsible for, the presence of such Hazardous
Substances. Persons who arrange, or are deemed to have arranged, for the
disposal or treatment of Hazardous Substances also may be liable for the costs
of removal or remediation of such substances at the disposal or treatment site,
regardless of whether the affected site is owned or operated by such person.
In connection with the National Acquisition and the TA Acquisition, the
Company entered into agreements (the "Environmental Agreements") with the
respective sellers, Unocal and BP, obligating the sellers to undertake, at their
sole expense, activities necessary to bring their former properties and
operations into compliance with Environmental Laws and to indemnify the Company
with respect to certain other environmental liabilities. The Company believes
that, after giving effect to the Environmental
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Agreements, liabilities under Environmental Laws will not have a material
adverse effect on the Company. If additional environmental compliance or
remediation obligations arise or are discovered, if additional environmental
requirements are imposed by government agencies, or if Unocal or BP fail to
satisfy their obligations under the Environmental Agreements, increased
remediation and compliance expenditures may be required, which could have a
material adverse effect on the Company. See "Business--Regulation--Environmental
Regulation."
ADVERSE EFFECTS OF AN INABILITY TO EFFECT OPERATING STRATEGY
The failure to implement the Company's operating strategy and consolidate
management effectively could have a material adverse effect on the Company. The
Company's plan to integrate the TA Network and the National Network entails a
number of significant risks, including, but not limited to, the risks that a
number of National Operators will refuse to accept the offer of a Network
franchise, that Operators who do accept will not be able to operate successfully
within the Network or that National's customers will not continue to provide the
same level of business after those sites are converted. In addition, although
management has successfully instituted cost controls, operating efficiencies and
revenue enhancement techniques within the TA Network, there is a risk that the
same programs will not be successfully implemented at sites that convert from
the National Network, particularly at sites that are not operated by the
Company. See "Business--Business Strategy."
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends to a significant extent on the
efforts and abilities of its management team, which has had responsibility for
the management of the TA Network for more than four years but only recently
assumed responsibility for overall management of the Company. The loss of the
services of certain of these individuals could have a material adverse effect on
the Company.
CHANGE OF CONTROL
A Change of Control (as defined in the Indenture) could require the
Company to refinance substantial amounts of its indebtedness. Upon the
occurrence of a Change of Control, the Company, unless it redeems the Notes,
would be required to offer to repurchase the Notes at a purchase price equal to
101% of the principal amount of such Notes, plus accrued and unpaid interest, if
any, to the date of purchase. However, the agreements providing for the Credit
Facilities and the exchange of the Senior Notes prohibit the purchase of the
Notes by the Company in the event of a Change of Control, unless and until such
time as the indebtedness under the Credit Facilities and the Senior Notes is
repaid in full. The Company's failure to purchase the Notes would result in a
default under the Indenture, the Credit Facilities and the Senior Notes. The
agreements providing for the Credit Facilities and the exchange of the Senior
Notes also provide that the indebtedness under the Credit Facilities and Senior
Notes becomes due in the event of a "Change of Control" as defined therein. In
addition, a Change of Control would constitute a "Change of Control" under such
agreements. The inability to repay the indebtedness under the Credit Facilities
and the Senior Notes, if accelerated, could have adverse consequences to the
Company and the holders of the Notes. In the event of a Change of Control, there
can be no assurance that the Company would have sufficient assets to satisfy all
of its obligations under the Credit Facilities, the Senior Notes and the Notes.
See "Description of Senior Indebtedness" and "Description of New Notes--Change
of Control."
CERTAIN FRANCHISEE MATTERS
The Company is subject to various state and federal laws relating to its
relationship with its franchisees. The failure by the Company to comply with
these laws could subject the Company to liability to franchisees and to fines or
other penalties imposed by governmental authorities. The Company believes it is
in material compliance with these laws and regulations and its agreements with
franchisees. The Company is currently involved in litigation with certain of its
franchisees, which is not expected to have a material adverse effect on the
Company. There can be no assurance, however, that franchisees will not commence
additional litigation against the Company in the future or that an unfavorable
decision in existing
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or future litigation will not have a material adverse effect on the Company.
See "Business--Litigation" and "Business--Regulation--Franchise Regulation."
FRAUDULENT CONVEYANCE
The incurrence of indebtedness and the use of proceeds thereof are subject
to review under relevant federal and state fraudulent conveyance statutes in a
bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
the obligor. Under these statutes, if a court were to find that obligations were
incurred with the intent of hindering, delaying or defrauding present or future
creditors or that the obligor received less than a reasonably equivalent value
or fair consideration for those obligations and, at the time of the occurrence
of the obligations, the obligor either (i) was insolvent or rendered insolvent
by reason thereof, (ii) was engaged or was about to engage in a business or
transaction for which its remaining unencumbered assets constituted unreasonably
small capital or (iii) intended to or believed that it would incur debts beyond
its ability to pay such debts as they matured or became due, such court could
void or subordinate the obligations in question. The measure of insolvency for
purposes of a fraudulent conveyance claim will vary depending upon the law of
the jurisdiction being applied. Generally, however, a company will be considered
insolvent at a particular time if the sum of its debts at that time is greater
than the then fair value of its assets or if the fair saleable value of its
assets at that time is less than the amount that would be required to pay its
probable liability on its existing debts as they become absolute and mature.
The Subsidiary Guarantees may be subject to review under relevant federal
and state fraudulent conveyance and similar statutes in a potential bankruptcy
or reorganization case or a lawsuit by or on behalf of creditors of any of the
Subsidiary Guarantors. In such a case, the analysis set forth above would
generally apply, except that the Subsidiary Guarantees could also be subject to
the claim that, since the Subsidiary Guarantees were incurred for the benefit of
the Company (and only indirectly for the benefit of the Subsidiary Guarantors),
the obligations of the Subsidiary Guarantors thereunder were incurred for less
than reasonably equivalent value or fair consideration. A court could void a
Subsidiary Guarantor's obligation under its Subsidiary Guarantee, subordinate
the Subsidiary Guarantee to other indebtedness of a Subsidiary Guarantor or take
other action detrimental to the holders of the Notes.
ADVERSE CONSEQUENCES OF FAILURE TO ADHERE TO EXCHANGE OFFER PROCEDURES
Issuance of the New Notes in exchange for Existing Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Exchange Agent of
such Existing Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of Existing
Notes desiring to tender such Existing Notes in exchange for New Notes should
allow sufficient time to ensure timely delivery. Neither the Company nor the
Exchange Agent is under any duty to give notification of defects or
irregularities with respect to the tenders of Existing Notes for exchange.
Existing Notes that are not tendered or are tendered but not accepted will,
following the consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof and, upon consummation of the
Exchange Offer certain registration rights under the Registration Rights
Agreement will terminate.
RECEIPT OF RESTRICTED SECURITIES UNDER CERTAIN CIRCUMSTANCES
Any holder of Existing Notes who tenders in the Exchange Offer for the
purpose of participating in a distribution of the New Notes may be deemed to
have received restricted securities and, if so, will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. See "The Exchange Offer--Consequences of
Failure to Exchange; Resales of New Notes."
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ADVERSE EFFECT ON MARKET FOR EXISTING NOTES
To the extent that Existing Notes are tendered and accepted in the Exchange
Offer, the trading market for the untendered and tendered but unaccepted
Existing Notes could be adversely affected. See "The Exchange Offer."
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES
The New Notes are new securities and there is currently no established
market for the New Notes. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Notes. The Company does not
intend to apply for listing of the New Notes on a securities exchange.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements concerning the
Company's operations, economic performances and financial condition, including,
in particular, the likelihood of the Company's success in developing and
expanding its business. These statements are based upon a number of assumptions
and estimates which are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company, and reflect
future business decisions which are subject to change. The foregoing description
of risk factors specifies the principal contingencies and uncertainties to which
the Company believes it is subject. Some of these assumptions inevitably will
not materialize, and unanticipated events will occur which will affect the
Company's results.
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THE REFINANCING, THE COMBINATION PLAN AND
THE CAPITAL PROGRAM
The Company has been recapitalized and has commenced a restructuring by
completing the Refinancing and the Restructuring in which (a) (i) the National
Subsidiary and the TA Subsidiary repaid in full all indebtedness outstanding
under their respective Old Credit Facilities and Old Subordinated Notes, of
which $139.6 million aggregate principal amount (before unamortized debt
discount and other repayment costs, see "Certain Transactions--Certain
Indebtedness Formerly Held by Stockholders and Related Transactions") was
outstanding on the Closing Date immediately prior to consummation of the
Refinancing, (ii) the Company issued $85.5 million principal amount of the
Senior Notes in exchange for $85.5 million principal amount of the Old Senior
Notes, (iii) the TA Subsidiary redeemed the $4.5 million principal amount of
Redeemed Notes and (iv) the TA Subsidiary and the National Subsidiary repaid all
accrued and unpaid interest on the Old Credit Facilities, Old Subordinated Notes
and Old Senior Notes and (b) the Company's subsidiaries were restructured such
that the Company directly owns its three subsidiaries. The Company is currently
continuing this restructuring by implementing the Combination Plan and the
Capital Program pursuant to which (a) the Company's Existing Networks are being
combined into the Network under the single "TA" trademark and (b) National
locations joining the Network and, as needed certain TA locations, are being
upgraded through capital investments pursuant to the Capital Program, which is
being funded, in part, by the Refinancing.
THE REFINANCING
In connection with the Refinancing, the Company issued pursuant to the
offering of the Existing Notes (the "Offering") $125.0 million aggregate
principal amount of the Existing Notes. The Chase Manhattan Bank ("Chase"),
together with the Lenders (as defined), provided the Company with the senior
secured Credit Facilities in an aggregate principal amount of $120.0 million,
comprised of the $80.0 million Term Facility and the $40.0 million Revolving
Credit Facility, of which up to $20.0 million is available in the form of
letters of credit. Chase syndicated the Term Facility and a portion of its
obligations under the Revolving Credit Facility to a group of financial
institutions (the "Lenders"), with Chase as administrative agent for the
Lenders. Upon consummation of the Term Facility and the Offering, the Company
made advances to the National Subsidiary and the TA Subsidiary, respectively, in
amounts sufficient to (i) enable them to repay the principal outstanding under
their respective Old Credit Facilities, which, in each case, were senior secured
credit facilities with lenders for which Chase was the administrative agent, and
their respective Old Subordinated Notes, in each case together with accrued
interest, (ii) enable the TA Subsidiary to repay the principal outstanding under
the Redeemed Notes, together with accrued interest, (iii) enable them to pay
related costs and expenses and (iv) pre-fund the Capital Program. See "--The
Combination Plan," "--The Capital Program," "Use of Proceeds," "Description of
Senior Indebtedness," and "Description of Existing Notes."
The Company also issued $85.5 million aggregate principal amount of its
Senior Notes in exchange for all the Old Senior Notes other than the Redeemed
Notes and paid in cash interest accrued thereon to the Closing Date. The Senior
Notes and the Credit Facilities are secured by the same collateral and the
Senior Notes rank PARI PASSU with the Credit Facilities. The relationship
between the Lenders and the holders of the Senior Notes is governed by an
intercreditor agreement, with Chase as collateral agent. See "Description of
Senior Indebtedness--Credit Facilities; --Senior Notes."
THE COMBINATION PLAN
A key component of the Company's strategic plan to continue improving its
operating performance is the Combination Plan, pursuant to which the Company is
integrating a majority of the National Network TravelCenters and all of the TA
Network TravelCenters into a single Network and consolidating leadership of the
combined Network under TA's management team (which assumed management
responsibility for the National Network in January 1997) and will operate the
Network under the well- regarded "TA" trademark. Historically, under the
Company's ownership, each of the Existing Networks has been separately managed
and financed. Through the Combination Plan, the Company expects to capitalize on
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both TA's proven management approach to the marketing and operation of a large
TravelCenter network as well as the larger National Network's premier locations.
The value of these combined assets will be further enhanced by the complimentary
nature of the Existing Networks' relationships with the largest long-haul
trucking fleets in the United States and the impact of the investment of
significant capital in the Network pursuant to the Capital Program.
The TA Network is comprised primarily of Company-owned and operated
TravelCenters, with 40 such locations, as compared to only eight sites
("Franchisee-Owner Sites") owned and operated by independent franchisees of the
Company ("Franchisee-Owners"). Consequently, TA's management had the opportunity
to provide substantial direction and focus to its operations and to develop and
implement a successful model for operating a travel center network. Management
expects that as a result of the Combination Plan, the TA management approach
will rapidly impact the 24 Company-operated National TravelCenters that have
been selected to become part of the Network because these TravelCenters are
being placed under the direct supervision of TA managers. In addition, 48 of the
76 National sites that have been selected to become part of the Network are
Company-owned sites ("Leased Sites") leased to lessee-franchisees of the Company
("Operators"). Management expects that these Leased Sites will be positively
impacted as a result of the Combination Plan, but does not expect the benefits
accruing to the Company to be realized as quickly, or to the same extent, as
they will at the Company-operated sites. Management believes that the Company
will also realize improved revenues from the four National Franchisee-Owner
Sites that are expected to join the Network. In connection with the Combination
Plan, the Company is offering new Network Franchise Agreements (as defined) to
certain National Operators and Franchisee-Owners with respect to 52 National
Network sites and new Network Lease Agreements (as defined) to certain National
Operators with respect to 48 of such sites that are Leased Sites. With respect
to National TravelCenters that will not become part of the Network, over time,
the Company expects to sell 23 such properties which are Company-owned
(including seven Company-operated sites) and expects to terminate franchise
agreements with respect to 21 of such properties which are Franchisee-Owner
Sites. Since March 24, 1997, the Company has terminated franchises with respect
to two former National Franchisee-Owner Sites. The Company is engaged in
discussions with Operators and Franchisee-Owners regarding the 40 National
TravelCenters not operated by the Company and not designated to be integrated
into the Network to effect mutually agreeable terms for the termination of
franchise and lease agreements with Operators and Franchisee-Owners and the
disposition of those facilities that are leased from the Company.
In 1996, the 23 Company-owned sites which are planned to be sold as part
of the Combination Plan contributed approximately $12 million of EBITDA, while
the 21 franchised sites planned to be terminated contributed approximately $2
million of EBITDA. The Company currently anticipates receiving an average of
approximately $2 million to $3 million of proceeds per Company-owned site sold.
The actual amount the Company receives could vary, perhaps significantly. The
Company anticipates that the Combination Plan will be implemented over a period
of approximately one to three years. The termination and renegotiation of
franchise agreements in connection with the Combination Plan will be subject to
and must be implemented in compliance with the PMPA (as defined), which will
affect the time required to implement fully the Combination Plan. See
"Business--Regulation--Franchise Regulation." Based on the Network Franchise
Agreement and the Network Lease Agreement, if all of the Operators and
Franchisee-Owners of the 53 sites expected to be offered such agreements enter
into such agreements, the Company's EBITDA would be reduced by approximately $1
million to $2 million on a pro forma basis for 1996. However, the impact of
these reductions is expected to be more than offset over time by the benefits to
be realized by the Company in connection with Combination Plan. See "Risk
Factors--Dependence on Network Members."
24
<PAGE>
The following chart summarizes the changes assumed in the Combination Plan
to the Company's number and mix of sites as of April 20, 1997.
<TABLE>
<CAPTION>
NATIONAL TA NETWORK
------------------------------------ --------- ---------
Non-
Continuing Post
Actual Sites Combination
---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Company-Owned and Operated Sites.......... 31 (7) 24 40 64
Company-Owned and Leased Sites............ 64 (16) 48 -- 48
---------- ----------- ------------ -------- ----------
Company-Owned Sites................. 95 (23) 72 40 112
Franchisee-Owner Sites.................... 25 (21) 4 8 12
---------- ----------- ------------ -------- -----------
Total............................... 120 (44) 76 48 124
</TABLE>
The foregoing summarizes the Combination Plan as currently formulated.
Based on discussions with Operators and Franchisee-Owners, further market
analysis and other relevant factors, there could be changes to the total number
and composition of sites within the Network. In particular, the Company is
currently in discussions with approximately 14 Operators regarding the possible
conversion of their Leased Sites to Company-operated sites. However, management
does not expect such changes to materially impact the scope of the Combination
Plan.
THE CAPITAL PROGRAM
In connection with the Combination Plan, the Company has initiated the
Capital Program to upgrade, rebrand, reimage and increase the number of the
combined Network's TravelCenters. Specific components of the Capital Program
include the following: (i) rebranding approximately 76 National sites to the
"TA" brandname; (ii) expanding the Network's offering of Nonfuel products and
services through the installation of fast food kiosks and food courts, improved
gasoline branding, redesigned and expanded travel and convenience stores and
larger TA type truck maintenance and repair shops; (iii) improving the Network's
image through expanded and improved parking, better lighting and security and
other general improvements such as site repainting and bathroom and shower
improvements; (iv) completing all required environmental expenditures including
compliance with the federally imposed 1998 underground storage tank
requirements; and (v) adding new Company-operated or franchised sites to the
Network. The foregoing improvements will be implemented at National sites that
join the Network and will be completed, where needed, at TA Network locations.
The Company expects to invest approximately $200 million in the Network between
1997 and the end of 2001 (with approximately $110 million of this amount to be
spent by the end of 1998) in connection with the Capital Program. Approximately
$50 million of the $200 million intended to be spent by the end of 2001
represents normal ongoing maintenance and related capital expenditures. The
Company will also incur approximately $11 million of one-time transition charges
during the next two to three years to execute the Combination Plan. A portion of
the proceeds of the Refinancing are being used to pre-fund the Capital Program.
See "Use of Proceeds."
USE OF PROCEEDS
There will be no proceeds to the Company from the exchange of New Notes
for Existing Notes pursuant to the Exchange Offer. This Exchange Offer is
intended to satisfy certain of the Company's and the Subsidiary Guarantors'
obligations under the Registration Rights Agreement. The proceeds from the
Offering, $125.0 million (before deductions of discounts and other expenses of
the Offering), together with the proceeds of the Term Facility and funds
available from the Company's cash on hand were used to (a) repay in full (i)
$57.6 million principal amount outstanding on the Closing Date under the
National Subsidiary's Old Credit Facility, which facility would have matured on
March 31, 2000 and had an interest rate of 8.44%, (ii) $42.0 million principal
amount outstanding on the Closing Date under the TA Subsidiary's Old Credit
Facility, which facility would have matured on December 31, 2000 and had an
interest rate of 8.31% (together with the National Subsidiary's Old Credit
Facility, the "Old Credit Facilities"), (iii) $4.5 million principal amount of
the Redeemed Notes, (iv) $25.0 million principal amount
25
<PAGE>
of the National Subsidiary's 12.5% Senior Subordinated Notes due April 14, 2003,
(v) $15.0 million principal amount of the TA Subsidiary's 12% Series A and 12%
Series B Senior Subordinated Notes due December 10, 2003 (collectively, the "Old
Subordinated Notes"), in each case, together with accrued interest; and (b) fund
certain inventory purchases and capital expenditures of the Company in
connection with the Capital Program (approximately $10 million and $50 million,
respectively). The balance of such proceeds was used to pay fees and expenses of
$15.2 million incurred in connection with the Transactions. The Refinancing also
includes the exchange by the holders of the Old Senior Notes of such Old Senior
Notes, other than the Redeemed Notes, for an equivalent principal amount of
Senior Notes and the payment in cash of accrued interest to the Closing Date.
See "The Refinancing, The Combination Plan and The Capital Program,"
"Business--Business Strategy," "Certain Transactions" and "Description of Senior
Indebtedness."
26
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1996, and as adjusted to give effect to the Refinancing. This table
should be read in conjunction with "Use of Proceeds" and the "Pro Forma
Financial Information" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------
Actual As Adjusted
------------ ---------------
(Dollars in Thousands)
<S> <C> <C>
Cash ......................................................... $ 23,779 $ 70,754
Short-term debt:
Revolving Credit Facility(1) .............................. $ 14,000 $ --
Current maturities of long-term debt ...................... 17,250 500
-------- --------
Total short-term debt .................................. 31,250 500
-------- --------
Long-term debt:
Old Credit Facilities ..................................... 64,550 --
Old Senior Notes .......................................... 90,000 --
Term Facility ............................................. -- 79,500
Senior Notes .............................................. -- 85,500
Old Subordinated Notes(2) ................................. 38,635 --
Notes ..................................................... -- 125,000
-------- --------
Total long-term debt ................................... 193,185 290,000
Mandatorily redeemable senior convertible participating
preferred stock ........................................... 51,075 51,075
-------- --------
Shareholders' equity:
Other preferred stock, common stock and other shareholders'
equity ................................................. 50,743 50,743
Retained earnings(3) ...................................... 17,647 11,801
Total shareholders' equity ............................. 68,390 62,544
-------- --------
Total capitalization ................................... $343,900 $404,119
======== ========
- -----------
</TABLE>
(1) The Company's Revolving Credit Facility permits borrowings in an aggregate
principal amount of up to $40.0 million, of which up to $20.0 million is
available, and $1.5 million of which was utilized at closing, for letters
of credit.
(2) Net of unamortized discount of $1.4 million.
(3) Reduction in retained earnings reflects an extraordinary charge, recorded
net of applicable income taxes, related to the early extinguishment of
debt resulting from the write-off of $8.4 million of deferred financing
costs and $1.4 million of unamortized debt discount.
27
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Balance Sheet of the
Company as of December 31, 1996 and the Unaudited Pro Forma Consolidated
Statement of Income of the Company for the year ended December 31, 1996 have
been prepared to reflect the consummation of the Transactions. The Unaudited Pro
Forma Consolidated Balance Sheet has been prepared as if such Transactions
occurred on December 31, 1996 and the Unaudited Pro Forma Consolidated Statement
of Income has been prepared as if such Transactions occurred as of January 1,
1996. The Pro Forma Financial Information is unaudited and not necessarily
indicative of the results that would have actually occurred if the Transactions
had been consummated on such dates, or results which may be obtained in the
future. The pro forma adjustments, as described in the Notes to the Unaudited
Pro Forma Financial Information, are based on available information and upon
certain assumptions that the Company believes are reasonable. The Pro Forma
Financial Information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited financial statements and related notes thereto, included elsewhere
in this Prospectus.
28
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Pro
Actual Adjustment Forma(a)
---------- --------------- -----------
Current assets:
<S> <C> <C> <C>
Cash ....................................................... $ 23,779 $ 125,000 (b) $ 70,754
(40,760) (c)
(187,565) (d)
165,500 (e)
(15,200) (f)
Accounts receivable (less $3,502 allowance for doubtful
accounts) .................................................. 54,371 54,371
Inventories ................................................... 29,082 29,082
Deferred income taxes ......................................... 3,877 3,877
Other current assets .......................................... 10,530 10,530
-------- ---------- --------
Total current assets ............................ 121,639 46,975 168,614
Notes receivable .............................................. 1,835 1,835
Property and equipment, net ................................... 269,366 269,366
Intangible assets ............................................. 19,657 19,657
Deferred financing costs ...................................... 8,379 (8,379) (g) 15,200
15,200 (f)
Other assets .................................................. 5,013 5,013
-------- ---------- --------
Total assets .................................... $425,889 $ 53,796 $479,685
======== ========== ========
Current liabilities:
Revolving loans ............................................... $ 14,000 $ (14,000) (d) $ --
Current maturities of long-term debt .......................... 17,250 (17,250) (d) 500
500 (e)
Accounts payable .............................................. 37,201 37,201
Other accrued liabilities ..................................... 29,422 (760) (c) 26,897
(1,765) (d)
-------- ---------- --------
Total current liabilities ....................... 97,873 (33,275) 64,598
Long-term debt, less unamortized discount ..................... 193,185 125,000 (b) 290,000
(40,000) (c)
(154,550) (d)
165,000 (e)
1,365 (g)
Deferred income taxes ......................................... 9,452 (3,898) (g) 5,554
Other long-term liabilities ................................... 5,914 5,914
-------- ---------- --------
306,424 59,642 366,066
Mandatorily redeemable senior convertible participating
preferred stock ............................................ 51,075 51,075
Other preferred stock, common stock and other shareholders'
equity ..................................................... 50,743 50,743
Retained earnings ............................................. 17,647 (5,846) (g) 11,801
-------- ---------- --------
Total shareholders' equity ...................... 68,390 (5,846) 62,544
-------- ---------- --------
Total liabilities and shareholders' equity ...... $425,889 $ 53,796 $479,685
======== ========== ========
</TABLE>
See Notes to Unaudited Pro Forma Balance Sheet.
29
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(a) The pro forma balance sheet data assume that the following transactions
occurred on December 31, 1996:
(1) the sale of the Existing Notes;
(2) the borrowing of $80.0 million of senior secured debt under the
Term Facility;
(3) the issuance of $85.5 million of Senior Notes and the prepayment of
$85.5 million of Old Senior Notes (which excludes the Redeemed Notes)
together with accrued interest;
(4) the prepayment of all amounts outstanding under the Old Credit
Facilities;
(5) the prepayment of the $4.5 million of Redeemed Notes and the payment
of accrued interest;
(6) the prepayment of the $40.0 million of Old Subordinated Notes and the
payment of accrued interest; and
(7) the payment of approximately $15.2 million of fees and expenses
associated with the foregoing, all of which are assumed to be new debt
issuance costs.
(b) Reflects gross proceeds of $125.0 million from the sale of the Existing
Notes.
(c) Reflects the prepayment of the $40.0 million of Old Subordinated Notes and
payment of accrued interest of $760,000.
(d) Reflects the prepayment of the $90.0 million of Old Senior Notes and $95.8
million of the Old Credit Facilities and the payment of accrued interest
of $1.8 million.
(e) Reflects borrowing of $80.0 million under the Term Facility and issuance
of $85.5 million of the Senior Notes.
(f) Reflects payment of new debt issuance costs of $15.2 million related to
the Transactions.
(g) Reflects an extraordinary charge, recorded net of applicable income taxes,
related to the early extinguishment of debt resulting from the write-off
of $8.4 million of deferred financing costs and $1.4 million of
unamortized debt discount.
30
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED
ACTUAL(a) ADJUSTMENT PRO FORMA(b)
------------- --------------- ---------------
Revenues:
<S> <C> <C> <C>
Fuel ............................................. $ 752,266 $ 752,266
Nonfuel .......................................... 239,449 239,449
Rent ............................................. 41,762 41,762
----------- -----------
Total revenues ................................... 1,033,477 1,033,477
Cost of revenues (excluding depreciation) .............. 801,665 $ (1,284)(c) 800,381
----------- ----------- -----------
Gross profit (excluding depreciation) .................. 231,812 1,284 233,096
Operating expenses ..................................... 128,773 128,773
Selling, general and administrative expenses ........... 42,349 (1,450)(d) 40,899
Refinancing, transition and development costs .......... 2,687 2,687
Depreciation and amortization .......................... 26,970 2,140 (e) 27,210
(1,900)(f)
Other (income) expense, net ............................ 1,324 1,324
----------- ----------- ----------
Income from operations ................................. 29,709 2,494 32,203
Interest (expense), net................................. (20,827) 22,072 (g) (25,916)
(27,161)(h)
----------- ----------- ----------
Income before provision for income taxes ............... 8,882 (2,595) 6,287
Provision for income taxes ............................. 3,349 (1,038)(i) 2,311
----------- ----------- ----------
Net Income.............................................. $ 5,533 $ (1,557) 3,976
============= =========== ==========
Other Financial Data:
EBITDA(j) ............................................ $ 60,690 $ 63,424
Capital expenditures ................................. 27,089 27,089
</TABLE>
See Notes to Unaudited Pro Forma Statement of Income.
31
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
(a) The Company's investment in TA was presented as net assets of subsidiary
held for disposition and the results of TA's operations were included in
the Company's income statement as a single amount for the nine months
ended September 30, 1996. Effective September 30, 1996, the decision was
made to retain TA and, subsequently, the Company chose to pursue the
Combination Plan. This presentation for the year ended December 31, 1996
sets forth the Company's consolidated results as though TA had not been
held for disposition and had instead fully consolidated for the year.
(b) The pro forma statement of operations data assume the following
transactions occurred at January 1, 1996:
(1) the sale of the Existing Notes;
(2) the borrowing of $80.0 million of senior secured debt under the Term
Facility;
(3) the issuance of $85.5 million of Senior Notes and the prepayment of
$85.5 million of Old Senior Notes (which excludes the Redeemed Notes)
together with accrued interest;
(4) the prepayment of all amounts outstanding under the Old Credit
Facilities;
(5) the prepayment of the $4.5 million of Redeemed Notes and the payment
of accrued interest;
(6) the prepayment of the $40.0 million of Old Subordinated Notes and the
payment of accrued interest; and
(7) the payment of approximately $15.2 million of fees and expenses
associated with the foregoing, all of which are assumed to be new debt
issuance costs.
(c) Reflects cost savings for tires to be purchased for TA Company-operated
sites under the terms of the National tire purchase contract (estimated to
total $600,000 annually) and payments to the Company for National sites
electing to participate in the TA oil purchase program (assumes
participation by each of the 76 National Sites expected to join the
Network at the current contract rate (totaling $684,000 annually)). The
Company's contracts permit the terms of both the tire and oil purchase
arrangements to be extended to all TravelCenters in the Network.
(d) Reflects the decrease in compensation expense of $950,000 associated with
certain National executives who resigned in 1997 and expected rental
expense savings of $500,000 from the closure of the National headquarters
in Nashville.
(e) Reflects the amortization expense associated with the $15.2 million of new
deferred financing costs.
(f) Reflects the elimination of the amortization expense related to the
deferred financing costs associated with the Old Credit Facilities, the
Old Senior Notes and the Old Subordinated Notes.
(g) Reflects elimination of interest expense incurred in relation to the Old
Credit Facilities, the Old Senior Notes and the Old Subordinated Notes.
(h) Reflects interest expense at 10.25% as the result of the issuance of the
Existing Notes, the Senior Notes (distributed as: Series I: $35.5 million
at 8.94%, fixed and Series II: $50.0 million at an assumed rate of 8.75%,
floating) and the Term Facility ($80.0 million at an assumed rate of
8.50%, floating).
(i) Reflects the decrease in the income tax provisions (at an assumed rate of
40%) required as a result of the decreased pro forma income before taxes
as a result of the above adjustments.
32
<PAGE>
(j) "EBITDA" is defined herein as income from operations plus the sum of
depreciation; amortization; refinancing, transition and development costs;
and other (income) expense, net and is presented because it is commonly
used by certain investors and analysts to analyze and compare operating
performance, and to determine a company's ability to service and incur
debt. EBITDA should not be considered in isolation from, or a substitute
for, net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance
with generally accepted accounting principles or as a measure of
profitability or liquidity.
33
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth selected historical financial data for the
Company, the TA Subsidiary and the National Subsidiary, as well as a portion of
the business of BP, consisting of the TA Network, and a portion of the business
of Unocal, consisting of the National Network, that were acquired by the Company
in the Acquisitions (the "BP Predecessor Business" and the "Unocal Predecessor
Business," respectively). The Company's historical financial data set forth in
the table below for the years ended 1994 through 1996 have been derived from the
Company's audited financial statements included elsewhere in this Prospectus.
For the period from April 15, 1993 through December 31, 1993 the historical data
have been derived from the Company's audited financial statements which are not
included in this Prospectus. As discussed elsewhere in this Prospectus, such
data presents the Company's investment in TA as net assets of subsidiary held
for disposition for the period from January 1, 1994 to September 30, 1996.
Accordingly, given the Company's decision to retain TA and pursue the
Combination Plan, such data should be read in conjunction with "Summary
Supplemental and Pro Forma Consolidated Financial Data," "Unaudited Pro Forma
Financial Information," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the audited financial statements and
related notes thereto of the Company included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THE COMPANY(1)
--------------------------------------------------
OPERATING
PERIOD
APRIL 15, 1993
THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, -------------------------------------
1993(2) 1994 1995 1996
------------ ---------- ---------- ----------
(Dollars in Thousands)
INCOME STATEMENT DATA:
<S> <C> <C> <C> <C>
REVENUES:
Fuel ........................................ $ 306,141 $ 396,748 $ 376,148 $ 550,212
Nonfuel ..................................... 10,175 19,882 29,332 101,278
Rent ........................................ 31,973 48,424 47,840 41,762
--------- --------- --------- ---------
Total revenues .............................. 348,289 465,054 453,320 693,252
Cost of revenues (excluding depreciation) ...... 295,781 391,148 376,823 568,226
--------- --------- --------- ---------
Gross profit (excluding depreciation) .......... 52,508 73,906 76,497 125,026
Operating expenses ............................. -- 7,711 9,521 54,001
Selling, general and administrative expenses ... 21,326 22,322 30,885 30,803
Refinancing, transition and development costs(3) 1,518 4,117 831 2,197
Depreciation and amortization .................. 7,844 10,398 11,379 17,838
Other (income) expense, net(4) ................. (21) (138) 196 1,324
Income of subsidiary held for disposition ...... -- -- (6,199) (5,255)
--------- --------- --------- ---------
Income from operations ......................... 21,841 29,496 29,884 24,118
Interest (expense), net ........................ (9,177) (13,243) (13,344) (15,236)
--------- --------- --------- ---------
Income before provision for income taxes ....... 12,664 16,253 16,540 8,882
Provision for income taxes ..................... 5,176 6,561 6,614 3,349
--------- --------- --------- ---------
Net income ..................................... $ 7,488 $ 9,692 $ 9,926 $ 5,533
========= ========= ========= =========
BALANCE SHEET DATA (END OF PERIOD):
Total assets ................................ $ 284,168 $ 294,961 $ 297,231 $ 425,889
Total debt (net of unamortized discount) .... 157,310 153,938 139,991 224,435
Mandatorily redeemable preferred stock(5) ... 36,435 41,315 46,195 51,075
Total shareholders' equity .................. 57,267 63,489 68,449 68,390
Working capital(6) .......................... 23,784 18,421 9,872 23,766
OTHER FINANCIAL AND OPERATING DATA:
Ratio of earnings to fixed charges(7) .......... 2.3x 2.1x 2.1x 1.5x
</TABLE>
See Notes to Selected Consolidated Financial Data
34
<PAGE>
The following table sets forth selected historical financial data for the
TA Subsidiary for the years ended December 31, 1992 through December 31, 1996.
For the years 1994 through 1996, the historical financial data have been derived
from the TA Subsidiary's audited financial statements included elsewhere in this
Prospectus. The TA historical financial data for the years 1992 and 1993 (the
period prior to the TA Acquisition) have been derived from the unaudited
financial statements of the BP Predecessor Business. In the opinion of the
Company's management, such financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of such data and such financial statements were prepared on a basis
that is consistent with the audited financial statements for the TA Subsidiary
appearing in this Prospectus.
<TABLE>
<CAPTION>
BP PREDECESSOR
BUSINESS(8) THE TA SUBSIDIARY
------------------- ------------------------------
Year Ended December 31,
-----------------------------------------------------
1992 1993 1994 1995 1996
--------- -------- -------- --------- ---------
(Dollars in Thousands)
Revenues:
<S> <C> <C> <C> <C> <C>
Fuel ................. $214,250 $229,972 $206,971 $214,250 $284,378
Nonfuel .............. 169,492 159,718 167,830 172,201 182,488
-------- -------- -------- -------- --------
Total revenues ....... $383,742 $389,690 $374,801 $386,451 $466,866
======== ======== ======== ======== ========
Gross profit (excluding
depreciation)........... $119,269 $129,761 $131,354 $130,452 $143,230
EBITDA (9) .............. 13,049 20,655 25,036 26,040 27,306
Total diesel fuel sold
(thousands of gallons).. 308,709 312,326 295,875 306,255 344,803
Sites at end of period .. 43 44 46 47 48
</TABLE>
The following table sets forth selected historical financial data for the
National Subsidiary for the years ended December 31, 1992 and December 31, 1994
through December 31, 1996, as well as for the period ended April 14, 1993 and
December 31, 1993. For the period from April 15, 1993 through December 31, 1993
and for the years 1994 through 1996 the historical financial data have been
derived from the National Subsidiary's audited financial statements. The
National historical financial data for 1992 and for the period from January 1,
1993 through April 14, 1993 have been derived from the audited financial
statements of the Unocal Predecessor Business.
<TABLE>
<CAPTION>
UNOCAL PREDECESSOR
BUSINESS(8) THE NATIONAL SUBSIDIARY
---------------------- ------------------------------------------
OPERATING OPERATING
PERIOD PERIOD
JANUARY 1, APRIL 15,
1993 1993
YEAR ENDED THROUGH THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, APRIL 14, DECEMBER 31, ------------------------------
1992 1993 1993 1994 1995 1996
----------- --------- ------------ -------- -------- --------
(DOLLARS IN THOUSANDS)
Revenues:
<S> <C> <C> <C> <C> <C> <C>
Fuel .............. $463,670 $128,414 $306,141 $396,748 $376,148 $467,888
Nonfuel ........... 15,941 4,277 31,970 19,882 29,332 56,961
Rent .............. 37,782 11,466 10,175 48,424 47,840 41,762
-------- -------- -------- -------- -------- --------
Total revenues .... $517,393 $144,157 $348,289 $465,054 $453,320 $566,611
======== ======== ======== ======== ======== ========
Gross profit
(excluding
depreciation) . .... $ 70,675 $ 18,675 $ 52,508 $ 73,906 $ 76,497 $ 88,582
EBITDA(9) ............ 31,776 4,353 31,203 44,399 36,259 34,120
Total diesel fuel sold
(thousands of
gallons) .......... 669,179 192,105 446,972 663,777 641,907 622,956
Sites at end of period 141 139 138 130 126 122
</TABLE>
See Notes to Selected Consolidated Financial Data
35
<PAGE>
NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA
(1) For the period from January 1, 1994 to September 30, 1996, the
Company's investment in TA was presented as net assets of subsidiary held
for disposition and TA's results of operations were excluded from the
Company's consolidated results of operations until December 31, 1994 and
subsequently included therein as a single amount in the Company's
consolidated income statement through September 30, 1996. Effective
September 30, 1996, the decision was made to retain TA and, subsequently,
the Company chose to pursue the Combination Plan. Accordingly, at such time
TA was no longer carried as a net asset of subsidiary held for disposition.
At that date, the carrying value of the Company's investment in TA of $44.6
million was allocated to identifiable assets and liabilities and was based
on the estimated current fair values at that date. In addition, the results
of operations and cash flows of TA are included in the consolidated results
of operations and cash flows of the Company from October 1, 1996.
(2) Effective April 14, 1993 and December 10, 1993, the Company acquired
National and TA, respectively. Although the Company was organized in 1992,
business operations did not commence until April 15, 1993, when the
National Acquisition was consummated. Prior to the National Acquisition,
the only activities of the Company were the recruitment of employees and
the negotiation of the National Acquisition. Expenses incurred during the
Company's pre-operating period are immaterial and have been included in
the results for the operating period from April 15, 1993 through December
31, 1993.
(3) "Refinancing, transition and development costs" represent non-recurring
costs, and certain development costs, associated with, among other things,
(i) the Repurchase and related refinancing efforts, (ii) pursuit of
potential acquisitions, (iii) expenses incurred as TA transitioned to a
stand-alone operation apart from BP and (iv) the design of the TA
TravelCenter prototype. Management expects to incur additional
non-recurring transition expenses pursuant to the Combination Plan.
(4) "Other (income) expense, net" primarily represents gains and losses on
sales of property and equipment.
(5) "Working capital" is defined as current assets minus curent liabilities.
(6) For purposes of computing this ratio, earnings consist of income from
operations before income taxes and fixed charges. Fixed charges consist of
interest expense, amortization of debt discount and one-third of rental
expense.
(7) "Mandatorily redeemable preferred stock" is comprised of two series of
convertible preferred stock which accumulate dividends semi-annually at a
compound annual rate of 13.5%. Both series are mandatorily redeemable in
2008 and are held by certain members of the Investor Group.
(8) For the year ended December 31, 1992 and for the period from January 1,
1993 through December 10, 1993 the BP Predecessor Business constituted part
of the business of BP. For the year ended December 31, 1992 and for the
period from January 1, 1993 through April 14, 1993 the Unocal Predecessor
Business constituted part of the business of Unocal. As discussed above,
the Company's management believes the financial statements for the BP
Predecessor Business were prepared on a basis that is consistent with the
audited financial statements for the TA Subsidiary appearing elsewhere in
this Prospectus; however, the financial data for the BP Predecessor
Business may not be comparable to the financial data for the TA Subsidiary
for a number of reasons, including purchase accounting for the TA
Acquisition and the addition of significant interest expense following the
TA Acquisition. The financial data for the Unocal Predecessor Business may
not be comparable to the financial data for the National Subsidiary for a
number of reasons, including the effects of new lease and franchise
agreements that have been entered into between the Company and its
franchisees, purchase accounting for the National Acquisition, the addition
of significant interest expense following the National Acquisition, the
internal transfer price of Fuel purchased from Unocal and the allocation of
selling, general and administrative expenses by Unocal to the Unocal
Predecessor Business.
(9) "EBITDA" is defined herein as income from operations plus the sum of
depreciation; amortization; refinancing, transition and development costs;
and other (income) expense, net and is presented because it is commonly
used by certain investors and analysts to analyze and compare operating
performance, and to determine a company's ability to service and incur
debt. EBITDA should not be considered in isolation from, or a substitute
for, net income, cash flows from operating activities or other
consolidated income or cash flow statement data prepared in accordance
with generally accepted accounting principles or as a measure of
profitability or liquidity.
36
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the audited
financial statements (including the notes thereto) included elsewhere in this
Prospectus. See "Index to Financial Statements."
OVERVIEW
The Company is a holding company which, through its wholly-owned
subsidiaries, the TA Subsidiary and the National Subsidiary, owns, operates and
franchises more travel centers in the United States than any of its competitors
with 168 network sites nationwide, including 135 Company-owned locations. TA
currently operates a network of 48 TravelCenters in 27 states under the
"Truckstops of America" or "TA" brand name and National currently operates a
network of 120 TravelCenters in 36 states under the licensed "Unocal 76" and
related brand names.
The Company was formed in December 1992 to facilitate the National
Acquisition in April 1993. In December 1993, the Company acquired the TA Network
through the TA Subsidiary. In connection with the TA Acquisition, the Investor
Group and certain members of TA's management granted an option to the Company
whereby the Company could repurchase its equity held by such Investor Group and
management members in exchange for consideration consisting of cash and all of
the equity of TA (the "Repurchase"). If the Repurchase had been consummated, the
Company and the National Network would have been owned by the Operator and
Franchisee-Owner stockholders of the Company and certain members of National's
management, and TA would have been owned by the Investor Group and certain
members of TA's management. Accordingly, the Company's consolidated financial
statements for the years 1994 and 1995 and the first nine months of 1996
reflected TA as net assets of subsidiary held for disposition. In addition,
during these periods, ongoing efforts by certain Operator and Franchisee-Owner
shareholders to consummate the Repurchase or a transaction similar thereto
resulted in the incurrence by the Company of certain non-recurring costs and
expenses (including legal and financing costs). During those same periods, each
of TA and National was separately managed and financed. Effective September 30,
1996, the decision was made to retain TA and, subsequently, the Company chose to
pursue the Combination Plan in order to improve its operating results by
combining the Existing Networks. After that date, TA was no longer carried as
net assets of subsidiary held for disposition.
Historically, under the Company's ownership, National operated principally
as a franchisor. As a result, its revenues consisted primarily of wholesale
diesel fuel sales to franchisees, rent from Operators of Leased Sites and
Nonfuel franchise royalty payments. Since early 1995, National has increased its
number of Company-operated sites as certain Operators terminated their franchise
and lease agreements. In contrast, TA operated principally as an owner-operator
of TravelCenters. Consequently, while TA derived the majority of its revenues
from retail diesel fuel sales, its principal strategic focus has been on the
sale of higher margin Nonfuel products and services.
The following table sets forth for each of TA and National the number and
type of ownership and management of the TravelCenters in each of the Existing
Networks.
<TABLE>
<CAPTION>
TA NATIONAL
-------------------- --------------------
AS OF DECEMBER 31, AS OF DECEMBER 31,
-------------------- --------------------
1994 1995 1996 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Company-Owned and Operated Sites.. 38 39 40 1 7 18
Company-Owned and Leased Sites.... -- -- -- 96 89 77
--- --- --- --- --- ---
Company-Owned Sites ........ 38 39 40 97 96 95
Franchisee-Owner Sites ........... 8 8 8 33 30 27
--- --- --- --- --- ---
Total ...................... 46 47 48 130 126 122
=== === === === === ===
</TABLE>
37
<PAGE>
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations presents detail on the Company's combined results as
well as the operating results of the TA Subsidiary and the National Subsidiary.
38
<PAGE>
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
TRAVELCENTERS OF AMERICA, INC.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
THE TA SUBSIDIARY THE NATIONAL SUBSIDIARY
----------------------------------------- -----------------------------------------
1994 1995 1996 1994 1995 1996
----------- ----------- ----------- ----------- ---------- -----------
(DOLLARS IN THOUSANDS)
Revenues:
<S> <C> <C> <C> <C> <C> <C>
Fuel ............................... $ 206,971 $ 214,250 $ 284,378 $ 396,748 $ 376,148 $ 467,888
Nonfuel ............................ 167,830 172,201 182,488 19,882 29,332 56,961
Rent ............................... -- -- -- 48,424 47,840 41,762
----------- ----------- ----------- ----------- ----------- -----------
Total revenues ..................... 374,801 386,451 466,866 465,054 453,320 566,611
Cost of revenues (excluding
depreciation) ...................... 243,447 255,999 323,636 391,148 376,823 478,029
----------- ----------- ----------- ----------- ----------- -----------
Gross profit (excluding depreciation).. 131,354 130,452 143,230 73,906 76,497 88,582
Operating expenses .................... 93,279 92,099 100,085 7,711 9,521 28,688
Selling, general and administrative
expenses ........................... 13,039 12,313 15,839 21,796 30,717 25,774
Refinancing, transition and development
costs .............................. 1,412 1,035 1,303 4,117 831 1,384
Depreciation and amortization ......... 9,950 11,232 12,663 10,398 11,379 14,307
Other (income) expense, net ........... (77) 51 21 (138) 196 1,303
----------- ----------- ----------- ----------- ----------- -----------
Income from operations ................ 13,751 13,722 13,319 30,022 23,853 17,126
Interest (expense), net ............... (7,294) (7,523) (7,381) (13,243) (13,344) (13,446)
----------- ----------- ----------- ----------- ----------- -----------
Income before provision for income
taxes .............................. 6,457 6,199 5,938 16,779 10,509 3,680
Provision for income taxes ............ 2,468 2,445 2,212 6,766 4,236 1,336
----------- ----------- ----------- ----------- ----------- -----------
Net income ............................ $ 3,989 $ 3,754 $ 3,726 $ 10,013 $ 6,273 $ 2,344
=========== =========== =========== =========== =========== ===========
EBITDA ................................ $ 25,036 $ 26,040 $ 27,306 $ 44,399 $ 36,259 $ 34,120
</TABLE>
RESULTS OF OPERATIONS (CONTINUED)
TRAVELCENTERS OF AMERICA, INC.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
<TABLE>
<CAPTION>
THE COMPANY(1)
-----------------------------------------
1994 1995 1996
----------- ----------- -----------
(DOLLARS IN THOUSANDS)
Revenues:
<S> <C> <C> <C>
Fuel ............................... $ 603,719 $ 590,398 $ 752,266
Nonfuel ............................ 187,712 201,533 239,449
Rent ............................... 48,424 47,840 41,762
----------- ----------- -----------
Total revenues ..................... 839,855 839,771 1,033,477
Cost of revenues (excluding
depreciation) ...................... 634,595 632,822 801,665
----------- ----------- -----------
Gross profit (excluding depreciation).. 205,260 206,949 231,812
Operating expenses .................... 100,990 101,620 128,773
Selling, general and administrative
expenses ........................... 35,361 43,198 42,349
Refinancing, transition and development
costs .............................. 5,529 1,866 2,687
Depreciation and amortization ......... 20,348 22,611 26,970
Other (income) expense, net ........... (215) 247 1,324
----------- ----------- -----------
Income from operations ................ 43,247 37,407 29,709
Interest (expense), net ............... (20,537) (20,867) (20,827)
----------- ----------- -----------
Income before provision for income
taxes .............................. 22,710 16,540 8,882
Provision for income taxes ............ 9,029 6,614 3,349
----------- ----------- -----------
Net income ............................ $ 13,681 $ 9,926 $ 5,533
=========== =========== ===========
EBITDA ................................ $ 68,909 $ 62,131 $ 60,690
- ----------------------------
(1) Results shown are historical results as presented under "Summary Supplemental
and Pro Forma Consolidated Financial Data." Such results include expenses of $526,
$168 and $736 in 1994, 1995 and 1996, respectively, not incurred at the TA
Subsidiary or the National Subsidiary level.
</TABLE>
39
<PAGE>
1996 COMPARED TO 1995
REVENUES
Revenues were derived from the sale of Fuel and Nonfuel products and
services and the collection of rent and royalties. The Company's revenues for
1996 were $1,033.5 million compared to $839.8 million for 1995, an increase of
$193.7 million or 23.1%. TA accounted for $80.4 million of this increase, while
National accounted for $113.3 million.
In 1996, TA had revenues of $466.9 million compared to $386.5 million in
1995, an increase of $80.4 million or 20.8%. This increase in revenues consisted
of a $70.1 million increase in Fuel revenues from $214.3 million to $284.4
million, and a $10.3 million increase in Nonfuel revenues, from $172.2 million
to $182.5 million. The increase in Fuel revenues was primarily due to a 38.5
million gallon increase in diesel fuel volume, or 12.6%, and an increase in
diesel fuel prices. Diesel fuel volume increased principally due to increases in
sales to fleets (including increased sales through the Pathway Program (as
defined), see "Business--Sales and Marketing") and the addition of one
TravelCenter in November of 1995 and another in September 1996.
The increase in TA's Nonfuel revenues is principally attributable to: (i)
a $4.7 million, or 8.7%, increase in truck maintenance and repair shop revenues;
(ii) a $2.6 million, or 34.3%, increase in fast food revenues primarily due to
the installation of 14 new fast food kiosks and (iii) a $1.5 million, or 3.5%,
increase in full service restaurant revenues.
In 1996, National had revenues of $566.6 million compared to $453.3
million in 1995, an increase of $113.3 million or 25.0%. This increase in
revenues consisted of a $91.7 million increase in Fuel revenues from $376.2
million to $467.9 million and a $27.6 million increase in Nonfuel revenues, from
$29.3 million to $57.0 million, partially offset by a $6.1 million decrease in
rent from $47.8 million to $41.7 million. The increase in Fuel revenues was
primarily due to an increase in diesel fuel prices partially offset by a
decrease in diesel fuel volume of 18.9 million gallons, or 3.0%. The decrease in
diesel fuel volume was primarily attributable to National's difficulty in
maintaining a coordinated fleet marketing program and a reduction in the total
number of National facilities. The increase in Nonfuel revenues and the decrease
in rent were primarily due to the conversion of 11 formerly Leased Sites to
Company-operated sites as well as the full year impact of six such conversions
which occurred in 1995.
GROSS PROFIT
The Company's gross profit for 1996 was $231.8 million, compared to $206.9
million for 1995, an increase of $24.9 million, or 12.0%. In 1996, TA had gross
profit of $143.2 million, compared to $130.5 million in 1995, an increase of
$12.7 million, or 9.8%. The increase in TA's gross profit was primarily due to
an increase in Nonfuel revenues and an increase in diesel fuel volume as
described above. In 1996, National had gross profit of $88.6 million, compared
to $76.5 million in 1995, an increase of $12.1 million, or 15.8%. The increase
in National's gross profit was primarily due to the increase in Nonfuel revenues
associated with the site conversions described above, which was partially offset
by a decline in rent.
OPERATING AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating expenses include the direct expenses of Company-operated
TravelCenters and selling, general and administrative expenses ("SG&A") include
corporate overhead and administrative costs. The Company's operating expenses
increased from $101.6 million in 1995 to $128.8 million in 1996. The increase in
operating expenses was derived from an $8.0 million increase at TA and a $19.2
million increase at National. The Company's SG&A decreased from $43.2 million in
1995 to $42.3 million in 1996 principally due to a $4.9 million decrease at
National, partially offset by a $3.5 million increase at TA. TA's operating
expense increase was associated with an increase in Nonfuel revenues at existing
TA TravelCenters and the addition of two new TA TravelCenters and of two
stand-alone truck maintenance
40
<PAGE>
and repair shops as part of TABB (as defined). The increase in TA's SG&A was
primarily due to expanded field support and training as well as planning and
development costs. National's operating expense increase was related primarily
to the site conversions described above. The decrease in National's SG&A was
primarily due to a reduction in bad debt expense and reduced levels of financial
assistance to franchisees.
REFINANCING, TRANSITION AND DEVELOPMENT COSTS
Refinancing, transition and development costs increased from $1.9 million
in 1995 to $2.7 million in 1996. In 1996, refinancing costs incurred at National
pursuant to the proposed Repurchase (including legal and financing costs) were
$1.4 million compared to $0.8 million for 1995. In addition, at TA, transition
and development expenses for 1996 were $1.3 million compared to $1.0 million for
1995. In 1996, these costs were incurred in pursuit of a potential acquisition
as well as in connection with TA's expansion plan and the design of the
TravelCenter prototype. In 1995, the costs also included expenses incurred as TA
transitioned to a stand-alone operation.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization for 1996 and 1995 were $27.0 and $22.6
million, respectively, an increase of $4.4 million. The increased level of
depreciation is related to the capital expenditures discussed below.
INCOME FROM OPERATIONS
Income from operations for the Company for 1996 was $29.7 million as
compared to $37.4 million in 1995, a decrease of $7.7 million. Income from
operations for 1996 and 1995 was $17.1 million and $23.9 million, respectively,
for National, while TA's income from operations was $13.3 for 1996 and $13.7 for
1995. The decrease at National is primarily attributable to the conversion of
Leased Sites to Company-operated sites. This decrease resulted in part from
start-up costs incurred upon conversion of the Leased Sites and the lack of a
corporate infrastructure at National to manage Company-operated sites. This
decrease in income from operations at National is also attributable to
distractions associated with the Repurchase. EBITDA decreased from $62.1 million
in 1995 to $60.7 million in 1996.
INTEREST (INCOME) EXPENSE--NET
Interest expense for 1996 was $20.8 million compared to $20.9 million for
the same period in 1995.
1995 COMPARED TO 1994
REVENUES
The Company's revenues for 1995 were $839.8 million which was flat with
1994. TA's revenues increased by $11.7 million, while National's revenues
decreased by $11.7 million.
In 1995, TA had revenues of $386.5 million compared to $374.8 million in
1994, an increase of $11.7 million or 3.1%. This increase in revenues consisted
of a $7.3 million increase in Fuel revenues from $207.0 million to $214.3
million, and a $4.4 million increase in Nonfuel revenues from $167.8 million to
$172.2 million. The increase in Fuel revenues was primarily due to a 10.4
million gallon increase in diesel fuel volume, or 3.5%. Diesel fuel volume
increased principally due to increases in sales to fleets (including increased
sales through the Pathway Program, which began in November 1994).
The TA Nonfuel increase was principally attributable to: (i) a $1.7
million, or 4.2%, increase in travel and convenience store revenues and (ii) a
$1.6 million, or 27.0%, increase in fast food revenues primarily due to the
installation of six new fast food kiosks.
41
<PAGE>
In 1995, National had revenues of $453.3 million compared to $465.0
million in 1994, a decrease of $11.7 million or 2.5%. This decrease in revenues
consisted of a $20.6 million decrease in Fuel revenues from $396.7 million to
$376.1 million, partially offset by a $9.4 million increase in Nonfuel revenues,
from $19.9 million to $29.3 million. The decrease in Fuel revenues was primarily
due to a decrease in diesel fuel volume of 21.1 million gallons, or 3.2%. This
decrease is principally due to causes similar to those described above in the
comparison of 1995 to 1996 results. The increase in Nonfuel revenues was
primarily due to the conversion of six formerly Leased Sites to Company-operated
sites during 1995.
GROSS PROFIT
The Company's gross profit for 1995 was $206.9 million, compared to $205.2
million for 1994, an increase of $1.7 million, or 0.8%. National's gross profit
increased $2.6 million partially offset by TA's gross profit decrease of $0.9
million. In 1995, TA had gross profit of $130.5 million, compared to $131.4
million in 1994, a decrease of $0.9 million, or 0.7%. The decrease in TA's gross
profit was primarily due to a reduction in diesel margins partially offset by an
increase in diesel fuel volume as described above. This decrease was further
offset by an increase in 1995 of higher margin Nonfuel revenues totaling $4.4
million. In 1995, National had gross profit of $76.5 million, compared to $73.9
million in 1994, an increase of $2.6 million, or 3.5%. The increase in
National's gross profit was primarily due to the increase in Nonfuel revenues
associated with the site conversions described above.
OPERATING AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company's operating expenses increased from $101.0 million in 1994 to
$101.6 million in 1995 and its SG&A increased from $35.4 million in 1994 to
$43.2 million in 1995. The increase in operating expense was derived from a $1.8
million increase at National partially offset by a $1.2 million decrease at TA,
and the increase in SG&A was primarily derived from a $8.9 million increase at
National. TA's operating expense decrease was due to cost control programs
implemented in late 1994. These programs included labor scheduling models for
all profit centers, billboard optimization and inventory control programs.
National's increase in operating expense increase was related primarily to the
site conversions described above. The increase in National's SG&A was primarily
due to increases in bad debt expense, financial assistance to franchisees and
litigation costs.
REFINANCING, TRANSITION AND DEVELOPMENT COSTS
Refinancing, transition and development costs decreased from $5.5 million
in 1994 to $1.9 million in 1995. In 1995, refinancing costs incurred at National
pursuant to the proposed Repurchase were $0.8 million compared to $4.1 million
for 1994, when the Company unsuccessfully pursued a public debt offering and
related financings. In addition, at TA, transition and development expenses for
1995 were $1.0 million in 1995 compared to $1.4 million for 1994. In 1995, these
costs were incurred in the development of TA's expansion plan and the design of
the TA TravelCenter prototype as well as expenses incurred to continue the
transition of TA to a stand-alone operation. In 1994, these costs only
represented transition efforts to establish TA as an entity separate from BP.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization costs for 1995 and 1994 were $22.6 and $20.3
million, respectively, a difference of $2.3 million. The increased levels of
depreciation is related to the capital expenditures discussed below.
INCOME FROM OPERATIONS
Income from operations for the Company for 1995 was $37.4 million as
compared to $43.2 million in 1994, a decrease of $5.8 million. Income from
operations for 1995 and 1994 was $23.9 million and $30.0 million, respectively,
for National, while TA's income from operations was essentially flat from 1994
to 1995. The decrease at National is primarily attributable to the increase in
its SG&A, as described above,
42
<PAGE>
partially offset by a reduction in costs incurred in connection with the
proposed Repurchase. EBITDA decreased from $69.0 million in 1994 to $62.1
million in 1995.
INTEREST (INCOME) EXPENSE--NET
Interest expense for 1995 was $20.9 million compared to $20.5 million in
1994.
LIQUIDITY AND CAPITAL RESOURCES
The following discussion of liquidity and capital resources is based upon
the TA Subsidiary and the National Subsidiary as combined for the years 1994,
1995 and 1996 and is based on the individual audited cash flow statements from
the TA Subsidiary and the National Subsidiary contained elsewhere in this
Prospectus.
The Company's cash requirements consist principally of working capital
needs, payments of principal and interest on outstanding indebtedness and
capital expenditures, including expenditures for acquisitions, expansion and
environmental upgrades. See "--Environmental Matters."
Net cash provided by operating activities on a combined basis totaled
$38.8 million in 1996, $27.3 million in 1995 and $32.4 million 1994. The change
in net cash flows provided by operating activities in 1996 compared to 1995 was
due to an increase in accounts payable and depreciation and amortization
partially offset by a decrease in National's results of operations. The
reduction in net cash flows provided by operating activities in 1995 as compared
to 1994 was primarily due to the decline in National's results of operations.
Net cash used in investing activities totaled $28.5 million in 1996, $29.5
million in 1995 and $19.6 million in 1994. The decrease in cash used in
investing activities in 1996 compared to 1995 was due to reduced capital
expenditures. The increase in investing activities in 1995 compared to 1994
reflected increased capital expenditures, largely at National, to improve sites.
Net cash flows used in financing activities totaled $2.1 million in 1996,
$18.1 million in 1995 and $5.5 million in 1994. The decrease in the amount of
cash flows used in financing activities in 1996 from 1995 was due to National's
borrowings of $14.0 million under its existing revolving loan agreement in 1996.
The increase in 1995 from 1994 was due to scheduled increases in long-term debt
payments.
Interest payments on the Notes and the Senior Notes and interest and
principal payments under the Credit Facilities represent significant cash
requirements for the Company. On the Closing Date, following consummation of the
Refinancing, the Company had outstanding approximately $290.5 million of
indebtedness, consisting of $125.0 million principal amount of the Existing
Notes, $85.5 million principal amount of the Senior Notes and the $80.0 million
Term Facility. The Company also has a $40.0 million Revolving Credit Facility,
which is undrawn, other than approximately $1.5 million (out of $20.0 million
available) used for letters of credit. The Senior Notes have no amortization
requirements until 2001 and the Term Facility has annual amortization
requirements of $500,000 until 2004. See "Description of Senior Indebtedness."
The Company expects to invest approximately $200 million in the Network
between 1997 and the end of 2001 (with approximately $110 million of this amount
to be spent by the end of 1998) in connection with the Capital Program to
upgrade, rebrand, reimage and increase the number of the Network's
TravelCenters. Approximately $50 million of the $200 million intended to be
spent represents normal ongoing maintenance and related capital expenditures.
The Company has budgeted expenditures in order to rebrand and reimage sites,
purchase, install and upgrade information systems at certain sites, to make
required environmental improvements and convert certain Leased Sites to
Company-operated sites.
The Company anticipates that it will be able to fund its 1997 working
capital requirements and capital expenditures primarily from funds generated
from the Refinancing, funds generated from operations, and,
43
<PAGE>
to the extent necessary, from borrowings under the Revolving Credit Facility.
The Company's long-term liquidity requirements, including capital expenditures,
are expected to be financed by a combination of internally generated funds,
borrowings and other sources of external financing as needed.
ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to various
Environmental Laws.
The Company owns and uses USTs (as defined) and ASTs (as defined) at
Company-operated locations and Leased Sites which must comply with certain
statutory and regulatory requirements by December 22, 1998. The Company is
making necessary upgrades to comply with those requirements. The Company
incurred capital expenditures, maintenance, remediation and other environmental
related costs of approximately $2.2 million, $4.0 million and $7.2 million in
1994, 1995 and 1996, respectively. The majority of these expenditures were
required to comply with the federally imposed 1998 UST regulations. The Company
expects to spend a total of approximately $15 million to $20 million in 1997 and
1998 to complete the upgrade of USTs and other environmental related costs. The
Company also expects to spend a total of approximately $6 million in 1997 and
1998 for certain one-time projects relating to control of wastewater and
stormwater discharges and other matters. In addition, the Company has estimated
the current ranges of remediation costs at currently active sites and what it
believes will be its ultimate share for such costs after required
indemnification and remediation is performed by Unocal and BP under the
Environmental Agreements and has recorded a reserve of $745,000 for such
matters.
For additional information on environmental matters, see "Risk
Factors--Environmental Liabilities" and "Business--Regulation--Environmental
Regulation."
44
<PAGE>
THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal
(which together constitute the Exchange Offer), to exchange up to $125.0 million
aggregate principal amount of New Notes for a like aggregate principal amount of
Existing Notes properly tendered on or prior to the Expiration Date and not
withdrawn as permitted pursuant to the procedures described below. The Exchange
Offer is being made with respect to all of the Existing Notes. The total
aggregate principal amount of Existing Notes and New Notes will in no event
exceed $125.0 million.
As of the date of this Prospectus, $125.0 million aggregate principal
amount of the Existing Notes was outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about
, 1997, to all holders of Existing Notes known to the Company. The
Company's obligation to accept Existing Notes for exchange pursuant to the
Exchange Offer is subject to certain conditions as set forth under "--Conditions
to the Exchange Offer" below.
PURPOSE OF THE EXCHANGE OFFER
The Existing Notes were issued by the Company on March 27, 1997 in a
transaction exempt from the registration requirements of the Securities Act.
Accordingly, the Existing Notes may not be reoffered, resold, or otherwise
transferred in the United States unless so registered or unless an applicable
exemption from the registration and prospectus delivery requirements of the
Securities Act is available.
In connection with the issuance and sale of the Existing Notes, the
Company and each of the Subsidiary Guarantors entered into an Exchange and
Registration Rights Agreement, dated as of March 27, 1997 (the "Registration
Rights Agreement"), which requires the Company and each of the Subsidiary
Guarantors to use its best efforts to file on or before May 26, 1997 (60 days
after the date of issuance of the Existing Notes) a registration statement
relating to the Exchange Offer (or a shelf registration statement relating to
resales of the Existing Notes) and to cause the registration relating to the
Exchange Offer or the shelf registration statement to become effective on or
before August 9, 1997 (135 days after the date of issuance of the Existing
Notes). The Exchange Offer is being made by the Company and each of the
Subsidiary Guarantors to satisfy its obligations with respect to the
Registration Rights Agreement.
Based on no-action letters issued by the staff of the Commission to third
parties in unrelated transactions, the Company believes that the New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder that is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases Notes from the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement or understanding
with any person to participate in the distribution of such New Notes and are not
participating in, and do not intend to participate in, the distribution of such
New Notes. Any holder of Existing Notes who tenders in the Exchange Offer for
the purpose of participating in a distribution of the New Notes may be deemed to
have received restricted securities and, if so, will be required to comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Thus, any New Notes acquired by
such holders will not be freely transferable except in compliance with the
Securities Act. See "--Consequences of Failure to Exchange; Resale of New
Notes."
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer will expire at 5:00 P.M., New York City time, on [ ],
1997, unless the Company, in its sole discretion, has extended the period of
time for which the Exchange Offer is open
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(such date, as it may be extended, is referred to herein as the "Expiration
Date"). The Expiration Date will be at least 20 business days after the
commencement of the Exchange Offer in accordance with Rule 14e-1(a) under the
Exchange Act. In addition, the Company has agreed in the Registration Rights
Agreement to keep the Exchange Offer open for not less than 30 days after the
date that notice thereof is first mailed to the holders of the Existing Notes.
The Company expressly reserves the right, at any time or from time to time, to
extend the period of time during which the Exchange Offer is open, and thereby
delay acceptance for exchange of any Existing Notes, by giving oral notice
(promptly confirmed in writing) or written notice to the Exchange Agent and by
giving written notice of such extension to the holders thereof or by timely
public announcement communicated, unless otherwise required by applicable law or
regulation, by making a release through the Dow Jones News Service, in each
case, no later than 9:00 A.M. New York City time, on the next business day after
the previously scheduled Expiration Date. During any such extension, all
Existing Notes previously tendered will remain subject to the Exchange Offer
unless properly withdrawn.
In addition, the Company expressly reserves the right to terminate or
amend the Exchange Offer and not to accept for exchange any Existing Notes not
theretofore accepted for exchange upon the occurrence of any of the events
specified below under "--Conditions to the Exchange Offer." If any such
termination or amendment occurs, the Company will notify the Exchange Agent and
will either issue a press release or give oral or written notice to the holders
of the Existing Notes as promptly as practicable.
For purposes of the Exchange Offer, the term "business day" has the
meaning set forth in Rule 14d- 1(c)(6) under the Exchange Act.
PROCEDURES FOR TENDERING EXISTING NOTES
The tender to the Company of Existing Notes by a holder thereof as set
forth below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal.
A holder of Existing Notes may tender the same by (i) properly completing
and signing the Letter of Transmittal or a facsimile thereof (all references in
this Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Existing Notes being tendered and any required
signature guarantees, to the Exchange Agent at its address set forth below on or
prior to the Expiration Date (or complying with the procedure for book-entry
transfer described below) or (ii) complying with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF EXISTING NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO INSURE TIMELY DELIVERY. NO EXISTING NOTES OR LETTERS OF TRANSMITTAL
SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Existing Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the
Existing Notes who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the amount of an Eligible Institution (as defined below). In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantees must be by a firm
which is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. or by a clearing agency, an
insured credit union, a savings association or a commercial bank or trust
company having an office or correspondent in the United States (collectively,
"Eligible Institutions"). If Existing Notes are registered in the name of a
person other than a signer of the Letter of Transmittal, the Existing Notes
surrendered for exchange must be endorsed by, or be
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accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by the Company in its sole discretion, duly
executed by the registered holder with the signature thereon guaranteed by an
Eligible Institution.
The Exchange Agent will make a request within two business days after the
date of receipt of this Prospectus to establish accounts with respect to the
Existing Notes at the book-entry transfer facility, The Depository Trust
Company, for the purpose of facilitating the Exchange Offer, and subject to the
establishment thereof, any financial institution that is a participant in the
book-entry transfer facility's system may make book-entry delivery of Existing
Notes by causing such book-entry transfer facility to transfer such Existing
Notes into the Exchange Agent's account with respect to the Existing Notes in
accordance with the book-entry transfer facility's procedures for such transfer.
Although delivery of Existing Notes may be effected through book-entry transfer
into the Exchange Agent's account at the book-entry transfer facility, an
appropriate Letter of Transmittal with any required signature guarantee and all
other required documents must in each case be transmitted to and received or
confirmed by the Exchange Agent at its address set forth below on or prior to
the Expiration Date, or, if the guaranteed delivery procedures described below
are complied with, within the time period provided under such procedures.
If a holder desires to accept the Exchange Offer and time will not permit
a Letter of Transmittal or Existing Note to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if the Exchange Agent has received at
its address set forth below on or prior to the Expiration Date a letter,
telegram or facsimile transmission from an Eligible Institution setting forth
the name and address of the tendering holder, the names in which the Existing
Notes are registered and, if possible, the certificate numbers of the Existing
Notes to be tendered, and stating that the tender is being made thereby and
guaranteeing that within three business days after the Expiration Date the
Existing Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Existing Notes into the Exchange Agent's account at the
book-entry transfer facility), will be delivered by such Eligible Institution
together with a properly completed and duly executed Letter of Transmittal (and
any other required documents). Unless Existing Notes being tendered by the
above-described method are deposited with the Exchange Agent within the time
period set forth above (accompanied or preceded by a properly completed Letter
of Transmittal and any other required documents), the Company may, at its
option, reject the tender. Copies of a Notice of Guaranteed Delivery which may
be used by Eligible Institutions for the purposes described in this paragraph
are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Existing Notes (or a confirmation of book-entry transfer of
such Existing Notes into the Exchange Agent's account at the book-entry transfer
facility) is received by the Exchange Agent, or (ii) a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided above) from an Eligible Institution is received by the Exchange Agent.
Issuances of New Notes in exchange for Existing Notes tendered pursuant to a
Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to
similar effect (as provided above) by an Eligible Institution will be made only
against deposit of the Letter of Transmittal (and any other required documents)
and the tendered Existing Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Existing Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Existing Notes not properly tendered or to not accept
any particular Existing Notes which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to any particular Existing Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Existing Notes in the Exchange Offer). The interpretation of the terms
and conditions of the Exchange Offer as to any particular Existing Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall
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<PAGE>
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Existing Notes for exchange must be
cured within such reasonable period of time as the Company shall determine.
Neither the Company, the Exchange Agent nor any other person shall be under any
duty to give notification of any defect or irregularity with respect to any
tender of Existing Notes for exchange, nor shall any of them incur any liability
for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Existing Notes, such Existing Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names of the registered holder or holders appear on the
Existing Notes.
If the Letter of Transmittal or any Existing Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of their authority to so
act must be submitted.
By tendering, each holder will represent to the Company in the Letter of
Transmittal that, among other things, the New Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder, that
neither the holder nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes, that
neither the holder nor any such other person is participating in or intends to
participate in the distribution of such New Notes and that neither the holder
nor any such other person is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company.
Each broker-dealer that receives New Notes for its own account in exchange
for Existing Notes, where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution."
WITHDRAWAL RIGHTS
Tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter must
be received by the Exchange Agent prior to the Expiration Date at its address
set forth below. Any such notice of withdrawal must (i) specify the name of the
person having tendered the Existing Notes to be withdrawn (the "Depositor"),
(ii) identify the Existing Notes to be withdrawn (including the certificate
number or numbers and principal amount of such Existing Notes), (iii) be signed
by the holder in the same manner as the original signature on the Letter of
Transmittal by which such Existing Notes were tendered or as otherwise described
above (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee under the Indenture
register the transfer of such Existing Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Existing
Notes are to be registered, if different from that of the depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company in its sole discretion, which
determination will be final and binding on all parties. Any Existing Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Existing Notes which have been tendered for
exchange and which are properly withdrawn will be returned to the holder thereof
without cost to such holder as soon as practicable after such withdrawal.
Properly withdrawn Existing Notes may be retendered by following one of the
procedures described under "--Procedures for Tendering Existing Notes" above at
any time on or prior to the Expiration Date.
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ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will accept, promptly after the Expiration Date, all Existing
Notes properly tendered and will issue the New Notes promptly after acceptance
of the Existing Notes. See "--Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Company shall be deemed to have accepted
properly tendered Existing Notes for exchange when, as and if the Company has
given oral and written notice thereof to the Exchange Agent.
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note.
In all cases, issuance of New Notes for Existing Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Existing Notes or a
timely Book-Entry Confirmation of such Existing Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility, a properly completed and duly
executed Letter of Transmittal and all other required documents. If any tendered
Existing Notes are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Existing Notes are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted or
non-exchanged Existing Notes will be returned without expense to the tendering
holder thereof (or, in the case of Existing Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
non-exchanged Existing Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration of
the Exchange Offer.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Existing Notes and may terminate or amend the Exchange Offer if at any
time before the acceptance of such Existing Notes for exchange or the exchange
of the New Notes for such Existing Notes any of the following events shall
occur:
(i) any injunction, order or decree shall have been issued by any
court or any governmental agency that would prohibit, prevent or otherwise
materially impair the ability of the Company to proceed with the Exchange
Offer; or
(ii) the Exchange Offer shall violate any applicable law or any
applicable interpretation of the staff of the Commission.
The foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of 1939
(the "TIA"). In any such event the Company is required to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange.
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EXCHANGE AGENT
Fleet National Bank has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this Prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
BY OVERNIGHT MAIL OR
BY MAIL: BY HAND: COURIER:
Fleet National Bank Fleet National Bank Fleet National Bank
P.O. Box 1440 One Talcott Plaza One Talcott Plaza
Hartford, CT 06143 5th Floor CTOP06D
Mail Code CT OPT06D Hartford, CT 06103 Hartford, CT 06103
For information, call:
(800) 666-6431 - Ext. 1271
Confirm: (860) 986-1271
Fax: (860) 986-7908
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
Fleet National Bank also acts as Trustee under the Indenture.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith. The cash
expenses to be incurred by the Company in connection with the Exchange Offer
will be paid by the Company.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company.
Neither the delivery of this Prospectus nor any exchange made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the respective dates as of which
information is given herein. The Exchange Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Existing Notes in any
jurisdiction in which the making of the Exchange Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction.
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the
exchange of Existing Notes for New Notes pursuant to the Exchange Offer.
However, holders who instruct the Company to register New Notes in the name of,
or request that Existing Notes not tendered or not accepted in the Exchange
Offer be returned to, a person other than the registered tendering holder will
be responsible for the payment of any applicable transfer tax thereon.
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ACCOUNTING TREATMENT
The New Notes will be recorded at the carrying value of the Existing Notes
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company upon the exchange of New Notes for Existing Notes. Expenses incurred in
connection with the issuance of the New Notes will be amortized over the term of
the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws.
Existing Notes not exchanged pursuant to the Exchange Offer will continue to
remain outstanding in accordance with their terms. In general, the Existing
Notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Existing Notes under the
Securities Act. However, (i) if the Initial Purchaser so requests with respect
to Existing Notes not eligible to be exchanged for New Notes in the Exchange
Offer and held by it following consummation of the Exchange Offer, (ii) if any
holder of Existing Notes is not eligible to participate in the Exchange Offer
or, in the case of any holder of Existing Notes that participates in the
Exchange Offer, does not receive freely tradable New Notes in exchange for
Existing Notes or (iii) if the Exchange Offer is not completed with respect to
tendered Existing Notes on or before September 8, 1997, the Company is obligated
to file a shelf registration statement (a "Shelf Registration Statement") on the
appropriate form under the Securities Act relating to the Existing Notes.
Based on certain no-action letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company believes that New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases Notes from the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement or understanding
with any person to participate in the distribution of such New Notes and are not
participating in, and do not intend to participate in, the distribution of such
New Notes. If any holder has any arrangement or understanding with respect to
the distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such holder (i) could not rely on the applicable interpretations of the staff of
the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. A broker-dealer who holds Existing Notes that were acquired
for its own account as a result of market making or other trading activities may
be deemed to be an "underwriter" within the meaning of the Securities Act and
must, therefore, deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of New Notes. Each such broker-dealer that
receives New Notes for its own account in exchange for Existing Notes, where
such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge in the
Letter of Transmittal that it will deliver a prospectus in connection with any
resale of such New Notes. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement and subject to certain
specified limitations therein, to register or qualify the New Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Existing Notes reasonably requests in writing.
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Participation in the Exchange Offer is voluntary, and holders of Existing
Notes should carefully consider whether to participate. Holders of the Existing
Notes are urged to consult their financial and tax advisors in making their own
decision on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Existing Notes pursuant to the terms of, this Exchange Offer,
the Company and the Subsidiary Guarantors will have fulfilled a covenant
contained in the Registration Rights Agreement. Holders of Existing Notes who do
not tender their Existing Notes in the Exchange Offer will continue to hold such
Existing Notes and will be entitled to all the rights, and limitations
applicable thereto, under the Indenture, except for any such rights under the
Registration Rights Agreement that by their terms terminate or cease to have
further effectiveness as a result of the making of this Exchange Offer. See
"Description of Existing Notes." All untendered Existing Notes will continue to
be subject to the restrictions on transfer set forth in the Indenture. To the
extent that Existing Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered Existing Notes could be adversely affected.
The Company may in the future seek to acquire untendered Existing Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise.
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BUSINESS
COMPANY OVERVIEW
The Company owns, operates and franchises more travel centers in the
United States than any of its competitors, with 168 network sites nationwide,
including 135 Company-owned locations. The Company's TravelCenters are full
service facilities offering a broad range of Fuel and Nonfuel products, services
and amenities to trucking fleets, professional truck drivers and other
motorists. In addition to diesel fuel and gasoline, the TravelCenters provide
truck maintenance and repair services and products, full service and fast food
dining, travel and convenience stores, telecommunications services and various
hospitality and rest-related amenities. This broad range of products and
services distinguishes the TravelCenters from traditional truckstops, which
focus on the sale of diesel fuel, and provides diverse revenue sources for the
Company. For the twelve months ended December 31, 1996, the Company sold 967.8
million gallons of diesel fuel and had pro forma consolidated net revenues and
EBITDA of $1,033.5 million and $63.4 million, respectively.
The Company is the only travel center or truckstop network operator in the
United States able to provide such comprehensive services and facilities to
long-haul truck drivers and fleets on a nationwide basis. The Company's
strategically positioned TravelCenters, which are located at key points on
interstate highways in 36 states, enable trucking fleets and drivers to utilize
the Company's TravelCenters as their supplier of choice for Fuel and Nonfuel
products and services on major trucking routes. The Company's integrated
information systems for billing and truck maintenance and repairs further
enhance operating efficiencies for the Company's large fleet customers and
strengthen these important relationships. Management believes that the Company's
broad range of products and services together with its comprehensive geographic
coverage has enabled the Company to become the largest supplier of diesel fuel
to the three largest and five of the six largest long-haul trucking fleets in
the United States. The Company's position as a leading supplier of diesel fuel
to major trucking fleets positions it to continue to increase its sales of
higher margin Nonfuel products and services to fleets, their drivers and
independent drivers.
The Company owns and operates two separate travel center networks, each of
which has operated for more than 30 years: the TA Network, with 48 sites (40
Company-owned and operated sites and eight Franchisee-Owner Sites), operating
under the Company-owned "Truckstops of America" and "TA" trademarks, and the
National Network, with 120 sites (31 Company-owned and operated sites, 64 Leased
Sites and 25 Franchisee-Owner Sites), operating under the licensed "Unocal 76"
and related trademarks. Historically, under the Company's ownership, each of the
Existing Networks has been separately managed and financed. The Company believes
it has identified a significant opportunity to improve its operating results by
combining the premier locations and long-standing fleet relationships of the
larger National Network with the strong brand image, complementary strategic
locations, established fleet relationships and proven management expertise of
the TA Network within a single Network operating under the well-regarded "TA"
brand.
In connection with the Combination Plan, the Company is pursuing a
business strategy which management believes will increase diesel fuel volume (in
particular with fleets), expand the sale of higher margin Nonfuel products and
services, increase operating efficiency and continue to broaden the Company's
customer base (see "--Business Strategy"). This business strategy is consistent
with the strategy that the TA management team successfully implemented at TA
since 1993. The existing TA management team, which has recently assumed control
of both Existing Networks, will manage the combined Network. From 1993 to 1996,
the TA strategy has resulted in a 10% increase in diesel fuel volume, a 14%
increase in Nonfuel revenues and a 32% increase in EBITDA at TA. In 1996,
Company-owned and operated TA sites had total Nonfuel revenues of $180.1
million, and average Nonfuel revenues and diesel fuel sales per site of $4.6
million and 8.7 million gallons, respectively (in the case of sites not owned
and operated by the Company for all of 1996, such average reflects annualized
results based on actual results during the period of Company operation), while
Company-owned and operated National sites had total Nonfuel revenues of $38.5
million, and average Nonfuel revenues and diesel fuel sales per site of $2.8
million and 5.6 million gallons, respectively (calculated as described above in
the case
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of sites not owned and operated by the Company for all of 1996). Based on its
experience at TA, management believes there are opportunities to improve the
operating performance of the National locations joining the combined Network.
The Company intends to capitalize on these opportunities through the
implementation of its business strategy and the Capital Program described below.
The Company has initiated a capital program to upgrade, rebrand, reimage
and increase the number of the combined Network's TravelCenters. Under this
Capital Program, the Company intends to invest approximately $200 million in the
Network's sites by the end of 2001, with approximately $110 million to be spent
by the end of 1998. In addition, pursuant to the Combination Plan, the Company
expects to rationalize the combined Network by selling 23 Company-owned National
sites (seven of which are Company-operated) and terminating the franchise
relationships with an additional 21 National sites. Since March 24, 1997, the
Company has terminated franchise relationships with respect to two former
National Franchisee-Owner Sites. Upon completion of this rationalization, the
Network is expected to be comprised of 124 TA branded facilities in 36 states
versus 168 TA and National branded facilities in 36 states today. For a
description of the specific components of the Combination Plan and the Capital
Program, see "The Refinancing, the Combination Plan and the Capital Program."
COMPETITIVE ADVANTAGES
The Company believes that the following competitive advantages provide it
with an attractive foundation upon which to implement the Combination Plan and
the Capital Program, further improve its marketing strength and operating
performance and strengthen its position as an industry leader:
O LARGEST FULL SERVICE TRAVEL CENTER NETWORK. Upon completion of the
Combination Plan, the Company will operate the nation's largest and only
nationwide network of full service travel centers with 124 sites in 36 states,
of which 112 will be Company-owned. The Company is the only travel center
network operator that offers truck maintenance and repair services at virtually
every location. In addition, the Company is the only industry participant with a
centralized procurement, warehousing and distribution system. These factors,
among others, have positioned the Company to offer its products and services at
competitive prices throughout the United States, which is particularly
attractive to long-haul trucking fleet customers. The Company believes that the
unique combination of its size and the comprehensive scope of products and
services it offers would be difficult for any competitor to replicate.
O STRATEGIC LOCATIONS. The Company's TravelCenters are located at
convenient intervals and will enable drivers to make stops within the same
network system across the country. Management believes that the strategic
geographic distribution of the Company's TravelCenters enhances the operating
efficiency of its fleet customers and positions the Company to continue to
increase fleet business. Most of the Existing Network properties were purchased
15 to 20 years ago when real estate along the interstate highway system was more
readily available than it is today. Management estimates that the cost of
duplicating the average Network site would be approximately $6 million to $8
million. Management believes that the Company's Network of sites could not be
easily duplicated due to the limited availability of well-situated locations,
increasingly restrictive zoning regulations and significant construction costs.
O STRONG FLEET RELATIONSHIPS. The Company sells more diesel fuel to the
three largest and five of the six largest long-haul trucking fleets than any
other travel center or truckstop operator, primarily due to the size of its
networks and the broad range of services the Company provides to these fleets,
including centralized billing, volume discount pricing, truck and cargo security
and other driver amenities. In addition, the TA Network currently offers an
industry leading 24-hour truck maintenance and repair service and a warranty
program honored system-wide. As part of the Combination Plan, the National
Network truck maintenance, repair and warranty program will be upgraded to the
TA standard. Fleet relationships provide directed diesel fuel volume to the
Company, reducing its dependence on individual customers. Fleet relationships
also increase Nonfuel related revenues as fleet drivers are generally required
by their employers to stop for diesel fuel and truck maintenance and repair
services only at facilities where the fleet maintains an account. The Company
estimates that fleet accounts represented approximately 75% and 60%,
respectively, of the TA Network's and the National Network's total diesel fuel
volume sold in 1996,
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although no single fleet accounted for more than 8% of either TA's or National's
total diesel fuel volume. TA and National together currently have supply
relationships with each of the 25 largest long-haul trucking fleets, and only
one fleet represents one of the ten largest customers of both TA and National.
O DIVERSIFIED REVENUE AND EARNINGS SOURCES. In 1996, TravelCenters owned
and operated by the Company derived 36% of their total revenues and 74% of their
gross profit from their broad array of Nonfuel products and services such as
truck maintenance and repair shops, full service and fast food restaurants,
travel and convenience stores, motels, telecommunications, truck weighing
stations and other services. The relationship between revenues and gross profit
arose because in 1996, the Company-operated TravelCenters earned gross margins
of approximately 57% on Nonfuel revenues compared to approximately 11% on diesel
fuel revenues. This diversity of gross profit sources among various profit
centers distinguishes the Company from pumper-only competitors that rely heavily
on profits generated by diesel fuel sales and often are unable substantially to
expand their Nonfuel offerings due to real estate constraints at their sites or
other factors.
O NATIONALLY RECOGNIZED BRANDS. The TravelCenters feature a variety of
well recognized national brands which attract professional truck drivers,
motorists and other customers who often satisfy both Fuel and Nonfuel needs at
the same stop. The Company's nationally recognized fast food and motel brands
include Burger King, Dunkin' Donuts, Kentucky Fried Chicken, Long John Silver's,
Pizza Hut, Sbarro, Subway, Taco Bell, DayStop, HoJo Inn and Travelodge. The
Company also offers such well recognized gasoline brands as BP, Exxon, Mobil,
Shell and Unocal 76. This portfolio of brands strongly appeals to what market
research indicates are customers' priorities of quality, convenience and
consistency of product offerings, as well as cleanliness and safety.
O STRONG MANAGEMENT TEAM. The Company's senior management team, led by
Edwin P. Kuhn, the President and CEO, has an average of over 21 years of
experience in the travel center, truckstop and related industries. From 1993 to
1996, the TA strategy has resulted in a 10% increase in diesel fuel volume, a
14% increase in Nonfuel revenues and a 32% increase in EBITDA at TA.
BUSINESS STRATEGY
The Company's strategy is to enhance its operating margins and strengthen
its position as a leading owner, operator and franchisor of travel centers in
the United States. In managing the integrated Network, the Company intends to
implement across the larger National Network the same strategy which it
successfully employed at the TA Network. The key components of this strategy
include the following initiatives:
O INCREASE DIESEL FUEL VOLUME. By more competitively pricing its diesel
fuel, TA has increased its diesel fuel volume. By implementing a similar pricing
strategy, the Company believes it can increase diesel fuel volume at National
sites that join the Network. At Company-owned and operated National sites,
management is currently implementing TA's pricing strategy by selectively
reducing posted prices and negotiating fleet business at greater discounts. The
Company intends to offer its franchisees that operate National sites more
competitive wholesale fuel pricing and certain other incentives. Although the
Company cannot establish the prices at which its franchisees sell diesel fuel,
the Company expects these incentives to result in consistently reduced diesel
prices across the Network. The Company also believes that multiple visits to
TravelCenters by drivers initially attracted by competitive diesel fuel pricing
enhances driver loyalty toward the Company's Nonfuel offerings. As part of its
business strategy, the Company plans to extend to all Network locations TA's
"Loyal Fueler" program, which is similar to airline frequent flyer programs and
which encourages drivers to select the Company's TravelCenters for their Fuel
and Nonfuel stops. The increase in customer traffic associated with Fuel patrons
provides the Company with an additional opportunity to sell higher margin
Nonfuel products and services.
O EXPAND NONFUEL PRODUCTS AND SERVICES. The Company intends to expand its
offering of higher margin Nonfuel products and services in order to maximize the
Nonfuel revenue captured from each customer stop at a Network TravelCenter. In
addition to its existing broad range of Nonfuel products and
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services, the Capital Program will allow the Company to add additional fast food
kiosks and food courts, expand and reformat travel and convenience stores,
improve truck maintenance and repair shops at National sites which join the
Network and construct new stand-alone truck maintenance and repair shops at
selected locations.
O INCREASE OPERATING EFFICIENCY. The Company has established a cost
reduction program at TA through which TA is realizing decreased labor costs by
investing in systems such as fuel island automation and by reducing overtime
expenses through improved labor scheduling. TA has also created operating
efficiencies by utilizing centralized purchasing and distribution. The current
management team reduced operating expenses as a percentage of Nonfuel revenues
for TA from 59% in 1993 to 54% in 1996, representing annual savings of
approximately $9 million based on TA's 1996 Nonfuel revenues. Management expects
to realize further operating efficiencies by implementing these initiatives at
the Company-operated National sites joining the Network and to achieve corporate
overhead savings by consolidating National's headquarters (historically located
in Tennessee) into TA's Westlake, Ohio headquarters. The Company expects to
realize corporate overhead savings, before one-time transition charges, of up to
$3.0 million in 1997, increasing to up to $6.0 million by 1999.
O BROADEN CUSTOMER BASE. The Company is in the process of expanding its
offering of nationally recognized, branded products and reimaging and upgrading
its sites (primarily National sites joining the Network) in order to attract
additional non-trucking customers, such as interstate motorists, recreational
vehicle travelers, long distance bus operators and their passengers and local
residents. The Company's market research indicates that these customers' primary
priorities are quality, convenience and consistency of product offerings as well
as cleanliness and safety, rather than price. By prominently featuring
nationally recognized brands which convey these qualities, the Company expects
to improve its appeal to these relatively price insensitive customers.
THE INDUSTRY
The United States travel center and truckstop industry is fragmented and
the ability of industry participants to add new sites is hindered by the limited
availability of suitable locations along or near interstate highways and the
substantial capital costs associated with constructing new full service
facilities (approximately $6 million to $10 million per site). In the United
States, there are generally two types of facilities designed to service the
trucking industry: pumper-only truckstops, which provide fuel, typically at
discounted prices, with limited additional services, and full service travel
centers, such as those in the Company's networks, which have a diversity of
revenue sources derived from a broad range of product and service offerings to
fleet and independent truck drivers and nontruck traffic, including Fuel
products, fast food and casual dining restaurants, hotel accommodations, truck
maintenance and repair products and services, truck weighing scales, electronic
data networks which enable fleets to monitor the location of their vehicles, to
communicate messages to drivers and to control their drivers' fuel purchase and
maintenance and repair decisions, telecommunication services, banking services,
drivers' lounges, arcades, specialized travel and convenience stores, barber
shops, laundry facilities, showers, truck washes and secure parking areas.
Company research indicates that in general only one of every three stops a truck
driver makes on a long distance route is for fuel. By offering a wide variety of
Nonfuel products and services, a full service network operator such as the
Company positions itself to capture the maximum revenue possible at both fueling
and nonfueling stops. Based on industry data, the Company believes that there
are approximately 2,500 travel centers and truckstops nationwide, of which
approximately 500 are full service travel centers. Only ten travel center or
truckstop chains in the United States have 25 or more locations, which the
Company believes is the approximate minimum number required to provide regional
coverage. Only six of these chains (including TA and National) currently operate
25 or more full service travel centers. The Company is the only travel center
network operator offering full service on a nationwide basis.
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According to the National Association of Truck Stop Operators, travel
centers and truckstops generated revenues of approximately $30 billion in 1996
in the following categories:
Fuel sales......................................... 62%
Restaurants........................................ 9%
Retail operations.................................. 7%
Other(1)........................................... 22%
----
Total................................................ 100%
=====
- -----------
(1) Includes truck maintenance and repair products and services, truck
weighing scales, amusements, telecommunications, showers, laundry
and other hospitality services.
The industry's principal customers, accounting for the majority of
diesel fuel volume, are long-haul trucking companies. Most long-haul truck
drivers make trips of several days' duration and have access to a limited number
of self-fueling terminals. For this reason, most long-haul trucking companies
purchase a majority of their diesel fuel at travel centers and truckstops, as
opposed to trucking company-owned terminals.
Over the last 20 years, trucks have increasingly become preferred over
rail by shippers as a method of transporting goods long and short distances. As
a result, according to the United States Department of Transportation (the
"DOT"), there was a relatively steady increase in the demand for highway diesel
fuel from 1970 to 1996. Even during economic recessions, demand for diesel fuel
has remained flat or decreased relatively insignificantly. Although the fuel
efficiency for trucks has improved and continues to improve, the continuing
growth of the trucking industry has heretofore helped to mitigate the negative
effects fuel efficiency would otherwise have had on diesel fuel demand. Demand
for diesel fuel is also relatively stable throughout the year, with slight
decreases typically in February and slight increases typically in October.
Since the deregulation of the trucking industry in 1980, the long-haul
trucking industry has become increasingly dominated by large, relatively more
efficient trucking fleets. Corporate relationships between fleets and full
service travel center networks like TA and National provide various benefits to
fleets, including consolidated billing, truck maintenance and repair warranties
honored on a network-wide basis, the ability to monitor repair and billing
information for its individual trucks and drivers and the provision of food,
accommodations, telecommunications and various amenities to fleet drivers.
Fleets also prefer to maintain relationships with travel center and truckstop
chains in order to consolidate fuel purchases and therefore to negotiate lower
fuel prices. Generally, in exchange for minimum monthly volume purchases, fleets
negotiate to purchase diesel fuel at prices discounted from the street prices
from travel center and truckstop chains. As a consequence, while the Company
projects that diesel fuel volume will grow as fleet volume increases, the
Company also anticipates an associated decrease in diesel fuel gross margins on
a per gallon basis. However, the increase in customer traffic from fleet drivers
associated with additional fuel volume provides the Company with an opportunity
to increase its higher-margin Nonfuel revenues. In 1996, 75% of the average
Company-owned TA site's gross profit was generated from Nonfuel sales.
Deregulation in the trucking industry (which has imposed price pressure
on trucking fleets), the growth of fleet bargaining power and a general decline
in oil prices has created an environment of generally declining fuel margins
over the course of the last ten years and has led the Company and its
competitors generally to adopt one of two strategies to continue to improve
profitability. The pumper-only truckstop chains have discounted the price of
diesel fuel in order to increase volume. However, pumper-only competition has
had the effect of further decreasing gross margins on fuel, and pumper-only
chains are very dependent on diesel driven profits. The Company and other full
service travel center and truckstop operators (and certain chains offering a mix
of pumper-only and full service facilities) have identified a different
opportunity in the generally lower diesel fuel margin environment. By offering
full service, the Company attracts customers by addressing the equipment
maintenance and individual driver needs of trucking fleets, as well as those of
independent drivers. Offering full service also gives the Company
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diverse and higher-margin revenue sources, making the Company less dependent on,
and less sensitive to, diesel fuel price fluctuations than pumper-only chains.
As a result, the Company is able to offer to fleets diesel fuel prices (after
giving effect to negotiated discounts) that are competitive with, and post
street diesel fuel prices that are typically only slightly higher than,
pumper-only truckstops.
Trucking fleets are also affected by an industry-wide shortage of
drivers and a driver turnover rate that the Company believes averages in excess
of 100% per year. The driver shortage is due in part to increased trucking
activity and a federally mandated maximum daily driving time of ten hours. High
driver turnover rates are due in part to high fatigue levels, difficult working
conditions and long absences from home and family. Driver turnover represents a
significant expense, costing fleets $3,000 to $5,000 to recruit and train a
driver. In an effort to ameliorate some of the difficult conditions faced by
drivers, fleet operators often design routes so that their drivers may stop at
full service facilities as often as possible while making long-haul deliveries.
In response to the mandated daily driving hour maximum, fleets are increasingly
assigning two drivers to travel as a team in order to increase utilization of
the fleet, and reduce shipping times. The trend towards team driving favors full
service travel centers because a truck stopping at a travel center has two
potential Nonfuel consumers, as opposed to one in the case of a single driver.
Generally, travel center and truckstop operators attempt to have at
least one location in every 200 to 300 mile interval of any route. However,
because interstate travel patterns vary, the geographic distribution of service
areas varies by region. In the Western United States, where there are fewer
origin and destination points, the need for service areas is reduced as the
various hauls become coordinated into one major flow. In the upper Midwestern,
Northeastern and Southeastern United States, there are more origin and
destination points and, therefore, travel center and truckstop operators require
a greater number of locations to maximize their ability to compete effectively.
In contrast, the need for a great number of geographically distributed sites is
diminished on routes to and from the West Coast due to fewer origin and
destination points, resulting in concentrations of competition along these
routes. The Company has more locations than any other travel center or truckstop
chain and because its locations are distributed nationally, the Company is the
industry participant best positioned to capture driver and fleet expenditures
when a driver stops on transcontinental and other long-haul trips.
TRAVELCENTERS
The Company's TravelCenters are designed to appeal to drivers seeking
either a quick stop or a more extended visit. The typical professional driver
patronizes a TravelCenter to seek not only diesel fuel but also food, truck
maintenance and repair services and products, supplies, business and
telecommunications services, restrooms, showers and laundry and sleeping and
parking facilities. Motorists and recreational vehicle and long distance bus
passengers typically stop at TravelCenters to purchase gasoline, food or
convenience store items or to use the telephones, motels or restrooms. (The
descriptions and related data set forth under the heading "TravelCenters" (i)
for TA TravelCenters refer to the TA TravelCenters prior to any rebranding of
National TravelCenters under the "TA" brand that has occurred since March 24,
1997 and (ii) for National TravelCenters refer to the National TravelCenters
prior to such rebranding and prior to the terminations of National franchises
that have occurred since March 24, 1997.)
Each of the TA and National TravelCenters is a full service facility
located on or near an interstate highway and identified with TA or Unocal 76
signage. As part of the Combination Plan, the National TravelCenters joining the
Network are being rebranded under the TA trademark. All Fuel and Nonfuel
products and services are generally available 24 hours per day and 365 days per
year. The typical TA TravelCenter, which is the model for the Network, on
average has 106 employees.
PROPERTY. The layout of the Company-owned TravelCenters generally vary
from site to site. The TA facilities are located on properties averaging 27
acres, of which an average of approximately 19 acres are developed. The majority
of the developed acres contain the main building, housing one or more
restaurants, a travel and convenience store and driver amenities, a truck
maintenance and repair shop, separate truck and car fuel islands, separate truck
and car paved parking and, in some cases, motels. The remaining developed acres
contain landscaping and access roads. On average, TA's Company-owned sites
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have 185 truck and 44 car parking spaces. The typical TA site has four 20,000
gallon underground storage tanks for diesel fuel and three such 10,000 gallon
tanks for gasoline. The National facilities are located on properties averaging
20 acres and have layouts which are similar to TA properties. The typical
National TravelCenter has three 20,000 gallon underground storage tanks for
diesel fuel, two gasoline tanks ranging in size from 10,000 to 20,000 gallons
and an average of 140 truck and 65 car parking spaces. The Company believes that
the National sites that have been selected by the Company to be rebranded,
reimaged and upgraded as part of the Capital Program have sufficient acreage
available to implement all the features of the typical TA TravelCenter which are
described below.
SECURITY AND SAFETY. The security of a travel center is important to
fleets and owner-operators of trucks both with regard to protection against
theft of the truck, the trailer and its cargo and with regard to the safety of
the driver. Tractors and trailers represent significant investments for fleets
and owner-operators, costing approximately $100,000 to $150,000 (excluding the
cargo value). Individual and vehicle safety and security are also important to
the Company's non-trucking customers. Accordingly, the typical TravelCenter has
well-lit parking, fuel island and indoor areas. In addition, in response to
customer concerns, Company facilities located in areas where security is of
particular importance (typically in or near urban population centers) generally
have fenced parking areas (for which the TravelCenter charges a fee to
nonfueling trucking customers) and sometimes dedicated security personnel
patrolling indoor and outdoor areas.
FUEL ISLANDS. Both TA and National sites have diesel fuel islands that
accommodate ten pumps on average, most of which are dual fill pumps that can
fill each of a typical truck's two tanks simultaneously. In addition,
TravelCenters generally have a gasoline island which can accommodate four to
eight automobiles simultaneously. Certain locations also have one and sometimes
two additional convenience stores located at the fuel islands. For the
convenience of truck drivers who need to refill rapidly and resume their
driving, the diesel pumps are easily accessible from the highway and are
separated from the gasoline pumps and other services. The average truck
refueling takes from 10 to 20 minutes and requires 100 gallons of diesel fuel.
Both TA and National sites feature nationally recognized brands of gasoline,
including BP, Exxon, Mobil, Shell and Unocal 76.
In 1996, TA entered into an agreement with Comdata Corporation
("Comdata") to, among other things, introduce Smart Fuel(R), currently the most
advanced system of card reader diesel pumps and billing technology in the travel
center and truckstop industry. The Smart Fuel(R) system is similar to the pumps
now available at many gasoline stations where customers can purchase gasoline
directly at the pump with a credit or debit card. In connection with this
agreement, TA invested approximately $2.6 million to install Smart Fuel(R) at TA
Network facilities in 1996. The system is expected to be fully operational
across the TA Network during the second quarter of 1997 and will provide TA the
following advantages: (i) elimination of approximately one or two employees per
site (an expected annual savings of approximately $1 million at TA's 40
Company-operated sites), (ii) enhancement of fleet operators, ability to receive
fuel consumption data and to control their drivers' fuel purchase decisions and
(iii) reduction of refueling waiting periods for drivers, allowing the Company
to service an increased number of trucks by maximizing fuel pump availability.
The Company intends to implement a promotional program based on the speed of the
fueling transaction. The Capital Program provides for the installation of the
Smart Fuel(R) system at all of the National TravelCenters joining the Network.
TRUCK MAINTENANCE AND REPAIR SHOP. Virtually all TravelCenters have
truck maintenance and repair shops nearly all of which operate 24 hours per day
and 365 days per year. The Company believes that TA is regarded as the industry
leader in providing truck maintenance and repair services. TA truck repair shops
typically feature one or more independently certified mechanics per shift. In
addition, TA has established uniform truck maintenance and repair procedures
which are reinforced by computerized monitoring systems to enhance the ability
of its mechanics to deliver consistency and quality over the entire TA Network.
The typical TravelCenter repair shop has between two and four service
bays, a parts storage room and fully trained mechanics on duty at all times.
These shops offer extensive maintenance and emergency repair and road services,
from basic services such as oil changes and tire repair to specialty services
such
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as diagnostics and repair of air conditioning, air brake and electrical systems.
Repair services performed at TA sites are backed by a warranty honored at all
other TA sites, a benefit that is particularly attractive to long-haul fleet and
independent operators. The Combination Plan is expected to further enhance the
value of this benefit by extending the TA truck maintenance and repair warranty
program to all former National locations joining the Network. As a result, the
Network will offer the only nationally accepted truck maintenance and repair
warranty program in the travel center and truckstop industry.
The TA truck maintenance and repair shops offer an advanced computer
system service which tracks customer maintenance and repair records by truck
serial number. The system enhances the ability of TA mechanics to repair the
individual trucks they service by allowing them to access individual truck
repair and maintenance histories on-line. This system is particularly attractive
to fleet operators because it provides them with consolidated fleet repair and
maintenance data on an as requested basis. As part of the Network Franchise
Agreement, the Company plans to require installation of the truck maintenance
and repair shop computer system at all National TravelCenters joining the
Network.
The Company believes that implementing the TA truck repair shop program
at the National TravelCenters as part of the Combination Plan will increase
Company profitability. In 1996, Company-operated TA truck maintenance and repair
shops collected total revenues of $58.3 million, and average revenues per site
of $1.5 million (in the case of sites not owned and operated by the Company for
all of 1996, such average reflects annualized results based on actual results
during the period of Company operation), as compared to total revenues of $10.7
million for Company-operated National shops and average revenues per site of
$0.7 million (calculated as described above in the case of sites not owned and
operated by the Company for all of 1996). The average annual shop revenue for
the five full service TA Franchisee-Owner Sites which joined the TA Network
since 1991 increased by 86% within one year after joining the TA Network by
implementing the TA truck maintenance and repair program. In addition to
expanding the TA shop program across the National Network sites, TA has also
initiated a program to operate "TA" branded shops on the premises of Burns
Brothers (as defined) travel centers. See "--Joint Venture."
CAT BRANDED WEIGH STATIONS. Nearly all TA sites include a nationally
recognized CAT Scale ("CAT") branded weigh station to allow truck drivers to
monitor their compliance with governmental regulations regarding maximum weight
limits. CAT's weigh stations set the industry standard, due in part to their
accuracy and their associated guarantee. As part of the Combination Plan, the
Company intends to replace existing weigh stations with CAT branded weigh
stations at many of the National facilities joining the Network.
MAIN BUILDING. The main building at each TravelCenter contains a full
service and, in many instances, a fast food restaurant, the travel and
convenience store, a fuel desk, driver amenity areas, including a lounge,
television room, private showers and laundry, as well as office space and
training rooms for the employees of the TravelCenter. In early 1994, the Company
began to install ATM machines at most sites. As of December 31, 1996, all TA and
National locations had installed ATMs. As part of the Capital Program, the
Company has allocated funds to expand the main building floor space for a
majority of the National Network sites selected to join the Network in order to
create adequate space within the main building to implement the Company's fast
food program or to increase the size of the TravelCenters' store or gaming and
vending areas.
FULL SERVICE AND FAST FOOD RESTAURANTS. All TA and National
TravelCenters have full service restaurants that offer seating for an average of
approximately 130 and 155 customers, respectively. The restaurants offer a wide
variety of "home style" meals through menu table service, buffets and take out
service. For the convenience of the truck drivers, most restaurants have private
"truck driver only" dining areas that offer pay phones at each table. The TA
Network has associated its full service restaurants with the Company-owned
"Country Pride" brand name in order to foster brand loyalty among its restaurant
patrons. As part of the Combination Plan and Capital Program, most of the
National locations joining the Network are also expected to rebrand their full
service restaurant under the "Country Pride" name.
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The Company has also promoted the installation of nationally branded
fast food restaurants such as Burger King, Dunkin' Donuts, Kentucky Fried
Chicken, Long John Silver's, Pizza Hut, Sbarro, Subway and Taco Bell, at its
TravelCenters. The Company believes that the addition of fast food kiosks or
food courts enhances the Company's opportunity to obtain additional high margin
revenues. The Company generally attempts to locate fast food offerings within
the main truckstop building (as opposed to constructing stand-alone buildings).
Management believes that fast food offerings do not significantly reduce
revenues at a TravelCenter's existing full service restaurant, but offer an
alternative that is popular with truck drivers, motorists and bus passengers. As
of December 31, 1996, 24 of the 40 Company-owned TA sites offered at least one
nationally branded fast food offering, while 17 of the 72 Company-owned National
sites that are expected to be included in the Network had such an offering. The
Capital Program contemplates installation of fast food kiosks such that the
Company will have at least one fast food offering at each Company-owned Network
site by 2001.
TRAVEL AND CONVENIENCE STORE. Each TravelCenter has a travel and
convenience store that caters to truck drivers, motorists, recreational vehicle
and bus customers. The travel and convenience stores sell food and snack items,
beverages, non-prescription drug and beauty aids, batteries, automobile
accessories, music and audio products. In addition to complete convenience store
offerings, the travel and convenience stores also sell items specifically
designed for the truck driver's on-the-road lifestyle, including laundry
supplies and clothing as well as truck accessories. The TA travel and
convenience stores' product offering is based on a uniform planogram, which the
Company believes increased TA's Company-owned TravelCenter travel and
convenience store merchandise same store revenues by 18% following its roll-out
from 1992 to 1994. The typical TA store averages approximately 1,800 square
feet, while the typical National store averages approximately 1,600 square feet.
The Capital Program includes funds to expand store size for a majority of
National sites joining the Network. In addition, the Company plans to redesign
these expanded National stores based on the TA planogram. Certain TravelCenters
also have one and sometimes two additional convenience stores located at the
Fuel islands.
The TA travel and convenience stores have been able to offer
competitive pricing while maintaining what management believes are higher
margins than most of the Company's competition through the purchasing power of
TA's dedicated distribution and warehouse center located in Nashville, Tennessee
(the "Distribution Center"). The Company believes that the centralized
purchasing power of the Distribution Center generates cost savings, relative to
most truckstop operations, in excess of 10% for its travel and convenience store
operations. The Capital Program allocates funds to expand Distribution Center
operations in order to service the National sites joining the Network. See
"--Distribution."
MOTELS. Thirteen of TA's TravelCenters currently have Company-owned
motels, with an average capacity of 35 rooms. Eleven of these motels are
operated under franchise grants from nationally branded motel chains, including
DayStop, HoJo Inn and Travelodge. The remaining two motels are TA branded
motels. In 1996, TA's motels had an average annual occupancy rate of
approximately 56%. TA currently remits royalty and advertising fees to its motel
franchisors at rates ranging from 3% to 8% of gross revenues.
None of the National Network sites that are expected to join the
Network have motels on the property, but certain National Operators operate
motels on adjacent parcels. Management believes that an opportunity exists to
lease or sell unused property at certain Company locations to motel developers
to enhance the offerings at such sites.
ADDITIONAL SERVICES. Each TA and National TravelCenter provides
professional drivers with access to specialized business services, including an
information center where drivers can send and receive faxes, overnight mail and
other communications, and a banking desk where drivers can cash checks and
receive fund transfers from fleet operators. Most TA and National sites have
installed telephone rooms with 20 to 25 pay telephones with AT&T long distance
service. To meet the personal needs of truck drivers, the typical TravelCenter
has designated "truck driver only" areas, including a television room with a VCR
and comfortable seating for drivers, a barber shop, a laundry area with washers
and dryers, 6 to 12 private showers and dressing rooms. These amenities will be
improved and upgraded at National locations joining
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the Network, and where needed at TA sites, as part of the Capital Program.
Company-owned TravelCenters located in Louisiana and Nevada also feature gaming
operations. Although the primary customers for gaming activities are local area
residents, these operations also cater to truck drivers and motorists.
HISTORY
The Company was formed in 1992 by the Investor Group led by Clipper, as
well as certain then prospective National Operators and Franchisee-Owners. The
Company acquired National in April 1993 and TA in December 1993. The Company is
a holding company whose sole assets consist of the stock of its subsidiaries.
TA, together with its predecessors, has been providing quality products
and services to the trucking industry and to nonprofessional travelers for over
30 years. The Standard Oil Company of Ohio ("Sohio") acquired TA from Ryder
System, Inc. ("Ryder") in 1984. Ryder founded the TA Network in 1973. The
Company acquired the assets of TA from BP (Sohio's successor in interest) for a
purchase price (including working capital) of approximately $130 million which
included 38 owned and six franchised locations. Since 1993, TA has added two
Company-operated sites and three franchised sites, terminated one franchised
site and entered into the TABB joint venture with Burns Brothers described below
(see "--Joint Venture"). As part of the TA Acquisition, BP agreed to indemnify
the Company against certain environmental liabilities with respect to which
claims are made prior to December 11, 2004 or December 11, 1996 (the relevant
date depending upon the nature of the underlying claim) (see
"--Regulation--Environmental Regulation"), entered into a noncompete agreement
for a seven-year period commencing on December 10, 1993 and granted the Company
the right, title and interest in and to certain copyrights, trademarks, service
marks and other intellectual property, including, "Truckstops of America," "TA"
and "Country Pride." See "--Agreements with Unocal and BP."
National has been providing quality products and services for over 35
years and has been the largest chain of full service travel centers or
truckstops, based on number of locations in the United States. Pure Oil Company
("Pure") founded the National Network and Unocal acquired National in connection
with Unocal's merger with Pure in 1965. In April 1993, the Company acquired the
National Network from Unocal in a series of asset purchase transactions for an
aggregate purchase price (including working capital) of approximately $210
million. The assets then acquired included a total of 139 facilities, of which
95 were Leased Sites, 42 were Franchisee-Owner Sites and two were Company-owned
and operated sites. Included in such purchase was the acquisition of six Leased
Sites located in California (the "California Properties") pursuant to separate
agreements. Prior to the National Acquisition, certain of the Operators of the
California Properties brought suit to challenge the sale of their respective
truckstops to the Company. See "--Litigation." As part of the National
Acquisition, Unocal agreed to indemnify the Company against certain
environmental liabilities occurring prior to 1993 (see
"--Regulation--Environmental Regulation"), entered into a non-compete agreement
for a ten-year period terminating on April 13, 2003, granted the Company a
license to use certain Unocal trademarks, and granted the Company a royalty-free
license to use the ACCESS 76 on-line information retrieval and credit card
system. See "--Agreements with Unocal and BP."
SALES AND MARKETING
The Existing Networks derive a significant percentage of their revenues
as a result of the sale of diesel fuel and Nonfuel products and services to
long-haul trucking fleets, and the Company is committed to providing the
products and services that fleets and their drivers demand. In 1996,
approximately 75% and 60% of the TA and National Networks' diesel fuel volumes,
respectively, were sold to fleets. TA and National together currently have
supply relationships with each of the 25 largest long-haul trucking fleets and
only one fleet represents one of the ten largest customers of both TA and
National. In 1996, the Company sold more diesel fuel to the three largest and
five of the six largest long-haul trucking fleets than any other chain of travel
centers or truckstops.
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The agreements with fleet customers are not exclusive arrangements and
unilaterally permit the customer to terminate the agreements. The Company does
not believe that it is dependent on any individual fleet or group of fleets. In
1996, TA's two largest fleets represented approximately 8% and approximately 6%,
respectively, of TA's total diesel fuel volume and National's largest fleet
represented approximately 7% of National's total diesel fuel volume. The Company
manages its fleet relationships through a force of approximately 15 regionally
located salespersons.
Due to an environment of relatively volatile fuel prices over the past
approximately two years, trucking fleets have been increasingly interested in
participating in fuel price hedging programs. TA, in conjunction with Simons
Petroleum, Inc. ("Simons"), offers an industry leading diesel fuel hedging
program (the "Pathway Program") to fleets for hedging fuel prices at the pump.
Simons contracts with fleets to permit them to hedge prices and TA facilitates
the distribution of that diesel fuel through its TravelCenters. TA receives a
fixed margin per gallon on the sale of diesel fuel to fleets participating in
the Pathway Program, but does not assume any hedging risk associated with the
underlying transactions. Diesel fuel sold in such transactions has increased 77%
from 24.4 million gallons in 1995 to 43.3 million gallons in 1996 and
represented approximately 13% of TA's total 1996 diesel fuel volume. The Company
intends to extend this program to certain National locations that join the
Network in connection with the Combination Plan.
The Company believes that trucking fleets value price, geographic
coverage, convenience and service in establishing travel center or truckstop
network relationships. The Company offers discounts on fleet diesel fuel
purchases in exchange for minimum monthly volume commitments. Fleet accounts are
also attracted to the Company's TravelCenters by the number of Company sites and
their prime locations on or near key interchanges and other high traffic areas
on the interstate highways. By providing nationwide coverage along long-haul
routes, the Company enables fleets to minimize the number of different
relationships they have with travel center and truckstop operators, allowing
them to consolidate billing and truck maintenance and repair services. The
Company also markets itself to fleets by offering advanced information systems,
which enhance the ability of fleets to monitor and control their operations and
drivers. The Company's TravelCenters are connected to data systems that permit
fleets to track and control drivers' fuel purchases and truck maintenance and
repair decisions, monitor truck locations to determine whether drivers are
adhering to preassigned routes, track vehicle mileage and repair histories for
preventative maintenance and retrieve data for fuel tax reporting purposes. In
addition, the Company provides fleets with communication services that allow
fleet managers to maintain contact with their drivers and banking services that
allow fleets to provide cash advances to them. The Company also offers fleets
driver comforts and amenities, which help to increase driver morale and reduce
the high cost to fleets of driver turnover caused by difficult working
conditions. See "--The Industry." These driver amenities include "trucker-only"
dining areas, lounges, showers, laundries and barbershops. In effect, by having
an account with the Network, a fleet can outsource its ancillary needs which,
the Company believes, is more cost effective for the fleet than developing its
own network of truck and driver service terminals.
The Company also markets itself to independent truck owners and
operators. During 1996, independents accounted for approximately 25% and 40% of
the diesel fuel sold by the TA Network and the National Network, respectively.
Independents are attracted to the Company by (i) the location of its
TravelCenters, (ii) the availability of both full service and fast food
restaurants, (iii) the excellent driver amenities, (iv) the travel and
convenience store, which sells products specially tailored for a truck driver's
"on-the-road" lifestyle, (v) the on-site motel at certain facilities, which is
more attractive to truck drivers than other lodging options because it includes
secure truck parking facilities and (vi) the Company's, and in particular TA's,
highly regarded truck maintenance and repair services. The Company markets its
TravelCenters to independents through its "Loyal Fueler" program (similar to
airlines' frequent flyer programs), which allocates points redeemable on nearly
all Nonfuel purchases at TravelCenter stores, truck maintenance and repair shops
and restaurants based on diesel fuel gallons purchased. The Company also
sponsors trucking industry events.
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The Company also targets non-professional travelers. These travelers
include motorists, bus passengers, owners of recreational vehicles and local
area residents. The Company's market research indicates that these travelers are
primarily concerned with quality, convenience, consistency as well as safety and
cleanliness, rather than price. Nonprofessional travelers are attracted to the
Company by (i) the proximity of its TravelCenters to interstate highways, (ii)
the nationally branded gasoline and fast food offerings, (iii) clean restroom
facilities, (iv) phone services, (v) the TravelCenter store and (vi) in certain
locations, motels. The Company expects the Combination Plan and Capital Program
to strengthen the Company's marketing efforts with non-trucking traffic by
adding more high recognition fast food outlets and gasoline brands and by
reimaging the owned National sites (and where needed, owned TA sites) to make
them cleaner, better lit and generally more appealing.
The Company has established an advertising, marketing and promotion
fund for each of its Existing Networks. Franchised sites are required to
contribute to the Company's advertising and marketing budget. The Company
invests in advertising and promotional programs, including magazine
advertisements, billboards and state logo signs, trade magazines, point of sale
advertising, on-site promotions and limited local advertisements. In addition to
direct advertising, the National Network publishes "Road King Magazine," a
bi-monthly subscription publication for professional truck drivers and also
distributes "Fleet Magazine Quarterly" to its fleet customers by mail.
The Company has implemented a variety of customer service support
programs and has a quality assurance program in place for nearly all of its
TravelCenters. For example, TA employs a "Mystery Shopper" program, an
independent quality assurance program that provides an evaluation of the overall
performance of each TA TravelCenter and of its major Nonfuel profit centers,
performed by independent shoppers approximately six to eight times a year. In
connection with the Combination Plan, the Company intends to implement the
Mystery Shopper program at those National TravelCenters that join the Network.
PAYMENT PROCEDURES
The Existing Networks offer customers a variety of ways to monitor,
control and facilitate their purchase transactions. The TA Network provides
electronic credit and billing information systems to its customers through the
Star Billing System, a proprietary, advanced electronic credit and billing
system that the Company acquired from BP in connection with the TA Acquisition.
The National Network provides more comprehensive services to its customers
through ACCESS 76, a proprietary, advanced, on-line credit card and information
retrieval system, which it licensed from Unocal as part of the National
Acquisition. The Company will integrate its credit and billing information into
a single, enhanced system as part of the Combination Plan. These and other
improvements to and upgrades of the Company's management information systems are
provided for under the Capital Program.
Over the last decade, several third-party billing companies, such as
Comdata, have developed systems which provide features comparable to those of
the Star Billing System and ACCESS 76. These billing companies typically have
relationships with fleet accounts. The companies issue cards to fleet drivers,
electronically approve purchases, arrange customized programs of discounted
diesel fuel at specified truckstops across the country and provide the fleet
accounts with billing information and expenditure analysis reports. The Existing
Networks have all necessary electronic interface capabilities to provide billing
data to such third-party billing companies as their fleet customers require.
CENTRALIZED PURCHASING AND DISTRIBUTION
The Distribution Center is the only dedicated purchasing, warehousing
and distribution center in the travel center and truckstop industry. The
Distribution Center is located in Nashville, Tennessee and has approximately
85,000 square feet of storage space. Approximately every two weeks, the
Distribution Center delivers products to each of TA's 48 sites using TA's fleet
of trucks and trailers. In 1996, the Distribution Center shipped approximately
$30 million of products (at cost). The Distribution Center's cost savings allow
the TA TravelCenters to offer products at reduced prices while maintaining
higher profit margins than many industry competitors. The Company estimates that
it purchases products for its
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restaurants, travel and convenience stores and truck maintenance and repair
shops through the Distribution Center at a weighted average discount of
approximately 15% to the prices paid by most of the Company's competitors. The
Capital Program includes the funds necessary to expand the Distribution Center's
operations to enable the Distribution Center to supply all of the National
TravelCenters that join the Network.
The Distribution Center provides the Company with cost savings by using
its considerable consolidated purchasing power to negotiate volume discounts
with third-party suppliers. The Distribution Center is able to obtain further
price reductions from suppliers in the form of reduced shipping charges, as
suppliers need only deliver their products to the Distribution Center warehouse
(as opposed to each TA site individually). The Distribution Center's
sophisticated inventory management system provides administrative cost savings
to the Company. This system tracks inventory at each TA site and attempts to
individually tailor the Distribution Center's product distributions to match
each particular site's needs. The system handles returns of defective or
obsolete items and provides Company management with information regarding
product sales volumes, allowing the Company to react quickly to changing market
conditions. In addition, use of the system has reduced the time that site
managers spend on inventory matters and has allowed them to focus on product
merchandising.
SUPPLY
The Company purchases Fuel from various suppliers at rates that
fluctuate with market prices and reset daily, and resells fuel to National
Operators and Franchisee-Owners and to the public at prices that the Company
establishes daily. By contracting for only a portion of its monthly diesel fuel
requirements and by establishing supply relationships with an average of four or
five alternate suppliers per location, TA has been able effectively to create
competition for the Company's business among the Company's various diesel fuel
suppliers on a daily basis. This flexibility has improved TA's purchasing
position and helped it partially to offset the decline in retail diesel fuel
margins. In connection with the Combination Plan, the Company intends to extend
this strategy to encompass National sites joining the Network. Purchases made by
the Company are delivered directly from suppliers' terminals to the
TravelCenters. The Company does not keep substantial quantities of Fuel in
inventory and is therefore susceptible to price increases and interruptions in
supply. The Company currently engages in only minimal hedging in connection with
its diesel fuel purchases. The Company's hedging program is not anticipated to
change significantly going forward. See "Risk Factors--Dependence on Motor Fuel
Supply and Sales."
The Company believes TA has used its purchasing power, particularly
through the Distribution Center, to negotiate favorable Nonfuel supply
arrangements. Management expects the combination of the Existing Networks to
further enhance economies of scale in the Company's Nonfuel procurement.
JOINT VENTURE
In 1995, the Company through TA entered into a joint venture with Burns
Bros., Inc. ("Burns Brothers") to market jointly and bill fleets for products
and services under the TABB(TM) name ("TABB"). Burns Brothers operates a chain
of 19 travel centers and truckstops in nine Western states. The Company began
this strategic alliance in 1996 to improve TA's coverage so that TA could meet
greater fleet needs in the Western and Northwestern United States. TA has
further initiated a program to operate "TA" branded truck maintenance and repair
shops at Burns Brothers travel centers. In connection with the TABB joint
venture, Burns Brothers agreed to construct and TA agreed to equip and operate
"TA" branded shops on Burns Brothers sites. Two such stand-alone shops opened in
1996 and, in connection with the Capital Program, the Company intends to open an
additional ten such shops over the next ten years, and three to five such shops
by 2001. Although the Company derives direct revenues only from the two Burns
Brothers sites that have TA truck maintenance and repair shops, the Company
believes that the TABB alliance provides the Company with additional valuable
marketing exposure. The Company believes that the TABB TravelCenters will
continue to provide expanded coverage for the Network following implementation
of the Combination Plan and the Company intends to continue this relationship.
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COMPETITION
The travel center and truckstop industry is highly competitive and
fragmented. Fuel and Nonfuel products and services can be obtained by long-haul
truck drivers from a wide variety of sources other than the Company, including
regional full service travel center and pumper-only truckstop chains,
independently owned and operated truckstops, some large service stations and
fleet-operated fueling terminals.
The Company believes that it experiences substantial competition from
pumper-only truckstop chains and that such competition is based principally on
diesel fuel prices. In the pumper-only truckstop segment, the largest networks
(based on number of facilities and gallons of diesel fuel sold) are Emro
Marketing Company, a subsidiary of Marathon Oil Company selling primarily under
the brand name Speedway, and Pilot Corporation. Additional substantial
competition is experienced from major full service networks and independent
chains and is based principally on diesel fuel prices and customer service. In
the full service travel center segment, the largest networks (other than the
Company) are operated by Flying J Inc. ("Flying J") and Petro Stopping Centers,
L.P.; however, only some of Flying J's sites offer full service. The Company's
vehicle products and truck maintenance and repair service operations compete
with regional full service travel center and truckstop chains, full service
independently owned and operated truckstops, independent garages and auto parts
service centers. The Company's TravelCenters compete with a variety of
establishments located within walking distance of its sites, including full
service and fast food restaurants and electronics, drug, health and beauty aid
and travel and convenience stores. The Company also competes with Comdata and
other third-party integrated billing networks in marketing credit programs to
fleets. See "--Payment Procedures."
A significant portion of all intercity diesel fuel consumption by
fleets and companies with their own trucking capability occurs through
self-fueling at both dedicated terminals and at fuel depots strategically
located across the country. Such terminals often provide facilities for truck
maintenance and repair. The Company's pricing decisions for diesel fuel and
repair services cannot be made without considering the existence of these
operations and their capacity for expansion. However, the Company believes that
a trucking industry trend has been to reduce the use of such terminals and to
outsource fuel and repair services in order to maximize the benefits of
competitive fuel pricing, superior driver amenities and reduced environmental
compliance expenditures.
Although the Company faces substantial competition in both its Fuel and
Nonfuel offerings, the Company nonetheless believes it is well positioned to
compete effectively in both areas because of the Company's size, locations, full
service offerings and other competitive advantages. See "--Competitive
Advantages." These factors enable the Company to compete effectively for large
fleet accounts because it is the chain best able to provide service to fleets
and to professional truck drivers on a nationwide basis.
RELATIONSHIPS WITH THE OPERATORS AND FRANCHISEE-OWNERS
Pursuant to the Combination Plan, the Company is offering the new TA
franchise agreement (the "Network Franchise Agreement") and the new TA lease
agreement (the "Network Lease Agreement" or "Network Lease" and, together with
the Network Franchise Agreement, the "Network Agreements") to certain of
National's existing Operators and is offering the Network Franchise Agreement to
certain National Franchisee-Owners, and in connection therewith, upon such
franchisee's acceptance of such offer, will terminate the existing National
lease (the "National Lease Agreement") and National franchise agreement (the
"National Franchise Agreement," and, together with the National Lease Agreement,
the "National Agreements") at those locations. The Company expects the
replacement of all the National Agreements with the Network Agreements to occur
within three to four years. Existing TA Franchisee-Owners will be allowed to
continue their franchises under the Network Franchise Agreement upon expiration
of their existing TA franchise agreements (the "Existing TA Franchise
Agreements"), which have an average remaining term of approximately four years.
The Network Agreements, the Existing TA Franchise Agreements and the National
Agreements are summarized below.
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TA licenses its trademarks to TAFSI. TA enters into its franchise
agreements with Franchisee-Owners of TravelCenters in the TA Network through
TAFSI and TAFSI collects franchise fees and royalties under such agreements. As
part of the Combination Plan and the Capital Program, TAFSI will enter into the
Network Franchise Agreement with all Operators and Franchisee-Owners of
TravelCenters in the integrated Network. TAFSI's assets consist primarily of the
rights under the Existing TA Franchise Agreements and its trademark licenses
from TA. TAFSI has no significant tangible assets.
NETWORK FRANCHISE AGREEMENT
INITIAL FRANCHISE FEE. If the franchisee has been continuously
operating under a franchise agreement, license agreement or prescribed marketing
plan or system of another travel center or truckstop company (including the
National Network) during a one-year period before signing the Network Franchise
Agreement and meets certain other conditions, the initial franchise fee would be
$5,000; otherwise, the franchise fee would be $100,000.
TERM OF AGREEMENT. The initial term of the Network Franchise Agreement
is five years. The Network Franchise Agreement provides for five three-year
renewals on the terms being offered to prospective franchisees at the time of
such franchisee's renewal. The Company offers no assurance that the terms of
such renewal will be the same as the initial Network Franchise Agreement, and
the Company reserves the right to decline renewal under certain circumstances or
if certain terms and conditions are not satisfied by the franchisee. Subject to
certain exceptions (including existing operations by the Company), so long as
the franchisee is not in default under the Network Franchise Agreement, the
Company agrees not to operate, or allow another person to operate, a travel
center or travel center business that uses the "TA" brand, within 75 miles in
either direction along the primary interstate at which the Franchised Premises
(as defined in the Network Franchise Agreement) is located.
RESTRICTIVE COVENANTS. Except for the continued operation of certain
businesses identified by the franchisee at the time of execution of the Network
Franchise Agreement, the franchisee is prohibited, during the term of the
agreement, from operating any travel center or truckstop-related business under
a franchise agreement, licensing agreement or marketing plan or system of its
own or another person or entity. If the franchisee owns the Franchised Premises,
the franchisee may continue to operate a travel center at the Franchised
Premises after termination of the Franchise Agreement, so long as such facility
is not a branded facility.
ROYALTY PAYMENTS. Franchisees are required to pay to the Company a
Continuing Services and Royalty Fee equal to 3.75% of all Nonfuel Revenue (each
term, as defined in the Network Franchise Agreement). In addition, as part of
the Continuing Services and Royalty Fee, the franchisees are required to pay to
the Company $0.03 per gallon on all sales of gasoline purchased from a supplier
other than the Company or its affiliates. If branded fast food is sold from the
Franchised Premises, the franchisee must pay the Company 3% of all net revenues
earned directly or indirectly in connection with such sales after deduction of
royalties paid to the fast food franchisor.
ADVERTISING, PROMOTION AND IMAGE ENHANCEMENT. The Network Franchise
Agreement establishes a system-wide advertising, marketing and promotional fund
to which the franchisees are required to contribute 0.6% of their Nonfuel
Revenue and net revenues from fast food sales. Franchisees are also required to
spend certain minimum amounts on advertising.
FUEL PURCHASES AND SALES. Pursuant to the Network Franchise Agreement,
the Company agrees to sell to franchisees, and franchisees agree to buy from the
Company, 100% of their requirements of diesel fuel. Franchisees agree to
purchase gasoline from only those suppliers that have been approved by the
Company in writing. Franchisees may not commingle any Fuel.
MAINTENANCE. Franchisees are required to operate their sites in
conformity with the Company's guidelines and offer any products and services the
Company deems integral to the Network. The Company will offer franchisees the
right to purchase products through the Company's Distribution Center, subject
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to a warehouse fee equal to 5% of the product's current average weighted cost.
If franchisees do not purchase products through the Company's Distribution
Center, the products to be purchased by franchisees must comply with the
Company's standards and specifications and must be approved by the Company. The
Company has the right to require a franchisee to discontinue any product or
service that the Company concludes is harmful to the image or productivity of
the Network.
TRANSFER OR ASSIGNMENT OF NETWORK FRANCHISE AGREEMENT. Franchisees may
not transfer or assign their rights or interests under the Network Franchise
Agreement without the prior written consent of the Company. Except for transfers
to immediate family members or principal operators which are approved by the
Company, any such transfer or assignment is subject to the payment of a $25,000
transfer and training fee.
RIGHT OF FIRST REFUSAL. If the Company does not renew the Network
Franchise Agreement prior to its expiration because (i) the Company makes a good
faith determination to withdraw from the marketing of Fuel in the area of the
Franchised Premises, (ii) the Company and the Operator fail to agree to changes
or additions to the Network Franchise Agreement, or (iii) the Company makes a
good faith determination not to renew the Network Franchise Agreement because it
would be uneconomical to the Company, the Company may not enter into another
Network Franchise Agreement relating to the same Franchised Premises with
another party within 180 days of such expiration date on terms materially
different from those offered to the prior Franchisee, unless the prior
Franchisee is offered the right, for a period of 30 days, to accept a renewal of
the Network Franchise Agreement on such different terms.
NETWORK LEASE AGREEMENT
TERM. Each Operator of a Leased Site that enters into a Network
Franchise Agreement also must enter into a Network Lease. The term of the
Network Lease is five years and contains five successive renewal options of
three years each. The Operator may terminate the Network Lease without cause
upon 180 days' prior written notice to the Company.
LEASED SITE. The Leased Site consists only of the improved (buildings
and improvements) land existing as of the date of the Network Lease. All of the
Company's property not included in the Leased Site may be developed, improved,
leased or sold by the Company in its sole discretion, provided that such surplus
property is not used for or in connection with any business engaged principally
in the sale of Fuel.
RENT. Under the Network Lease, an Operator must pay annual fixed rent
("Fixed Rent") equal to the sum of (i) base rent agreed upon by the Operator and
the Company, plus (ii) an amount equal to 14% of the cost of all capital
improvements, agreed upon by the Company and the Operator to enhance the value
of the Leased Premises, which cost in excess of $2,500 and are paid for by the
Company, plus (iii) an annual inflator equal to the percentage increase in the
consumer price index ("Inflator"). The base rent will not be increased if the
Operator elects to pay for the capital improvements. If the Company and the
Operator agree upon an amortization schedule for a capital improvement funded by
the Operator, the Company will, upon termination of the Network Lease, reimburse
the Operator for an amount equal to the unamortized portion of the cost of such
capital improvement. The Fixed Rent, using the Inflator, may not increase more
than 20% during the initial five-year term or 12% during any three-year renewal
term of the Network Lease. The Operator is responsible for the payment of all
charges and expenses in connection with the operation of the Leased Site,
including maintenance costs. The Company is required to pay the cost of any
alterations it requires, but only to the extent that the aggregate cost of such
alterations exceeds $2,500.
USE OF THE LEASED SITE. The Operator must operate the Leased Site as a
travel center in compliance with all laws, including all Environmental Laws. The
Operator must submit to quality inspections by the Company and appoint a
manager, acceptable to the Company, who is responsible for the day-to-day
operations at the Leased Site.
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TRANSFERABILITY OF INTEREST. The Network Lease may be assigned freely
by the Company. Transfer by the Operator is subject to the Company's consent.
RIGHT OF FIRST REFUSAL. If the Company does not renew the Network Lease
prior to its expiration because (i) the Company makes a good faith determination
to withdraw from the marketing of Fuel in the area of the Franchised Premises,
(ii) the Company and the Operator fail to agree to changes or additions to the
Network Lease, or (iii) the Company makes a good faith determination not to
renew the Network Lease because it would be uneconomical to the Company, the
Company will not sell, or enter into an agreement to sell, the Company's
interest in the Leased Premises to another party within 180 days of such
expiration date, unless the Operator is offered the right, for a period of 30
days, to meet the bona fide offer of such other party to purchase the Company's
interest in the Leased Premises.
EXISTING TA FRANCHISE AGREEMENT
INITIAL FRANCHISE FEE. If the franchisee converted an existing travel
center facility to a TA franchise, the initial franchise fee was $100,000. If
the franchisee built a new travel center facility to be operated as a TA
franchise, the initial franchise fee was $150,000.
TERM OF AGREEMENT. The initial term of the Existing TA Franchise
Agreement is ten years. The Existing TA Franchise Agreement provides for one
five-year renewal on the terms being offered to prospective franchisees at the
time of the franchisee's renewal. The Existing TA Agreement offers no assurance
that the terms of such renewal will be the same as those of the initial Existing
TA Franchise Agreement, and the Company intends to offer the existing TA
franchisees renewals in accordance with the terms of the Network Franchise
Agreement. The Company reserves the right to decline renewal under certain
circumstances or if certain terms and conditions are not satisfied by the
franchisee. In addition, the Company may charge a renewal fee, which fee may
equal but not exceed the amount of the current initial franchise fee being
charged by the Company for new franchises. So long as the franchisee is not in
default under the Existing TA Franchise Agreement, the Company agrees not to
operate, or allow another person to operate, the travel center or travel center
business that uses the "TA" brand, within the designated area in either
direction along one or more interstates at which the Franchised Premises (as
defined in the Franchise Agreement) is located, such area to be determined on a
case-by-case basis. The Company may terminate the Existing TA Franchise
Agreement upon the occurrence of certain defaults, upon notice and without
affording the franchisee an opportunity to cure such defaults. Upon the
occurrence of certain other defaults, the Company may terminate the Existing TA
Franchise Agreement if, after receipt of such notice of default, the franchisee
has not cured such default within the applicable grace period. The franchisee
may terminate the Existing TA Franchise Agreement upon thirty days' notice if
the Company is in material default under the Existing TA Franchise Agreement and
fails to cure or attempt to cure such default within a reasonable period after
notification.
RESTRICTIVE COVENANTS. During the term of its Existing TA Franchise
Agreement and for two years thereafter, if such agreement is terminated prior to
its expiration date, the franchisee is prohibited from: (i) operating any other
truckstop or travel center within its protected territory; (ii) operating at the
franchise location under any national brand other than "TA"; (iii) operating a
branded facility within 150 miles of any other TA facility; and (iv) operating
any competitive business (or a business that trades upon the franchise) within
the area adjacent to the franchise location.
ROYALTY PAYMENTS. Franchisees are required to pay to the Company a
continuing services and royalty fee equal to 4% of all revenues earned directly
or indirectly by the franchisee from any business conducted at or from the
Franchised Premises, excluding fuel sales and sales of branded fast food. As
part of the continuing services and royalty fee, the franchisee must pay to the
Company $0.004 per gallon on all sales of fuel. If branded fast food is sold
from the Franchised Premises, the franchisee must pay the Company 2% of all
revenues earned directly or indirectly in connection with such sales.
ADVERTISING, PROMOTION AND IMAGE ENHANCEMENT. The Existing TA
Franchise Agreement establishes a system-wide advertising, marketing and
promotional fund to which franchisees are required to contribute
69
<PAGE>
0.25% of all revenues (including revenues from fuel and fast food sales) and
mandates certain minimum franchisee expenditures on advertising.
FUEL PURCHASES AND SALES. Franchisees are not required to purchase
gasoline or diesel fuel from the Company; however, all fuel sales at the
Franchised Premises are subject to the Continuing Services and Royalty Fee (as
defined in the Existing TA Franchise Agreement).
MAINTENANCE. Franchisees are required to operate their travel centers
in conformity with the Company's guidelines, participate in and comply with all
programs prescribed by the Company as mandatory and offer any products and
services the Company deems integral to the Network. The Company grants
franchisees the right to purchase products from the Distribution Center. If a
franchise does not purchase products through the Distribution Center, the
products purchased by the franchisee must be approved by the Company in
accordance with its standards and specifications. The Company has the right to
require a franchisee to discontinue the sale of any product or service that the
Company concludes is harmful to the image or productivity of the TA Network.
TRANSFER OR ASSIGNMENT OF EXISTING TA FRANCHISE AGREEMENT. Franchisees
may not transfer or assign their rights or interests under the Existing TA
Franchise Agreement without the prior written consent of the Company. Any such
transfer or assignment is subject to the payment of a transfer and training fee
in an amount equal to 25% of the initial franchise fee originally charged to the
franchisee by the Company.
NATIONAL FRANCHISE AGREEMENT
TERM OF AGREEMENT. The term of the National Franchise Agreement is five
years plus (i) for Operators, the amount of time remaining under the existing
Unocal lease agreement, if applicable, but in no event longer than seven years
from the next anniversary date of such Unocal lease agreement and (ii) for
Franchisee-Owners, the amount of time remaining under their existing Unocal
motor fuel purchase agreement, but in no event longer than seven years from the
next anniversary date of that Unocal Fuel purchase agreement. The National
Franchise Agreement provides for five three-year renewals on the terms being
offered to prospective franchisees at the time of renewal. The Company offers no
assurance that the terms of any renewal will be the same as the initial
franchise agreement. The National Franchise Agreement provides no geographic
exclusivity and the franchise grant applies only to the specific location on
which the franchisee's travel center is located. The National Franchise
Agreement contains termination and nonrenewal provisions that are substantially
the same as those provided in the PMPA. Operators and Franchisees have similar
rights to terminate the agreements, and the Franchisees have the right to
terminate the National Lease Agreement upon 180 days, prior written notice to
the Company.
ROYALTY PAYMENTS. Franchisees are obligated to pay to the Company a 3%
Non-Fuel Royalty (as defined in the National Franchise Agreement) in excess of a
Base Year Amount (as defined in the National Franchise Agreement). Franchisees
are also required to pay a one-time supplemental royalty fee in an aggregate
amount of $80,000.
FUEL PURCHASES AND SALES. Pursuant to the National Franchise Agreement,
the Company agrees to sell to Franchisees, and Franchisees agree to buy, from
the Company, 100% of their requirements for Fuel. The Agreement sets forth the
terms and conditions under which the Company sells Fuel to the franchisees.
Franchisees may be allowed to purchase gasoline from other suppliers, but from
only those suppliers that have been approved by the Company in writing.
Franchisees may not commingle any Fuel.
CENTRALIZED BUYING PROGRAM. Pursuant to the National Franchise
Agreement, the Company offers Franchisees the opportunity to participate in its
buying program (the "Buying Program"), which is a centralized purchasing effort
designed to maximize franchisees' buying power. At the time of signing the
National Franchise Agreement, a franchisee had the option either to accept or
reject the Buying Program. If the franchisee accepted the plan, it became
obligated to purchase those products included in the Buying Program only from
participating or approved suppliers. Franchisees who participate in the Buying
Program must maintain a representative inventory of all products covered in the
program.
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<PAGE>
SITE OPERATION AND MAINTENANCE. Franchisees are required to operate
their TravelCenters in conformity with the Company's guidelines, offer any
products and services the Company deems to be integral to the National Network
and pass two annual evaluations.
ADVERTISING, PROMOTION AND IMAGE ENHANCEMENT. The National Franchise
Agreement requires each Franchisee to participate in the ACCESS 76 system and
all National Network promotional programs. The Company does not mandate a
specified price with respect to such promotional programs but may suggest prices
to be charged in any promotional program. The National Franchise Agreement
establishes a system-wide advertising, marketing and promotional fund to which
Franchisees are required to contribute 1% of their non-fuel revenues.
NATIONAL LEASE AGREEMENT
Each Operator who has elected to enter into a National Franchise
Agreement also must enter into a National Lease Agreement. The term of the lease
is coterminous with the National Franchise Agreement and contains an identical
renewal option. No assurance is given that the terms of any renewal lease
agreement will be the same as the initial lease agreement.
Under the current National Lease Agreement, an original Operator
Franchisee pays annual fixed rent ("Fixed Rent"). Operators receive a rent
rebate, payable monthly in arrears, equal to the sum of (i) 9% of the Fixed Rent
that was paid by the Operator and (ii) unless the Operator participates in a
special fuel pricing program, the product of $0.03 multiplied by the sum of the
number of gallons of diesel fuel purchased by such Operator from the Company. A
consumer price index inflator is applied to the Fixed Rent each year on the
anniversary date of the Operator current National Lease Agreement.
AGREEMENTS WITH UNOCAL AND BP
TRADEMARK AND SOFTWARE LICENSE AGREEMENTS. In conjunction with its
purchase of the National Network, the Company entered into a trademark license
agreement (the "Trademark License Agreement") with Unocal pursuant to which
Unocal granted the Company a ten-year license, with two optional two-year
extensions, to use certain registered or unregistered Unocal marks, including,
"76," "Unocal" and "ACCESS 76" (collectively, the "Unocal Marks"), in connection
with marketing approved petroleum and related products and approved services
through the Network. The Company is obligated to pay Unocal an annual trademark
license fee of $600,000, adjusted annually for inflation. The Company may
terminate the Trademark License Agreement upon 180 days, prior written notice to
Unocal and expects to discontinue the use of the Unocal Marks as soon as
feasible.
The Company also entered into a software license agreement with Unocal
whereby Unocal provides to the Company a 99-year, royalty-free license to use
the ACCESS 76 software program in connection with the ownership and operation of
the Network. Under the terms of that license agreement, the Company is
responsible for the costs of maintaining and upgrading the ACCESS 76 software
system. In addition, the Company may sub-license certain portions of the ACCESS
76 software program to National Network members and to entities not associated
with the National Network.
In conjunction with its purchase of the TA Network, the Company
acquired all of BP's right, title and interest in and to certain patents,
copyrights, trademarks and service marks, including, "Truckstops of America,"
"TA" and "Country Pride."
NON-COMPETITION AGREEMENTS. Pursuant to non-competition agreements,
which are subject to certain exceptions specified therein, Unocal and BP have
agreed not to compete with the Company in the interstate travel center business
in the continental United States. Unocal has agreed not to compete with the
Company for a ten-year period beginning April 14, 1993. BP has agreed not to
compete with the Company for a seven-year period commencing December 10, 1993.
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<PAGE>
ENVIRONMENTAL AGREEMENTS. For a description of the Environmental
Agreements between the Company and each of Unocal and BP, see
"--Regulation--Environmental Regulation."
REGULATION
FRANCHISE REGULATION. The relationship between the Company and the
National Network franchisees is governed by the Petroleum Marketing Practices
Act (the "PMPA"), 15 U.S.C. ss.ss. 2801 et seq. The relationship between the
Company and the TA franchisees is not governed by the PMPA because TA does not
license its franchisees to sell Fuel under a refiner's brand. The Network
Franchise Agreement will not be subject to the PMPA. Among other things, the
PMPA limits the circumstances under which franchisors such as the Company may
terminate or fail to renew a franchise agreement, and it imposes notification
and other requirements in those cases where termination or nonrenewal is
permissible. Circumstances under which a franchisor is permitted to terminate or
fail to renew include, among others, the following (in each case subject to
certain conditions): violation by the franchisee of any provision of the
franchise or lease agreement that is reasonable and of material significance to
the franchise relationship; the franchisee's bankruptcy or insolvency; fraud by
the franchisee; the franchisee's criminal misconduct or continuing disability;
willful adulteration, mislabeling or misbranding of Fuel or other trademark
violations by the franchisee; and loss of the franchisor's right to grant the
right to use the trademarks that are the subject of the franchise. The PMPA also
permits the franchisor to terminate or not to renew a franchise relationship if,
subject to certain conditions, the franchisor makes a good faith determination
to withdraw from the marketing of refiner's branded fuel in the relevant
geographic market area. The Company intends to terminate certain franchisees on
that basis if it is unable to reach a voluntary termination agreement with those
franchisees.
The PMPA also permits the franchisor not to renew the franchise under
certain circumstances, including (in each case subject to certain conditions):
the failure of the parties to agree upon good faith changes or additions to the
provisions of the franchise agreement; numerous customer complaints or failure
to operate the franchised premises in a safe and healthful manner; a good faith
determination by the franchisor to convert the premises to another use,
materially alter, add to, or replace the premises, sell the premises; or a good
faith determination by the franchisor that renewal of the franchise would be
uneconomical. The PMPA permits a franchisor and a franchisee to terminate their
franchise relationship by written agreement. In certain circumstances the PMPA
requires the franchisor upon termination or nonrenewal to make a bona fide offer
to sell the premises to the franchisee or to provide the franchisee with a right
of first refusal to purchase the premises. Finally, where the PMPA applies, it
preempts any inconsistent state laws that purport to govern termination or
nonrenewal of a franchise.
The Company is also subject to state franchise laws, some of which
require the Company to register with the state before it may offer a franchise,
require the Company to deliver specified disclosure documentation to potential
franchisees, and impose special regulations upon petroleum franchises. Some
state franchise laws also impose restrictions on the Company's ability to
terminate or not to renew its franchises, and impose other limitations on the
terms of the franchise relationship or the conduct of the franchisor. With
respect to National franchisees who do not consent to termination or nonrenewal
of their existing National franchises, the PMPA preempts state laws with respect
to termination or nonrenewal unless such laws are consistent with the PMPA.
Finally, a number of states include, within the scope of their petroleum
franchising statutes, prohibitions against price discrimination and other
allegedly anticompetitive conduct. These provisions supplement applicable
antitrust laws at the federal and state levels.
The Company is subject to regulation under the Federal Trade Commission
("FTC") rule entitled "Disclosure Requirements and Prohibitions Concerning
Franchising and Business Opportunity Ventures," and the FTC requires that
franchisors make extensive disclosure to prospective franchisees but does not
require registration.
The Company cannot predict the effect of any future federal, state, or
local legislation or regulation on its franchising operations.
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<PAGE>
ENVIRONMENTAL REGULATION. The Company's operations and properties are
subject to extensive regulation pursuant to Environmental Laws that (i) govern
activities and operations that may have adverse environmental effects, such as
discharges to air, soil and water, as well as handling, storage and disposal
practices for Hazardous Substances or (ii) impose liability and damages for the
costs of cleaning up sites affected by, and for damages resulting from, past
spills and disposal or other releases of Hazardous Substances.
The Company owns and uses underground storage tanks ("USTs") and
aboveground storage tanks ("ASTs") at Company-operated and Leased Sites to store
petroleum products and waste. These tanks must comply with requirements of
Environmental Laws regarding tank construction, integrity testing, leak
detection and monitoring, overfill and spill control, release reporting,
financial assurance and corrective action in case of a release from a UST or AST
into the environment. At certain locations, the Company also is subject to
Environmental Laws relating to vapor recovery and discharges to water. The
Company believes that all of its travel centers are in material compliance with
applicable requirements of Environmental Laws. The Company is making necessary
upgrades to USTs to comply with federal regulations which will take effect in
1998. These upgrades are expected to be completed by 1998 at a total estimated
cost to the Company of approximately $15 to $20 million. The Company does not
believe that such costs will have a material adverse effect on the Company and
the Capital Program incorporates funds to complete such upgrades.
The Company has received notices of alleged violations of Environmental
Laws associated with wastewater discharges (relating to periods both before and
after the Company acquired the Networks) from Company-owned travel centers in a
number of jurisdictions. In 1996, the TA Network facility in Wadsworth, Illinois
was assessed a $100,000 penalty in connection with a government Consent Order
resolving alleged wastewater discharge violations. BP paid this penalty because
the violations at issue occurred prior to the TA Acquisition or arose from
conditions existing prior to such acquisition. The Company does not expect that
any financial penalties associated with these alleged violations, or remedial
costs incurred in connection therewith, will be material to the Company's
results of operation or financial condition. The Company expects to spend a
total of approximately $6 million in 1997 and 1998 for certain one-time projects
relating to wastewater discharge controls and other matters. The Company is
conducting investigatory and/or remedial actions with respect to releases and/or
spills of Hazardous Substances that have occurred subsequent to the National
Acquisition and the TA Acquisition, respectively, at fewer than 30 Network
properties. While the Company cannot precisely estimate the ultimate costs it
will incur in connection with the investigation and remediation of these
properties, based on its current knowledge, the Company does not expect that the
costs to be incurred at these properties, individually or in the aggregate, will
be material to the Company's results of operation or financial condition. While
the aforementioned matters are, to the best knowledge of the Company, the only
proceedings for which the Company is currently exposed to potential liability
(particularly given the Unocal and BP indemnities discussed below), there can be
no assurance that additional contamination does not exist at these or additional
Network properties, or that material liability will not be imposed in the
future. If additional environmental problems arise or are discovered, or if
additional environmental requirements are imposed by government agencies,
increased environmental compliance or remediation expenditures may be required,
which could have a material adverse effect on the Company.
In connection with the National Acquisition, Phase I environmental
assessments of the then 97 Company-owned National Network properties (now 95)
were conducted. Pursuant to the Unocal Environmental Agreement, Phase II
environmental assessments of all such National properties are required to be
completed by the year 2000. As of December 31, 1996, 31 of the Phase II
assessments were in progress and 46 had been completed. The Company contributed
$500,000 toward the total cost of the Phase II environmental assessments, and
Unocal is responsible for the remainder of the cost. The Unocal Environmental
Agreement provides that Unocal is responsible for all costs incurred for
remediation of environmental contamination (the remediation must achieve
compliance with the Environmental Laws in effect on the date the remedial action
is completed) and for otherwise bringing the properties into compliance with
Environmental Laws (as in effect at the date of the National Acquisition) with
respect to environmental contamination or non-compliance identified in the Phase
I or Phase II environmental
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<PAGE>
assessments, which environmental contamination or non-compliance existed on or
prior to the date of the National Acquisition. Under the terms of the Unocal
Environmental Agreement, Unocal also must indemnify the Company against any
other environmental liabilities that arise out of conditions at, or ownership or
operations of, the National Network prior to the date of the National
Acquisition. Pursuant to the Unocal Environmental Agreement, Unocal is obligated
to indemnify the Company for claims made before April 14, 2004. Except as
described above, Unocal does not have any responsibility for any environmental
liabilities arising out of the ownership or operations of the National Network
after the date of the National Acquisition. There can be no assurance that, if
additional environmental claims or liabilities were to arise under the Unocal
Environmental Agreement, Unocal would not dispute the Company's claims for
indemnification thereunder.
Prior to the TA Acquisition, 38 TA locations (two locations were
acquired after the TA Acquisition) were subject to Phase I and Phase II
environmental assessments, undertaken at BP's expense. The BP Environmental
Agreement provides that, with respect to environmental contamination or
non-compliance with Environmental Laws identified in the Phase I or Phase II
environmental assessments, BP is responsible for all costs incurred for
remediation of such environmental contamination (the remediation must achieve
compliance with the Environmental Laws in effect on the date the remedial action
is completed) and for otherwise bringing the properties into compliance with
Environmental Laws (as in effect at the date of the TA Acquisition). The BP
Environmental Agreement further provides that BP must indemnify the Company
against any other environmental liabilities that arise out of conditions at, or
ownership or operations of, the TA locations prior to the date of the BP
Acquisition. With respect to liabilities relating to the investigation and
remediation of environmental contamination, BP is obligated to indemnify the
Company for liabilities with respect to which claims are made before December
11, 2004. With respect to liabilities otherwise relating to non-compliance with
Environmental Laws (for example, equipment), BP is obligated to indemnify the
Company for liabilities with respect to which claims were made before December
11, 1996. Except as described above, BP does not have any responsibility for any
environmental liabilities arising out of the ownership or operations of the TA
locations after the date of the TA Acquisition. There can be no assurance that,
if additional environmental claims or liabilities were to arise under the BP
Environmental Agreement, BP would not dispute the Company's claims for
indemnification thereunder.
OTHER REGULATION. The Company, the Operators and the Franchisee-Owners
are required to comply with federal, state and local government regulations
applicable to service station and lubrication operations and consumer food
services businesses generally, including those relating to the preparation and
sale of food, minimum wage requirements, overtime, working, health, fire, safety
and sanitation conditions, mandated health insurance coverage and citizenship
requirements, as well as regulations relating to zoning, construction, business
licensing and employment. The Company believes that it is in material compliance
with the provisions applicable to it and has no knowledge of material violations
of these provisions by its Operators and Franchisee-Owners.
LITIGATION
The Company is party to several litigation matters, described below,
involving certain of its franchisees. The Company does not expect any of these
matters to have a material adverse effect on the Company. From time to time the
Company is a party to litigation in the ordinary course of its business
involving negligence and other similar claims which are covered by the Company's
third party insurance policies. While claims for damages in such litigation may
in certain instances be in excess of the Company's insurance coverage, the
Company does not expect its existing litigation to have a material adverse
effect on the Company.
FORTY-NINER TRUCK PLAZA LITIGATION. This action was commenced in
California Superior Court, Sacramento County, on January 28, 1993 by four
Operators of National TravelCenters in California. The complaint asserts claims
on behalf of each of the plaintiffs against the Company, Clipper and Unocal
Corporation and its subsidiaries based upon alleged violations by Union Oil
Company of California and Unocal Corporation (together the "Unocal Entities") of
the California Business and Professions Code and of an alleged contract by
failing to provide them with a bona fide offer or right of first refusal to
purchase
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their truckstops in connection with the sale of the plaintiffs' truckstops by
Unocal to the Company. Two of the plaintiffs settled their claims prior to
commencement of the trial. The claims of two plaintiffs, who are franchisees of
National in Sacramento and Santa Nella, California, were tried and the jury
rendered a verdict awarding $4.0 million in compensatory damages jointly and
severally against the Company, the Unocal Entities and Clipper, and assessing
punitive damages against them in the amount of $1.5 million, $7.0 million and
$1.6 million, respectively. On August 1, 1995, the court granted the defendants'
motions for a new trial on all issues, although it denied defendants' motions
for judgment notwithstanding the verdict. These orders are currently on appeal.
The appeal has been fully briefed but not argued. Pursuant to the asset purchase
and related agreements between the Company and the Unocal Entities, the Company
believes that the Unocal Entities are required to indemnify it for attorneys'
fees and compensatory damages. The Unocal Entities may, however, contest the
Company's claim for indemnification. The indemnification agreement between the
Unocal Entities and the Company does not by its terms cover punitive damages.
The Company entered into an agreement indemnifying Clipper in connection with
the Company's purchase of the properties in the National Network, and Clipper
has asserted and the Company has concurred that this agreement obligates the
Company to pay any compensatory and punitive damages assessed against Clipper.
PANHANDLE LITIGATION. This action was commenced on April 17, 1996 in
the Circuit Court of Berkeley County, West Virginia. By the original complaint,
the eleven named plaintiffs, all of whom were National Operators purported to
represent two alleged nationwide classes of National Operators. The complaint
alleges that the Company's fuel pricing policies and practices violate the
Uniform Commercial Code and constitute a breach of the contractual duty of good
faith and fair dealing and unjust enrichment. The complaint also asserts claims
of fraud and fraud in the inducement, apparently based on alleged
representations made by the Company concerning fuel pricing. Plaintiffs have
moved to amend the complaint to add seven additional plaintiffs, to withdraw
their class action allegations, to assert claims, including claims of fraud and
fraudulent inducement, against Clipper and certain present and former directors
and officers of the Company and to add additional claims, including claims for
alleged violation of the PMPA. The complaint and proposed amended complaint seek
actual and punitive damages in an unspecified sum. National intends to remove
the action to federal court and to move to dismiss or transfer the action to
Nashville, Tennessee. No substantive rulings have been made in the case to date.
On September 6, 1996, one of the plaintiffs, Panhandle Motor Service
Corp. ("Panhandle"), the Operator of a National TravelCenter in Martinsburg,
West Virginia, filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code. The bankruptcy court converted the case to Chapter 7. The
Company has entered into a settlement agreement with the Chapter 7 trustee
pursuant to which, among other things, National released certain liens. The
Trustee has agreed to release all claims against the Company and its affiliates,
and has agreed to dismissal of all claims asserted by Panhandle in the Panhandle
litigation. National has also entered into a settlement agreement with two of
the remaining plaintiffs pursuant to which the claims of those plaintiffs will
be dismissed with prejudice.
On March 31, April 1 and April 7, 1997, three of the plaintiffs filed
motions for a preliminary injunction. The motions seek an order requiring, among
other things, that the Company sell to the movants all of the movants'
requirements of diesel fuel at a price per gallon of not more than two cents
above the Oil Price Information Service average price under the terms of the
Company's existing lease and franchise agreements. The Company intends to oppose
the motions. In addition, on April 22, 1997, two of the movants filed a motion
seeking a temporary restraining order for substantially the same relief.
FOOD SYSTEMS LITIGATION. The Company filed this action on May 7, 1996,
in the U.S. District Court for the Middle District of Tennessee seeking, among
other things, a declaratory judgment that it was entitled to terminate the
franchise of the defendant, one of the Company's TravelCenter Operators, for
failure to pay rent and on other grounds. On June 11, 1996, the defendant filed
counterclaims for violation of the PMPA, for breach of contract and for breach
of implied contract, seeking actual and punitive damages in an unspecified
amount. On November 12, 1996, the defendant filed for relief under Chapter 7 of
the Bankruptcy Code, thereby staying all proceedings in this action. The Company
has recovered possession of the Salt Lake City site through bankruptcy court
proceedings.
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EMPLOYEES
As of April 20, 1997, the Company employed approximately 240 employees
who performed managerial, operational or support services and approximately
6,600 employees at Company-operated locations. Approximately 45 employees staff
the Distribution Center. Except for the restaurant employees of one National
Company-operated site (which the Company intends to sell pursuant to the
Combination Plan), all of the Company's employees are non-union. The Company
believes its relationship with its employees is satisfactory.
PROPERTIES
The Company's principal executive offices are leased and are located at
24601 Center Ridge Road, Suite 300, Westlake, Ohio 44145-5634. The Company also
leases offices at 3100 West End Avenue, Suite 300, Nashville, Tennessee 37203.
The Distribution Center is a leased facility located at 1450 Gould Boulevard,
LaVergne, Tennessee 37086-3535.
Of the Company's 135 owned sites, the improvements at three are leased,
three are subject to ground leases of the entire site and seven are subject to
ground leases of portions of such sites.
The following charts set forth a list of each of the TA Network's
locations (including locations of Burns Brothers, which is affiliated with TA
through the TABB joint venture) and the National Network's locations, and also
list certain of the products and services available at each TravelCenter as of
December 31, 1996.
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<TABLE>
<CAPTION>
TravelCenter Directory
TA Network & Burns Brothers Network
Full AT&T Private 24 Truck Permit Cert-
Service Fast Parking Phone Drivers' Show- Hour Maint- Serv- ified
ST City Name/Interstate Location Dining Food Spaces Service Lounge ers ATM Garage enance ices Scales
- -- ---------------- ------------------------- ------ ---- ------ ------- ------ ------ --- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL Tuscaloosa Exit 77, I-20/I-59 X SUB 152 X X 12 X X X X X
& Buttermilk Rd.
AZ Eloy Toltec Rd. Exit I-8/I-10 X TB 222 X X 12 X X X X X
AR West Memphis Earle Exit 260, I-40 & X 140 X X 10 X X X X X
S.R. 149
CA Ontario Exit Milliken Ave., I-10 X SBA, 630 X X 28 X X X X X
& Milliken Ave. BK
CA Wheeler Ridge I-5 at Lake Isabella X TB, 165 X X 13 X X X X X
(Northbound) SUB,
I-5 at Laval Rd. BK
(Southbound)
CA Barstow (BB) West Main Exit, I-15 X 35 X 7 X
CA Coachella (BB) Dillon Road Exit, I-10 X TCBY 300 X X 16 X X X X X
CA Corning (BB) South Avenue Exit, I-5 X SUB 300 X X 20 X X X X X
CA Lost Hills (BB) Exit Hwy 45, I-5 X 65 X 6 X X
CT Willington Exit 71, I-84 X BK, 256 X X 10 X X X X X
DQ
GA Atlanta Exit 39/Hwy. 160, I-285E X 239 X X 12 X X X X X
GA Brunswick Exit 6, I-95 at U.S. 17 X DQ 120 X X 12 X X X X X
IL Chicago North Illinois/Wisconsin Line, X PH 250 X X 12 X X X X X
I-94 & Russell
IL Effingham Exit 160, I-57/I-70 & X 170 X X 10 X X X X X
S.R. 32 & 33
IN Gary Burr St. Exit, I-80/I-94 X PH, 339 X X 22 X X X X X
TB,
KFC
IN Seymour Exit 50, I-65 & S.R. 50 X 145 X X 11 X X X X X
ID Boise (BB) Exit 54, I-84 X 130 X X 8 X X X X
IA Minden (BB) Exit 29, I-80 X 30 X 2 X X X
IA Stockton (BB) Exit 280, I-80 X 75 X 3 X X
IA Walcott I-80 at Exit 284 X DQ, 620 X X 24 X X X X X
BL,
W
KS Beto Junction Exit 155, U.S. 75 & I-35 X 180 X X 6 X X X X X
KY Cincinnati South Exit 175, I-75/I-71 X 98 X X 8 X X X X X
& S.R. 338
MD Baltimore South Jessup Exit 41A, Rt. 175 X SUB 650 X X 25 X X X X X
& I-95
MI Monroe Exit 15, I-75 & S.R. 50 X 82 X X X X
MO Concordia Exit 58, I-70 & Rt. 23 X PH, 125 X X 12 X X X X X
SUB
MO Mt. Vernon Exit 46, I-44 & S.R. 39 X 150 X X 12 X X X X X
NJ Carney's Point Exit 2C, I-295 X 80 X X 6 X X X X X
NJ Columbia Exit 4, I-80 at Rt. 94 X 200 X X 7 X X X X X
NE Overton (BB) Exit 248, I-80 X 45 X 3 X X
58 Miles West of Grand
Island
NE Waco (BB) Exit 360, I-80 X 70 X 3 X X
NV Mill City (BB) Exit 151, I-80 X 120 X X 10 X X
(heading West)
Exit 149, I-80
(heading East)
NV Rye Patch (BB) Exit 129, I-80 40 3 X X
25 Miles East of
Lovelock
</TABLE>
(BB) - Denotes Burns Brothers site
<TABLE>
<CAPTION>
Express Dining Legend
<S> <C> <C> <C> <C> <C> <C>
DQ Dairy Queen SBA Sbarro LC Little Ceasar's
TB Taco Bell Express BK Burger King HSP Hot Stuff Pizza
SUB Subway LJS Long John Silver's TCBY TCBY
BL Blimpie W Wendy's PH Pizza Hut
KFC Kentucky Fried Chicken HD Hardee's PY Popeyes
OM Oscar Meyer
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TravelCenter Directory
TA Network & Burns Brothers Network
Full AT&T Private 24 Truck Permit Cert-
Service Fast Parking Phone Drivers' Show- Hour Maint- Serv- ified
ST City Name/Interstate Location Dining Food Spaces Service Lounge ers ATM Garage enance ices Scales
- -- ---------------- ------------------------- ------ ---- ------ ------- ------ ------ --- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NM Gallup Exit 16, I-40 & Hwy. 66 X 120 X X 15 X X X X X
NM Las Cruces I-10 & Amador Exit, X 150 X X 15 X X X X X
Hwy. 292
NM Santa Rosa Exit 277, I-40 & X SUB 160 X X 10 X X X X X
U.S. 66, 54 & 84
NC Greensboro Exit 138, I-85/I-40 & X BK 198 X X 13 X X X X X
Hwy. 61
NC Kenly Exit 106, I-95 X HSP 300 X X 12 X X X X X
OH Ashland Exit 186, I-71 & U.S. 250 X 55 X X 4 X X X X X
OH Dayton Exit 10, I-70 & U.S. 127 X SUB 225 X X 8 X X X X X
OH Jeffersonville Exit 65, I-71 & U.S. 35 X 101 X X 4 X X X X X
OH Lodi Exit 209, I-71 & I-76 at X 250 X X 12 X X X X X
Rt. 224
OH Stony Ridge Ohio Turnpike Exit 5, X SBA 300 X X 15 X X X X X
I-80 & I-280
OK Oklahoma City Council Rd. Exit, I-40 X BK 200 X X 12 X X X X X
OR Eugene Exit 199, I-5 X 120 X X 6 X X X X X
OR Troutdale (BB) Exit 17, I-84 X SUB 240 X X 10 X X X X
OR Wilsonville (BB) Exit 266, I-5 X 300 X X 7 X X X X X
PA Barkeyville Exit 3, I-80 & S.R. 8 X SUB 86 X X 9 X X X X X
PA Breezewood PA Turnpike Exit 12 & X DQ, 220 X X 16 X X X X X
U.S. 30, LC
I-76/I-70
PA Brookville Exit 13, I-80 & Rt. 36 X TB 220 X X 16 X X X X X
PA Harrisburg Manada Hill Exit 27, X 175 X X 17 X X X X X
I-81 & S.R. 39
PA Lamar Exit 25, I-80 & S.R. 64 X SUB 75 X X 10 X X X X X
SC Spartanburg Exit 63, I-85 & S.R. 290 X DQ 160 X X 12 X X X X X
SD Kadoka (BB) Exit 152, I-90 X 75 X 4 X X
SD Spencer (BB) Exit 353, I-90 SUB 20 1 X X
45 Miles West of Sioux
Falls
TN Knoxville Exit 374, I-40 & I-75 X TB 180 X X 14 X X X X X
TN Nashville Exit 85, I-65 X SUB 205 X X 11 X X X X X
TX Amarillo Exit 81, I-40 E & X SUB 156 X X 12 X X X X X
FM 1912
TX Baytown Exit 789, I-10 & X 200 X X 10 X X X X X
Thompson Rd.
TX Dallas Exit Big Town Blvd., X 265 X X 13 X X X X X
I-30 & U.S. 80
UT Parowan (BB) Exit 78, I-15 40 X X 3 X X
20 Miles North of Cedar
City
VA Ashland Exit 92, I-95 & Rt. 54 X 204 X X 16 X X X X X
VA Roanoke Exit 150, I-81 & X BK 100 X X 11 X X X X X
U.S. 220
WV Wheeling Exit 11, I-170 at X 200 X X 15 X X X X X
Dallas Pike
WI Janesville Exit 171-C, I-90 & W 52 X X 4 X X X
Hwy 14
WY Sinclair (BB) Exit 221, I-80 150 X 4 X X
WY Cheyenne (BB) Exit 377, I-80 X 140 X X 12 X X X X
17 Miles East of
Cheyenne
WY Ft. Bridger (BB) Exit 30, I-80 X 200 X X 9 X X X X
East of Evanston
</TABLE>
(BB) - Denotes Burns Brothers site
<TABLE>
<CAPTION>
Express Dining Legend
<S> <C> <C> <C> <C> <C> <C>
DQ Dairy Queen SBA Sbarro LC Little Ceasar's
TB Taco Bell Express BK Burger King HSP Hot Stuff Pizza
SUB Subway LJS Long John Silver's TCBY TCBY
BL Blimpie W Wendy's PH Pizza Hut
KFC Kentucky Fried Chicken HD Hardee's PY Popeyes
OM Oscar Meyer
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
TravelCenter Directory
National Network
Full AT&T Private 24 Truck Permit Cert-
Service Fast Parking Phone Drivers' Show- Hour Maint- Serv- ified
ST City Name/Interstate Location Dining Food Spaces Service Lounge ers ATM Garage enance ices Scales
- -- ---------------- ------------------------- ------ ---- ------ ------- ------ ------ --- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AL Mobile Mobile 76 Auto/Truck X 102 X X 10 X X X X X
Plaza
I-10, Exit 4
AL Montgomery Montgomery 76 X 100 X X 14 X X X X X
Auto/Truck Plaza
I-65, Exit 168
AL Tuscaloosa Baggett's 76 Truck Plaza X 110 X X 11 X X X X X
I-59 & I-20, Exit 76
AR North Little Rock Little Rock Auto-Truck X 175 X X 9 X X X X X
Stop
I-40 & Galloway, MM 161
AR Van Buren Van Buren Travel Center X 120 X X 6 X X X X X
I-40 & Highway 59,
Exit 5
AR West Memphis Memphis Gateway Truck X TB, 165 X X 10 X X X X X
Center TCBY
I-40 & I-55, Exit 278
AZ Kingman Kingman 76 Auto/Truck X 125 X X 12 X X X X X
Plaza
I-40, Exit 48
CA Blythe Southwest Express Travel X 40 X X 6 X X X X X
Plaza
I-10 & Mesa Drive
CA Buttonwillow Bruce's 76 Travel Plaza X 220 X X 12 X X X X X
I-5, Highway 58
CA Ontario Ontario Auto/Truck Plaza X 450 X X 18 X X X X X
I-10 at Milliken Avenue
CA Redding Redding 76 Travel Center X 250 X X 9 X X X X X
I-5, Knighton Road
CA Sacramento Sacramento 49er X 220 X X 12 X X X X X
Auto/Truck Plaza
I-80 at West El Camino
CA Santa Nella Mid Cal Auto Truck Plaza X 216 X X 13 X X X X X
I-5 & Highway 33, Santa
Nella Exit
CO Wheat Ridge Denver West Travel X 155 X X 10 X X X X X
Center
I-70, Exit 266
CT New Haven New Haven 95 East Truck X 120 X X 7 X X X X X
Stop
I-95, CT Exit 56
CT Southington American Eagle 76 X 94 X X 12 X X X X X
Auto/Truck Plaza
I-84, Exit 28,
HIGHWAY 322
FL Jacksonville Jacksonville I-10 X 90 X X 6 X X X X X
Travel Center
Jct. I-10 & U.S. 301,
Exit 50, MM 345
FL Jacksonville Jacksonville South X 137 X X 6 X X X X X
Travel Center
I-95 & C.R. 210 West,
Exit 96, MM 329
FL Marianna Marianna 76 Auto/Truck X 138 X X 12 X X X X X
Stop
I-10 & State Route 71
FL Vero Beach Vero Beach Travel Center X W 180 X X 9 X X X X X
I-95, Exit 68, MM 147
FL Wildwood Wildwood Travel Center X PH, 170 X X 12 X X X X X
I-75 at Route 44, SUB
Exit 66, MM 330
GA Commerce North Georgia 85 X 151 X X 14 X X X X X
Auto/Truck Plaza
I-85 & U.S. 441,
Exit 53, MM 151
GA Jackson Atlanta South 75 Travel X SUB 200 X X 12 X X X X X
Plaza
I-75 & Georgia
Highway 36
GA Lake Park Lake Park Travel Center X TB 75 X X 6 X X X X X
I-75, Exit 1
GA Madison Madison 20 Travel Center X TB 75 X X 10 X X X X X
I-20, Exit 51
GA Ringgold Cochran's Auto Truckstop X 82 X X 12 X X X X X
I-75 & U.S. 41, Exit 139
</TABLE>
(BB) - Denotes Burns Brothers site
<TABLE>
<CAPTION>
Express Dining Legend
<S> <C> <C> <C> <C> <C> <C>
DQ Dairy Queen SBA Sbarro LC Little Ceasar's
TB Taco Bell Express BK Burger King HSP Hot Stuff Pizza
SUB Subway LJS Long John Silver's TCBY TCBY
BL Blimpie W Wendy's PH Pizza Hut
KFC Kentucky Fried Chicken HD Hardee's PY Popeyes
OM Oscar Meyer
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
TravelCenter Directory
National Network
Full AT&T Private 24 Truck Permit Cert-
Service Fast Parking Phone Drivers' Show- Hour Maint- Serv- ified
ST City Name/Interstate Location Dining Food Spaces Service Lounge ers ATM Garage enance ices Scales
- -- ---------------- ------------------------- ------ ---- ------ ------- ------ ------ --- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GA Savannah Savannah Travel Center X PH, 107 X X 9 X X X X X
I-95 & U.S. 17 South, LJS
Exit 14
IA Altoona Mid-Iowa Travel Center X 165 X X 10 X X X X X
I-80, Exit 143
IA Council Bluffs Council Bluffs X TCBY 100 X X 5 X X X X X
Auto/Truck Stop
I-80 & I-29, Exit 3
IL Bloomington Bloomington Auto/Truck X 150 X X 11 X X X X X
Plaza
I-55, I-74, I-39 at
Route 9, Exit 160A
IL Chicago New Lemont Auto/Truck X 175 X X 9 X X X X
Plaza
I-55, Exit 267
IL Chicago Calumet Auto/Truck Plaza X 210 X X 10 X X X X X
I-94, Exit 73B
IL Elgin Elgin West Truckstop X 125 X X 10 X X X X X
I-90 & U.S. Highway 20,
Maringo-Hampshire Exit
IL Monee Windy City South X PH 125 X X 6 X X X X X
Auto/Truck Plaza
I-57, Exit 335
IL Mt. Vernon Big Chief Auto/Truck X 85 X X 8 X X X X X
Plaza
I-57 & I-64, MM 95
IL Peru Lasalle-Peru X 115 X X 7 X X X X X
Auto/Truckstop
I-80, Exit 75
IL Troy St. Louis Easts Truck X HD 100 X X 6 X X X X X
Plaza
I-55 & I-70, Exit 18
IN Angola Angola 76 Travelers Mall X 75 X X 6 X X X X X
I-80/90, Exit 144; I-69,
Exit 157
IN Clayton Indianapolis West 70 X OM 100 X X 7 X X X X X
Truck Plaza
I-70 & State Road 39,
Exit 59, MM 59
IN New Lisbon New Lisbon Travel Plaza X 100 X X 5 X X X X
I-70, Exit 131
IN New Point Ross Point Travel Plaza X 100 X X 5 X X X X X
I-74, New Point
Interchange, MM 143
IN Remington Remington Truck Plaza X 150 X X 7 X X X X X
I-65, Exit 201
IN Whitestown Indy 500 Auto/Truck X 150 X X 6 X X X X X
Plaza
I-65, State Road 334,
Exit 130
KS Solomon Mid Kansas Travel Center X 80 X X 6 X X X
I-70, Exit 266
KY Florence Burns Bros. Truck Plaza X OM 200 X X 8 X X X X X
I-75, Exit 181
KY Waddy Waddy Travel Center X 175 X 4 X X X
I-64 & KY 395, Exit 43
LA Lafayette Lafayette 76 X 119 X X 13 X X X X X
Auto/Truck Plaza
I-10 & State Road 182,
MM 101
LA Shreveport Kelly's Truck Terminal X 300 X X 15 X X X X X
I-20, Exit 5 at U.S.
Highway 79 & 80
LA Slidell Slidell 76 Travel Center X 200 X X 10 X X X X X
I-10, Exit 266
LA Tallulah Louisiana I-20 East X 120 X X 8 X X X X X
Travel Center
I-20 & U.S. 65,
Exit 171
</TABLE>
(BB) - Denotes Burns Brothers site
<TABLE>
<CAPTION>
Express Dining Legend
<S> <C> <C> <C> <C> <C> <C>
DQ Dairy Queen SBA Sbarro LC Little Ceasar's
TB Taco Bell Express BK Burger King HSP Hot Stuff Pizza
SUB Subway LJS Long John Silver's TCBY TCBY
BL Blimpie W Wendy's PH Pizza Hut
KFC Kentucky Fried Chicken HD Hardee's PY Popeyes
OM Oscar Meyer
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
TravelCenter Directory
National Network
Full AT&T Private 24 Truck Permit Cert-
Service Fast Parking Phone Drivers' Show- Hour Maint- Serv- ified
ST City Name/Interstate Location Dining Food Spaces Service Lounge ers ATM Garage enance ices Scales
- -- ---------------- ------------------------- ------ ---- ------ ------- ------ ------ --- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MD Elkton Maryland's Liberty Bell X SUB 230 X X 12 X X X X X
Auto/Truck Plaza
I-95, Exit 109B
MI Ann Arbor Wolverine Truck Plaza X 200 X X 10 X X X X X
I-94, Exit 167
MI Saginaw Alpine Auto/Truck Plaza X 100 X X 4 X X X X X
I-75, Exit 144
MI Sawyer Sawyer Truck Plaza X 175 X X 8 X X X X X
I-94, Exit 12
MN Rogers Twin City West X 127 X X 8 X X X X X
Auto/Truck Plaza
I-94 & Highway 101,
Exit 207
MO Foristell St. Louis West 70 Truck X 86 X X 8 X X X X X
Plaza
I-70 & Route W,
Exit 203, MM 204
MO Matthews Eagle Landing Travel X TB 100 X X 6 X X X X X
Center
I-55 & Highway 80,
Exit 58
MO Oak Grove Kansas City East X 130 X X 10 X X X X X
National 76
I-70 & Route H, Exit 28
MO Strafford Springfield 44 X 130 X X 8 X X X X X
Auto/Truck Stop
I-44, Exit 88
MS Meridian Kelley's Truck Plaza X 115 X X 6 X X X X X
I-20 & I-59, Exit 160
NC Charlotte Jake's Red Ball at Sunset X 150 X X 18 X X X X X
I-77, Exit 16
NC Benson Dunn Robin Hood Truck Plaza X 75 X X 7 X X X
I-95, Exit 77
NC Mocksville Horn's Auto Truck Plaza X 150 X X 7 X X X X X
I-40 & Highway 601,
Exit 170, MM 170
NC Salisbury Derrick 76 X 120 X X 8 X X X X
I-85, Exit 71
NC Waynesville McElroy, Inc. X 25 X X 3 X X X X X
I-40, Exit 24
NC Wilmington Wilmington Auto/Truck X 275 X X X X
Stop
Highway 421 at Third
Street
NE Grand Island Grand Island West 76 X 125 X X 7 X X X X X
Auto/Truck Plaza
I-80, Exit 305
NE Ogallala Ogallala 76 Auto/Truck X 100 X X 10 X X X X X
Plaza
I-80, Exit 126
NJ Bloomsbury Garden State Truck Plaza X 175 X X 7 X X X X X
I-78, Bloomsbury Exit 7
NM Albuquerque Albuquerque Travel X 125 X X 11 X X X X X
Center
I-25 & I-40, Exit 227A
NM Gallup Baggett's Gallup 76 X 90 X X 9 X X X X
I-40, Exit 16
NV Las Vegas Blue Diamond Auto/Truck X 135 X X 14 X X X X X
Center
I-95, Blue Diamond
Exit 33
NV Reno-Sparks Sierra Sid's Auto/Truck X 187 X X 16 X X X X X
Plaza
I-80, Exit 19
NY Buffalo Buffalo I-90 East Auto X 150 X X 8 X X X X X
Truck Center
I-90 & SR 77, Exit 48A,
Pembroke
NY Ripley Ripley State Line X 150 X X 4 X X X X X
Truckstop
I-90 Shortman Road 61,
495
</TABLE>
(BB) - Denotes Burns Brothers site
<TABLE>
<CAPTION>
Express Dining Legend
<S> <C> <C> <C> <C> <C> <C>
DQ Dairy Queen SBA Sbarro LC Little Ceasar's
TB Taco Bell Express BK Burger King HSP Hot Stuff Pizza
SUB Subway LJS Long John Silver's TCBY TCBY
BL Blimpie W Wendy's PH Pizza Hut
KFC Kentucky Fried Chicken HD Hardee's PY Popeyes
OM Oscar Meyer
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
TravelCenter Directory
National Network
Full AT&T Private 24 Truck Permit Cert-
Service Fast Parking Phone Drivers' Show- Hour Maint- Serv- ified
ST City Name/Interstate Location Dining Food Spaces Service Lounge ers ATM Garage enance ices Scales
- -- ---------------- ------------------------- ------ ---- ------ ------- ------ ------ --- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OH Columbus Ohio 70-37 Truck Stop X 160 X X 9 X X X X X
I-70 at Ohio 37, Exit 126
OH Franklin Dayton South Truck Plaza X OM 152 X X 6 X X X X X
I-75 & State Road 123,
Exit 36
OH Jeffersonville Garner's Auto TruckStop X 190 X 7 X X X X X
I-71, MM 65
OH Kingsville Kingsville 90 X 150 X X 8 X X X X X
Auto/Truckstop
I-90, Exit 255
OH London Columbus I-70 West X PH 200 X X 13 X X X X X
Auto/Truck Stop
I-70 & U.S. 42, Exit 79
OH North Baltimore Buckeye Travelers Mall X 200 X 10 X X X X
I-75, State Route 18,
Exit 167
OH North Canton Akron/Canton Truck Plaza X 90 X X 5 X X X X X
I-77, Exit 111
OH Seville Akron West Travel Center X 190 X X 9 X X X X X
I-71, Exit 209, MM 209
OH Toledo Toledo-5 Travel Center X 200 X X 12 X X X X X
I-80/90 & I-280, Exit 5
OH Youngstown Youngstown 76 Auto/Truck X 200 X X 12 X X X X X
Plaza
I-80, Route 46, Exit 223,
Ohio Turnpike, Exit 15
OK Oklahoma City Oklahoma City Travel X OM 200 X X 9 X X X X X
Center
I-40 West, Exit 140
OR Portland Portland Travel Center X 90 X X 8 X X X X X
I-5, Exit 278
PA Bartonsville American Falcon X PH, 120 X X 9 X X X X X
Auto/Truck Stop TB,
I-80 & U.S. 611, SUB
Exit 46B
PA Breezewood All American 76 X 150 X X 10 X X X X
Auto/Truck Plaza
PA Turnpike Exit 12,
I-70 & Route 30
PA Claysville Exit 2 Travel Center X SBA, 135 X X 6 X X X X X
I-70, Exit 2 TCBY
PA Harrisburg P & M 76 Plaza X 180 X X 8 X X X X X
I-81, Exit 27, MM 76
PA North East North East Service Plaza X PH, 90 X X 10 X X X X X
I-90, Route 20, Exit 12, TB
MM 44
PA Smithton New Stanton West Auto X 130 X X 7 X X X X X
Truck Plaza
I-70, Exit 23
PA Strattanville Keystone Shortway 76 X 140 X X 9 X X X X X
I-80 & U.S. Route 322,
Exit 11, MM 70
SC Columbia Columbia 20 X PH 100 X X 11 X X X X X
Auto/Truckstop
I-20 & U.S. 21, Exit 71
SC Manning Jerry's Travel Center X TB, 114 X 7 X X X X X
I-95, MM 119 BL,
SBA
TN Antioch Baggett's Music City X 150 X X 6 X X X X X
Auto/Truckstop
I-24, Exit 62, MM 62
TN Franklin Nashville South 76 Auto X 86 X X 6 X X X X X
Truck Plaza
I-65, Exit 61
</TABLE>
(BB) - Denotes Burns Brothers site
<TABLE>
<CAPTION>
Express Dining Legend
<S> <C> <C> <C> <C> <C> <C>
DQ Dairy Queen SBA Sbarro LC Little Ceasar's
TB Taco Bell Express BK Burger King HSP Hot Stuff Pizza
SUB Subway LJS Long John Silver's TCBY TCBY
BL Blimpie W Wendy's PH Pizza Hut
KFC Kentucky Fried Chicken HD Hardee's PY Popeyes
OM Oscar Meyer
</TABLE>
82
<PAGE>
<TABLE>
<CAPTION>
TravelCenter Directory
National Network
Full AT&T Private 24 Truck Permit Cert-
Service Fast Parking Phone Drivers' Show- Hour Maint- Serv- ified
ST City Name/Interstate Location Dining Food Spaces Service Lounge ers ATM Garage enance ices Scales
- -- ---------------- ------------------------- ------ ---- ------ ------- ------ ------ --- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TN Jackson Wilhite's Travel Center X 100 X X 6 X X X X X
I-40, Exit 68
TN Knoxville Knoxville Travel Center X PH, 176 X X 13 X X X X X
I-40 & I-75, Exit 369 BK
TN Lebanon Nashville East 40 Truck X 100 X X 6 X X X X X
Stop
I-40 & Highway 109,
Exit 232
TN Monteagle Monteagle Truck Plaza X 100 X X 6 X X X X X
I-24, Exit 135,
U.S. 64 & 41A
TX Amarillo Amarillo Travel Center X 114 X X 8 X X X X X
I-40, Exit 74
TX Brookshire Houston West Travel X 250 X X 8 X X X X X
Center
I-10 & FM 359, Exit 732,
MM 732
TX Dallas Denton Travel Center X 160 X 9 X X X X X
I-35 & U.S. 77,
Exit 471, MM 471
TX Edinburg Edinburg Auto/Truck Stop X 175 X X 4 X X X
North Highway 281
at FM 2812
TX El Paso El Paso Travel Plaza X 350 X X 13 X X X X X
I-10, Exit 37, MM 37,
Horizon Blvd.
TX Ozona Circle Bar 76 X 150 X X 6 X X X X X
Auto/Truck Plaza
I-10 & Taylor Box Road,
Exit 372
TX Rockwall Rockwall 76 Auto/Truck X 100 X X 6 X X X X X
Plaza
I-30 at State Highway
205, Exit 68
TX Sweetwater Sweetwater 76 Auto/Truck X PH, 110 X X 6 X X X X X
Stop OM
I-20, Exit 242
UT Salt Lake City Salt Lake City Auto X 150 X X 12 X X X X X
Truck Plaza
I-80, Exit 99
VA Ashland Speed & Briscoe X TB 158 X X 8 X X X X X
I-95, Exit 89, MM 89
VA Raphine Whites Truckstop X 260 X X 10 X X X X X
I-81 & I-64, Exit 205
VA Wytheville Wilderness Road Travel X TB, 120 X X 12 X X X X X
Center SUB
I-77, Exit 41, I-81,
Exit 72
WI Hudson Twin City East 76 X 90 X X 6 X X X X X
Auto/Truck Plaza
I-94, Exit 4
WI Madison Madison Travel Center X SUB 150 X X 10 X X X X X
I-90 & I-94, Exit 132
WI New Lisbon New Lisbon Travel Center X 75 X X 6 X X X X X
I-90/I-94, Exit 61
WI Oak Creek Milwaukee Travel Center X SUB 180 X X 10 X X X X X
I-94 & Route 100, Ryan
Road, Exit 322, MM 23
WV Hurricane Charleston West 76 X 95 X X 7 X X X X X
Auto/Truck Stop
I-64, Exit 39
WV Martinsburg Panhandle Travel Center X 103 X X 4 X X X X X
I-81 & Spring Mills
Road, WV Highway 901
</TABLE>
(BB) - Denotes Burns Brothers site
<TABLE>
<CAPTION>
Express Dining Legend
<S> <C> <C> <C> <C> <C> <C>
DQ Dairy Queen SBA Sbarro LC Little Ceasar's
TB Taco Bell Express BK Burger King HSP Hot Stuff Pizza
SUB Subway LJS Long John Silver's TCBY TCBY
BL Blimpie W Wendy's PH Pizza Hut
KFC Kentucky Fried Chicken HD Hardee's PY Popeyes
OM Oscar Meyer
</TABLE>
83
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND MEMBERS OF BOARD OF DIRECTORS
The executive officers and members of the Board of Directors of the
Company and their ages, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Edwin P. Kuhn............ 54 President, Chief Executive Officer and Director
James W. George.......... 45 Senior Vice President and Chief Financial Officer
Timothy L. Doane......... 39 Senior Vice President
Michael H. Hinderliter... 48 Senior Vice President
James F. Blackstock...... 49 Vice President, General Counsel and Secretary
Walter E. Smith, Jr...... 56 Director
Margaret M. Eisen........ 43 Director
Robert B. Calhoun, Jr.... 54 Chairman of the Board of Directors and Director
Eugene P. Lynch.......... 35 Director
Louis J. Mischianti...... 38 Director
Rolf H. Towe............. 58 Director
</TABLE>
Officers of the Company are appointed by the Board of Directors and
serve at its discretion.
Edwin P. Kuhn was named the President, Chief Executive Officer and
Director of the Company and its subsidiaries in January 1997. Mr. Kuhn has
served as the President and Chief Executive Officer of TA since the closing of
the TA Acquisition in December 1993. Mr. Kuhn served as the General Manager (the
most senior position and effective President) of TA under BP's ownership from
April 1992 to December 1993. Prior to joining TA, Mr. Kuhn spent 25 years with
Sohio and BP in a series of retail site operating positions, most recently as
the Retail Marketing Regional Manager for all BP retail facilities in the states
of Ohio, Pennsylvania and Kentucky.
James W. George was named Senior Vice President and Chief Financial
Officer of the Company and its subsidiaries in January 1997. Mr. George has
served as a Vice President and Chief Financial Officer of TA since the closing
of the TA Acquisition in December 1993. From August 1990 to December 1993, Mr.
George served as the Controller (the most senior financial position) of TA under
BP's ownership. Prior to joining TA, Mr. George spent ten years with Sohio and
BP in a series of accounting and finance positions.
Timothy L. Doane was named Senior Vice President, Market Development of
the Company and its subsidiaries in January 1997. Mr. Doane has served as a Vice
President, Market Development of TA since 1995. Prior to joining TA, Mr. Doane
spent 15 years with Sohio and BP in a series of positions including Director of
Procurement (for all purchases except crude oil), Manager of BP's Procare
Automotive Service (a chain of stand-alone automobile repair garages in three
midwestern states), International Brand Manager (in the United Kingdom) and
Division Manager in retail marketing.
Michael H. Hinderliter was named Senior Vice President, Marketing of
the Company and its subsidiaries in January 1997. Mr. Hinderliter has served as
a Vice President, Marketing of TA since the closing of the TA Acquisition in
December 1993. From August 1992 to December 1993, Mr. Hinderliter served as the
Marketing Manager of TA under BP's ownership. From 1989 to August 1992, Mr.
Hinderliter
84
<PAGE>
was the manager of BP Truckstops Limited, BP's truckstop network in the United
Kingdom. Prior thereto, Mr. Hinderliter spent 14 years with TA under Ryder,
Sohio and BP ownership in a series of positions which included serving as a
Fleet Sales Manager, Division Manager and location General Manager.
James F. Blackstock was named Vice President and General Counsel of the
Company and its subsidiaries in January 1997. Mr. Blackstock has served as Vice
President and General Counsel of the Company and National since June 1994 and
Secretary since September 1993. From 1991 to 1993, Mr. Blackstock operated his
own law firm. From 1987 through 1990, Mr. Blackstock was Co-Managing Partner of
Sullivan, Workman and Dee, a Los Angeles law firm.
Walter E. Smith, Jr. has been a Director of the Company since July
1995. Mr. Smith has operated TravelCenters under franchises from National since
1993. Mr. Smith is a director of Citrus Financial Services, Inc., a bank holding
company in Vero Beach, FL, and the chief executive officer of four separate
private corporations which operate National TravelCenters.
Margaret M. Eisen has been a director of the Company since April 1997.
Ms. Eisen has served as Managing Director, North American Equities since June
1995 at General Motors Investment Management Corporation ("GMIMC"), the
investment advisor to First Plaza Group Trust ("First Plaza"). From March 1993
to June 1995 and from March 1992 to March 1993, Ms. Eisen served as Director,
Worldwide Pension Investments and as Director, Equity Portfolio Strategy,
respectively, at Du Pont Pension Fund Investment, E. I. Du Pont de Nemours and
Company.
Robert B. Calhoun, Jr. has been a director of the Company since April
1993 and was elected Chairman of the Board of Directors in September 1996. Mr.
Calhoun has been President of Clipper Asset Management Corporation, which is the
sole general partner of Clipper, as well as certain of its affiliates, since
1991. Mr. Calhoun also serves as director of Avondale Mills, Inc., Hvide Marine
Incorporated, Interstate Bakeries Corporation, Sterling Chemicals Holdings, Inc.
and several private companies.
Eugene P. Lynch has been a director of the Company since April 1993.
Mr. Lynch has been employed by Clipper or its affiliates since 1991 and has
served as a Managing Director since 1993. Mr. Lynch also serves as a director of
Owosso Corporation and several private companies.
Louis J. Mischianti has been a director of the Company since October
1992. Mr. Mischianti has been employed by Olympus Advisory Partners, Inc., an
affiliate of Olympus Private Placement Fund, L.P. ("Olympus"), since May 1994.
Mr. Mischianti was employed by Clipper or its affiliates from 1991 to April
1994. Mr. Mischianti serves as a director of several private companies.
Rolf H. Towe has been a director of the Company since July 1996. Mr.
Towe has served as a Senior Managing Director of Clipper and its affiliates
since 1991. Mr. Towe also serves as a director of American Heritage Life
Insurance Company, Sealy Corporation and several private companies.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth the
compensation awarded to, earned by or paid to the Chief Executive Officer and
each of the five most highly compensated officers of the Company as of December
31, 1996 (the "Named Executive Officers") for services rendered to the Company
and its subsidiaries for 1994, 1995 and 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Annual Compensation Securities All Other
------------------- Underlying Compen-
Name and Principal Position Year Salary($) Bonus($)(1) Options (#) sation($)(2)
- --------------------------- ---- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
C. William Osborne............................. 1996 264,452 26,445 -- 1,235
President, Chief Executive Officer and 1995 257,500 20,214 -- 1,152
Director(3) 1994 250,764 70,351 -- 1,152
Edwin P. Kuhn.................................. 1996 230,000 92,000 -- 4,204
President, Chief Executive Officer, TA 1995 220,000 88,000 -- 2,165
Subsidiary(4) 1994 210,000 84,000 -- 528
James W. George................................ 1996 144,000 57,600 -- 360
Vice President and Chief Financial Officer, 1995 136,500 54,600 -- 348
TA Subsidiary(5) 1994 130,000 52,000 -- 324
Michael H. Hinderliter......................... 1996 144,000 57,600 -- 360
Vice President, TA Subsidiary(5) 1995 136,500 54,600 -- 348
1994 130,000 52,000 -- 324
Kenneth W. Barrios............................. 1996 179,731 17,973 -- 747
Executive Vice President(3) 1995 175,000 13,738 -- 518
1994 139,213 46,013 -- 313
Timothy L. Doane............................... 1996 138,000 55,200 -- 348
Vice President, TA Subsidiary(5)(6) 1995 86,666 34,666 23,400 216
1994 -- -- -- --
</TABLE>
- ----------------------
(1) Represents bonus for services rendered in the indicated year.
(2) Represents life insurance premiums paid by the Company. Mr. Kuhn's amount
includes $1,613 in 1995 and $3,628 in 1996, reflecting his use of a
Company automobile.
(3) Resigned effective January 21, 1997.
(4) Elected as Chief Executive Officer and President of the Company and as a
director, effective January 21, 1997.
(5) Elected as Senior Vice President of the Company, effective January 21,
1997.
(6) Mr. Doane has served as a Vice President of the TA Subsidiary since May
1995.
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OPTION GRANTS. No options were granted by the Company to any Named
Executive Officer in 1996.
1993 STOCK PLAN. Stock options to purchase shares of Common Stock have
been granted to the Named Executive Officers prior to 1996 pursuant to the
Company's 1993 Stock Incentive Plan (the "1993 Stock Plan") as Series I, Series
II and Series III options, as follows: Mr. Osborne, 25,175, 26,573 and 28,252
options; Mr. Kuhn, 15,860, 16,721 and 17,799 options; both of Messrs. George and
Hinderliter, 9,818, 10,364 and 11,018 options; Mr. Barrios, 14,161, 14,948, and
15,892 options; and Mr. Doane, 7,364, 7,773, and 8,263 options, respectively.
The option exercise price for each Series I, Series II and Series III option is
as follows: $10.00 per share, $17.49 per share and $28.56 per share,
respectively. Fifty percent of each of the Series I, II and III options have
vested with respect to Messrs. Osborne and Barrios; however, all of such options
have been canceled. See "--Termination, Consulting and Release Agreements with
C. William Osborne, Kenneth W. Barrios and Daniel L. Tennant." Seventy-five
percent of each series of options have vested with respect to Messrs. Kuhn,
George and Hinderliter and 67% of each series of options have vested with
respect to Mr. Doane. Options are currently exercisable to the extent vested as
of December 31, 1996 and remain exercisable for limited periods following
termination of employment of the Named Executive Officer. All such unvested
options are expected to be canceled in connection with the adoption of a new
stock incentive plan. See "--Certain Prospective Management Equity
Participation." Common Stock acquired upon the exercise of options may not be
transferred except to certain family members and are subject to call and put
options upon termination of employment. It is expected that the call and put
option pricing formula under the 1993 Stock Plan and option agreements will be
modified. It is also expected that if a change of control occurs within six
months after termination of employment for "good reason," death, "disability" or
termination other than for "cause" (as defined), an adjustment will be made to
the amount paid upon exercise of any call options or put options (but, in the
case of put options, only to the extent the proceeds received by the former
employee upon exercise of the put option are used to repay indebtedness to the
Company) so that the former employee will be able to receive any amounts in
excess of the call or put price payable in the change of control transaction. It
is further expected that the option exercise price of the Series III options
granted under the 1993 Stock Plan, other than those which were canceled, shall
be reduced from $28.56 per share to $22.50 per share. See "Certain
Transactions--Stockholders' Agreements--Supplemental Institutional and
Management Stockholders' Agreement."
The following table sets forth information concerning the value of
unexercised options as of December 31, 1996 held by the Named Executive
Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1996
AND 1996 YEAR-END OPTION VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED VALUE UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
ON EXERCISE REALIZED AT 1996 YEAR-END (#) AT 1996 YEAR-END ($)
NAME (#)(1) ($)(1) EXERCISABLE/UNEXERCISABLE(2) EXERCISABLE/UNEXERCISABLE(2)(3)
---- -------- -------- ---------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. William Osborne............... -- -- 40,000 / 40,000(4) 159,225 / 159,225(4)
Edwin P. Kuhn.................... -- -- 37,800 / 12,600 134,382 / 66,188
James W. George.................. -- -- 23,400 / 7,800 83,210 / 40,985
Michael H. Hinderliter........... -- -- 23,400 / 7,800 83,210 / 40,985
Kenneth W. Barrios............... -- -- 22,500 / 22,500(4) 89,570 / 89,570(4)
Timothy L. Doane................. -- -- 15,678 / 7,722 62,411 / 30,738
</TABLE>
- ---------------------
(1) No options were exercised by any Named Executive Officer in 1996.
(2) The portion of all options granted pursuant to the 1993 Stock Plan which
are unexercisable as of December 31, 1996 are expected to be canceled in
connection with the adoption of the 1997 Stock Plan (as defined).
See "--Certain Prospective Management Equity Participation."
(3) Based on a stock price of $20.00 per share.
(4) All options of Messrs. Osborne and Barrios, 50% vested at 1996 Year-End,
have been canceled. See "--Termination, Consulting and Release
Agreements with C. William Osborne, Kenneth W. Barrios and Daniel L.
Tennant."
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CERTAIN PROSPECTIVE MANAGEMENT EQUITY PARTICIPATION
The Board of Directors has approved the adoption of a 1997 Stock
Incentive Plan (the "1997 Stock Plan"). The principal terms and conditions of
the plan are expected to be as follows: a maximum of 650,000 shares of Common
Stock (subject to adjustment) may be issued pursuant to options and stock
appreciation rights granted to officers, directors and key employees of the
Company designated by the Compensation Committee; up to 162,500 nonqualified
stock options will be granted annually over the four-year period from 1997
through 2000; the option exercise price for each option granted will be the fair
market value of the stock on the respective grant date; the options will vest on
the December 31 of the year of grant upon the attainment of performance targets
(outstanding options and options with respect to shares reserved for future
awards will vest upon a "change of control" or "initial public offering" of the
Company (as such terms are defined in the plan)), and remain exercisable for
limited periods following termination of employment; shares of Common Stock
acquired upon exercise of options are subject to call and put options upon
termination of employment; if a change of control occurs within six months after
termination of the employment of a former employee for "good reason," death,
"disability" or termination other than for "cause" (as defined), an adjustment
will be made to the amount paid upon exercise of any call options or put options
(but, in the case of put options, only to the extent the proceeds received by
the former employee upon exercise of the put option are used to repay
indebtedness to the Company) so that the former employee will be able to receive
any amounts in excess of the call or put price payable in the change of control
transaction.
In addition, it is also expected that the Company will issue to Mr.
Doane, for a subscription price of $15.00 per share, 7,727 shares of Common
Stock.
COMPENSATION OF DIRECTORS
In September 1996, the Company's Board of Directors unanimously agreed
to waive all Board of Directors retainers and meeting fees. There is no
assurance such an arrangement will continue in the future. Members of the
Company's Board of Directors receive reasonable out-of-pocket expenses in
connection with travel to and attendance at meetings.
EMPLOYMENT AGREEMENTS AND STOCKHOLDERS' AGREEMENTS WITH EDWIN P. KUHN,
JAMES W. GEORGE, MICHAEL H. HINDERLITER AND TIMOTHY L. DOANE
The Company plans to enter into an employment agreement, a
stockholder's agreement and a Supplemental Institutional and Management
Stockholders' Agreement with each of Edwin P. Kuhn, James W. George, Michael H.
Hinderliter and Timothy L. Doane (the "Executives"). The principal terms and
conditions of the Executives' employment agreements are expected to be as
follows:
The Executives shall be employed by the Company from January 1, 1997
through December 31, 2000 (unless terminated earlier). The employment agreements
provide for annual base salaries of $325,000 for Mr. Kuhn and $210,000 for
Messrs. George, Hinderliter and Doane, respectively; annual bonuses of up to 50%
of annual base salary, minimum 25% of base salary for 1997 and 12.5% of base
salary for 1998 (the "Guaranteed Bonuses"); participation in Company employee
benefit plans; and certain fringe benefits.
If an Executive's employment is terminated prior to December 31, 2000:
(i) by his resignation (other than for "good reason" (this term and each
subsequent term in quotation marks referenced in this paragraph as defined in
the employment agreements) or for "cause", he shall be entitled to only his
accrued and unpaid base salary and any vested benefits under the Company's 1993
and 1997 Stock Plans; (ii) by reason of death or "permanent disability", then in
addition to the foregoing, any annual or guaranteed bonus (whichever is
greater), pro-rated, and Company-paid continued medical coverage; and (iii) by
his resignation for good reason or by the Company for any other reason, base
salary until December 31, 2000 (or if later, for one year) subject to offset,
his guaranteed bonus, if any (or, if greater, any annual bonus, pro-rated), any
vested benefits under the Company's 1993 and 1997 Stock Plans and subsidized
medical
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<PAGE>
coverage; provided that if the Executive engages in a "competitive activity," he
shall instead only be entitled to his accrued and unpaid base salary, any vested
benefits under the Company's 1993 and 1997 Stock Plans and subsidized medical
coverage. If any payments and the value of benefits are "contingent on a change
of control" within the meaning of section 280G of the Internal Revenue Code of
1986, as amended (which could include, for example and without limitation, the
accelerated vesting of stock options upon a change of control), then the Company
may be denied an income tax deduction for all or a portion of such payments, and
the recipient thereof may be subject to a 20% excise tax in addition to income
tax otherwise imposed. The Executives' employment agreements also include
non-competition and non-solicitation covenants and confidentiality agreements.
For a description of the stockholder's agreements and Supplemental
Institutional and Management Stockholders' agreement to be entered into by the
Executives, see "Certain Transactions--Stockholder Agreements."
EMPLOYMENT AGREEMENTS WITH JAMES F. BLACKSTOCK AND KENNETH E. DONNER
The Company plans to enter into an employment agreement with both James
F. Blackstock and Kenneth E. Donner (the "Other Executives"). The principal
terms and conditions of the Other Executives' employment agreements are expected
to be as follows:
The Other Executives shall be employed by the Company for two years
(unless terminated earlier). The employment agreements provide for annual base
salaries of $134,000 and $111,100 for Messrs. Blackstock and Donner,
respectively, and participation in Company employee benefit plans. The other
terms and conditions of the Other Executives' agreements are expected to be
similar to those found in the Executives' employment agreements. The Other
Executives' employment agreements also include non-competition and
non-solicitation covenants and confidentiality agreements.
TERMINATION, CONSULTING AND RELEASE AGREEMENTS WITH C. WILLIAM OSBORNE,
KENNETH W. BARRIOS AND DANIEL L. TENNANT
The Company has entered into a Termination, Consulting and Release
Agreement with three of the National Subsidiary's former executive officers, C.
William Osborne, President and Chief Executive Officer of the National
Subsidiary, Kenneth W. Barrios, Executive Vice President of the National
Subsidiary, and Daniel L. Tennant, Vice President of the National Subsidiary
(the "National Executives") on the principal terms and conditions described
below, as of January 17,1997 (the "Termination Agreements").
Each National Executive resigned from all positions and directorships
of the Company and its affiliates. The National Executives were entitled to
continued base salaries through January 31, 1997, 1996 fiscal year bonuses (10%
of annual base salary), any vested benefits under the Company's retirement or
group health plans and reimbursement for up to six months of outplacement
services.
The National Executives have been retained as consultants from February
1, 1997 (the "Initial Payment Date") through January 31, 1998 (the "Final
Payment Date"), in consideration for payment on or about February 28, 1997 of
$176,300, $119,817 and $95,200 for Messrs. Osborne, Barrios and Tennant,
respectively, continued medical coverage for up to one year, and severance of
$88,150, $59,908 and $47,600 for Messrs. Osborne, Barrios and Tennant,
respectively, on the Final Payment Date.
Certain stock options held by the National Executives under the
Company's 1993 Stock Plan were canceled without consideration. The Series I
options were canceled for the right to receive (i) on or about the Initial
Payment Date, (x) the product of $13.00 and the number of shares of Class B
common stock into which the Series I options held by the National Executive
could be converted minus (y) the option exercise price and (ii) on the Final
Payment Date, the product of $2.69 and such number of shares. Shares of Class B
common stock held by the National Executives or by their transferees were
purchased by the Company for (i) an amount payable on or about the Initial
Payment Date equal to the product of $10.00
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<PAGE>
and such number of shares and (ii) an amount payable on the Final Payment Date
equal to the product of $5.69 and such number of shares.
The outplacement service reimbursements and all deferred payments are
conditioned upon the National Executive's service as a consultant not being
terminated for "cause" (as defined in the Termination Agreements). The National
Executives also executed a general release of claims and covenants regarding
confidentiality, non-solicitation of employees or clients and non-disparagement.
EMPLOYMENT, TERMINATION, CONSULTING AND RELEASE AGREEMENT WITH A. BRUCE REYNOLDS
The Company has entered into an Employment, Termination, Consulting and
Release Agreement with the Company's Vice President and Chief Financial Officer,
A. Bruce Reynolds ("Reynolds") on the principal terms and conditions described
below, as of January 17, 1997 (the "Reynolds Agreement").
Reynolds resigned from all positions of the Company and its affiliates
other than as Vice President and Chief Financial Officer of the National
Subsidiary, which Reynolds shall continue until May 15, 1997. The Reynolds
Agreement provides for continued payment of Reynolds' current annual base salary
of $148,914 through the earlier to occur of July 31, 1997 and the date of
termination of Reynolds' employment and a 1996 fiscal year bonus (10% of annual
base salary), and reimbursement for up to six months of outplacement services.
Reynolds will be retained as a consultant from May 16, 1997 through
January 31, 1998 in consideration for the payment of a retainer fee of $74,457
payable in equal monthly installments with the last installment to be paid by
January 31, 1998 and continued medical coverage until no later than January 31,
1998, and severance of $112,865 on January 31, 1998 (the "Reynolds Final Payment
Date").
Certain stock options held by Reynolds under the Company's 1993 Stock
Plan were canceled without consideration. The Series I options were canceled for
Reynolds' right to receive (i) on or about March 10, 1997 (the "Reynolds Initial
Payment Date") (x) the product of $13.00 and the number of shares of Class B
common stock into which the Series I Options held by Reynolds could be converted
minus (y) the option exercise price and (ii) on the Reynolds Final Payment Date,
the product of $2.69 and such number of shares. Shares of Class B common stock
held by Reynolds or by his transferees were purchased by the Company for (i) an
amount payable on the Reynolds Initial Payment Date equal to the product of
$10.00 and such number of shares and (ii) an amount payable on the Reynolds
Final Payment Date equal to the product of $5.69 and such number of shares.
The base salary, bonus payments, outplacement service reimbursements
and all deferred payments are conditioned upon Reynolds' service as an employee
and consultant not being terminated for cause. Reynolds also executed a general
release of claims, and covenants regarding confidentiality, non-solicitation of
employees or clients and non-disparagement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Hugh D. Schmieder, Bruce D. Dorbeck, Walter M. Cain and Louis J.
Mischianti served as members of the Executive Compensation Committee of the
Board of Directors during fiscal year 1996. Messrs. Schmieder, Dorbeck and Cain
are former directors of the Company, each of whom resigned in April 1997. Mr.
Schmieder is an Operator of three TravelCenters and is a Franchisee-Owner with
respect to one TravelCenter. Mr. Dorbeck is an Operator of one TravelCenter and
a lessee (but not a franchisee) of an additional TravelCenter. During fiscal
year 1996, Mr. Cain was employed by GMIMC, the investment advisor to First
Plaza, but resigned as of April 1997. Mr. Mischianti is employed by an affiliate
of Olympus. As of April 1997, the members of the Executive Compensation
Committee of the Board of Directors were Messrs. Calhoun, Mischianti and Towe.
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CERTAIN TRANSACTIONS
VOTING TRUST AGREEMENT
The following summary description of the Voting Trust Agreement does
not purport to be complete and is qualified in its entirety by reference to such
agreement.
Voting and transfer of the shares of Common Stock beneficially owned by
Operators and Franchisee-Owners ("Certificate Holders") are governed by a voting
trust agreement dated as of April 14, 1993, as amended as of March 6, 1997,
among the Certificate Holders, United States Trust Company of New York as the
voting trustee (the "Voting Trustee") and the Company (the "Voting Trust
Agreement"). The Operators' and Franchisee-Owners' beneficial ownership interest
in such shares is evidenced by voting trust certificates (the "Voting Trust
Certificates"). In connection with any matter which may be put to a vote of the
Company's stockholders, the Voting Trustee will vote all of the shares subject
to the Voting Trust Agreement in the manner determined by a vote by the
Certificate Holders. Transfers of the Voting Trust Certificates or beneficial
interests in shares of Common Stock represented thereby are only permitted in
accordance with applicable securities laws and are also subject to certain
restrictions. Certain provisions of the Voting Trust Agreement may only be
amended by a vote of Certificate Holders holding a majority of the Voting Trust
Certificates and a vote of the holders of a majority of the shares of Series I
Preferred Stock (and the holders of Common Stock issued upon conversion of
Series I Preferred Stock) together with the consent of the Company. The Voting
Trust Agreement will terminate on the earlier of (i) April 14, 2003, unless
Certificate Holders beneficially owning 65% of the shares subject to the Voting
Trust Agreement elect to continue the Voting Trust or (ii) upon the consent of
the Company and the vote of the holders of Voting Trust Certificates who
beneficially own more than 75% of the shares subject to the Voting Trust
Agreement.
STOCKHOLDERS' AGREEMENTS
The following summary descriptions of the Stockholders' Agreements does
not purport to be complete and is qualified in its entirety by reference to such
agreements.
GLOBAL STOCKHOLDERS' AGREEMENT. The Voting Trustee, Certificate
Holders, certain members of the Investor Group (members of such group referred
to individually as an "Investor") holding preferred stock, certain members of
management (the "Management Stockholders") and the Company are parties to a
stockholders' agreement, dated as of April 14, 1993, as amended as of March 6,
1997 (the "Global Stockholders' Agreement"). Pursuant to the Global
Stockholders' Agreement, the Management Stockholders have agreed not to sell any
shares of Common Stock except for certain family transfers, transfers pursuant
to the laws of descent and distribution, and certain other exceptions. The
Global Stockholders' Agreement provides that, in the event of any sale (whether
by merger or sale of the stock) of the Company effected on the same terms for
each holder of capital stock of the Company, a stockholder party to the Global
Stockholders' Agreement has no right to dissent and be paid the appraised value
of his or her shares and, in the event of a stock sale, is required to sell his
or her shares to any purchaser in such sale. The Global Stockholders' Agreement
will terminate on the earlier of April 14, 2003 or the consummation of a
registered public offering of the Company's stock.
SUPPLEMENTAL STOCKHOLDERS' AGREEMENT. The Company and certain Investors
are parties to a supplemental stockholders' agreement, dated as of December 10,
1993, which the parties thereto expect to amend following completion of this
Offering (the "Supplemental Stockholders' Agreement"). The Supplemental
Stockholders' Agreement sets forth analogous provisions for the transfer of
preferred stock as the Global Stockholders' Agreement sets forth for transfer of
shares held by Management Stockholders.
INSTITUTIONAL AND MANAGEMENT STOCKHOLDERS' AGREEMENT. The Company and
the Investor Group are parties to a preferred and common stockholders'
agreement, dated as of December 10, 1993 (the "Institutional and Management
Stockholders' Agreement") to establish in part the composition of the Company's
Board of Directors and to provide for certain participation rights related to
the sale of stock by
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major stockholders. This agreement is expected to be amended and restated
contemporaneously with or shortly following this Offering to add Management
Stockholders as parties and provide for certain other changes.
The parties to the Institutional and Management Stockholders' Agreement
are required to vote their shares to elect to the Board of Directors two
nominees of Clipper Capital Associates, L.P. ("CCA"), an affiliate of Clipper,
one nominee of National Partners III, L.P. ("National III"), two nominees of
National Partners, L.P. ("National I") and one nominee jointly chosen by
National I and CCA. After the liquidation of National I, First Plaza will assume
National I's rights and after the liquidation of National III, Olympus will
assume National III's rights, with respect to nominating directors under the
agreement. Under certain conditions, the rights of certain parties to nominate
directors may increase or decrease. The right to nominate a director ceases when
any party (together with its affiliates) sells any shares governed by the
agreement unless such shares have been registered under the Securities Act or
sold pursuant to Rule 144 under the Securities Act. The portion of the
Institutional and Management Stockholders' Agreement pertaining to the Board of
Directors terminates on December 10, 2003 unless extended. In the event that the
Company becomes publicly held, the Institutional and Management Stockholders'
Agreement will terminate except for that portion of the agreement pertaining to
nomination of directors.
The Institutional and Management Stockholders' Agreement provides for
the right of such stockholders to participate in certain sales of stock of the
Company by other parties. In addition, the agreement requires Management
Stockholders to participate in any sale of the Company.
Any transferee of a party to the Institutional and Management
Stockholders' Agreement must become party to that agreement according to its
terms.
SUPPLEMENTAL INSTITUTIONAL AND MANAGEMENT STOCKHOLDERS' AGREEMENT. The
Company plans to enter into a Supplemental Institutional and Management
Stockholders Agreement with the Investor Group and the Management Stockholders
effective contemporaneously with or shortly following this Offering, the
principal terms and conditions of which are expected to be as follows: shares of
Common Stock held by Management Stockholders will be subject to call and put
options upon termination of employment of Management Stockholders; the call and
put option pricing formula under the 1993 Stock Plan and option agreements will
be modified; if a change of control occurs within six months after termination
of the employment of a Management Stockholder for "good reason," death,
"disability" or termination other than for "cause" (as defined), an adjustment
will be made to the amount paid upon exercise of any call options or put options
(but, in the case of put options, only to the extent the proceeds received by
the Management Stockholder upon exercise of the put option are used to repay
indebtedness to the Company) so that the Management Stockholders will be able to
receive any amounts in excess of the call or put price payable in the change of
control transaction; and the option exercise price of vested and exercisable
Series III options granted under the 1993 Stock Plan shall be reduced from
$28.56 per share to $22.50 per share.
CERTAIN INDEBTEDNESS FORMERLY HELD BY STOCKHOLDERS AND RELATED TRANSACTIONS
On the Closing Date, immediately prior to the consummation of the
Refinancing, First Plaza, Olympus and Barclays Bank PLC (together with its
affiliates, "Barclays") owned $19.6 million, $3.2 million and $2.1 million in
principal amount, respectively, of the National Subsidiary's Old Subordinated
Notes and each owned, individually (directly or through affiliates), more than
5% of at least one class of the Company's capital stock. In connection with the
issuance of the National Subsidiary's Old Subordinated Notes, the Company issued
a total of 128,206 warrants exercisable at $0.01 per warrant for an equal number
of shares of Common Stock. First Plaza, Olympus and Barclays received 100,641,
16,539 and 11,026 warrants, respectively. Immediately prior to the Closing Date,
Clipper/Merban, L.P. ("Clipper/Merban"), an affiliate of Clipper, Union Bank of
Switzerland (together with its affiliates, "UBS") and Barclays held $6.0
million, $6.0 million and $3.0 million in principal amount, respectively, of the
TA Subsidiary's Old Subordinated Notes and each owned, individually (directly or
through affiliates), more than 5% of at least one class of the Company's capital
stock. In connection with the issuance of the TA
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<PAGE>
Subsidiary's Old Subordinated Notes, the Company issued a total of 80,520 shares
of Common Stock, with 53,680 such shares issued to UBS and 26,840 such shares
issued to Barclays. In lieu of receiving shares of Common Stock in connection
with the issuance of the Old Subordinated Notes to it, Clipper/Merban received a
right to a contingent payment upon early redemption of the Old Subordinated
Notes held by it in the amount necessary to cause the yield on its Old
Subordinated Notes to aggregate 14%. As part of the Refinancing, all outstanding
indebtedness under the Old Subordinated Notes was repaid in full, Clipper/Merban
received a payment equal to approximately $480,000 pursuant to its contingent
payment right described above and the warrants and Common Stock referred to
above remain outstanding. See "Use of Proceeds" and "The Refinancing, the
Combination Plan and the Capital Program." In April 1993, the Company entered
into an agreement (the "First Clipper Agreement") and related indemnity for
financial advisory services to be provided, on an exclusive basis, by Clipper
and Clipper Capital Partners, L.P. (together, the "Clipper Entities") to the
Company and the National Subsidiary. In December 1993, the First Clipper
Agreement was restated and amended in connection with the TA Acquisition and TA
Holdings Corporation ("TA Holdings"), a former subsidiary of the Company that
was merged with and into the Company in connection with the Restructuring, and
the TA Subsidiary entered into an agreement (the "Second Clipper Agreement" and,
together with the First Clipper Agreement, the "Clipper Agreements") and related
indemnity for financial advisory services to be provided, on an exclusive basis,
by the Clipper Entities to TA Holdings and the TA Subsidiary. In consideration
for services provided pursuant to such agreements, the Company, the National
Subsidiary, TA Holdings and the TA Subsidiary agreed to compensate the Clipper
Entities at rates established by the Clipper Entities consistent with those
rates customarily charged by nationally recognized investment firms. The terms
of the Clipper Agreements continue until such time as Clipper and its affiliates
no longer own, in the aggregate, 5% or more of the equity securities of the
Company. To date, no fees have been paid or have become payable to the Clipper
Entities pursuant to the First Clipper Agreement or the Second Clipper Agreement
or the related indemnity other than fees paid to Clipper at the time of the
National Acquisition and the time of the TA Acquisition. Clipper has also been
reimbursed from time to time by the Company for out of pocket expenses,
including legal fees. Upon the closing of the Transactions, the Company
reimbursed Clipper for approximately $137,000 in connection with Clipper's
payment for certain consulting services rendered to the Company and the
reimbursement of out of pocket expenses incurred in connection therewith by
Charles L. Dunlap, a former director of the Company. The Company anticipates
amending and restating the First Clipper Agreement and the Second Clipper
Agreement into one agreement in connection with the Refinancing. Margaret M.
Eisen, who is employed by GMIMC, the investment advisor to First Plaza, and
Louis J. Mischianti, who is employed by an affiliate of Olympus, are directors
of the Company. Robert B. Calhoun, Jr., Rolf H. Towe and Eugene P. Lynch, each
of whom are directors of the Company, are employed by Clipper or its affiliates.
On the Closing Date, immediately prior to the consummation of the
Refinancing, the Travelers Insurance Company (together with its affiliates,
"Travelers") owned, in the aggregate, $7.0 million and $20.0 million in
principal amount of the TA Subsidiary's and the National Subsidiary's Old Senior
Notes, respectively, and owned, in the aggregate, more than 5% of at least one
class of the Company's capital stock. The Old Senior Notes held by Travelers
were exchanged by the Company for Senior Notes as part of the Refinancing. See
"The Refinancing, the Combination Plan and the Capital Program" and "Use of
Proceeds."
TRANSACTIONS WITH OPERATOR SHAREHOLDERS AND DIRECTORS
As of April 20, 1997, Operators and Franchisee-Owners controlling 61
TravelCenters owned an aggregate of 824,150 shares of the Company's Common
Stock, which represents approximately 9.4% of the issued and outstanding Common
Stock giving effect to the conversion of preferred stock and the exercise of
warrants. The Company's transactions with these Operators are at prices and on
terms that are the same as similar transactions with non-stockholder Operators.
Such Operator stockholders have entered into the Voting Trust Agreement with the
Company and the Voting Trustee.
Walter E. Smith, Jr., a director of the Company, is an Operator of
four TravelCenters. See "Business--Relationships with the Operators and
Franchisee-Owners--The National Agreements."
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TRANSACTIONS WITH OFFICERS
As of March 31, 1997, the Company had issued or agreed to issue or sell
to Edwin P. Kuhn, James W. George, Timothy L. Doane, Michael H. Hinderliter,
James F. Blackstock and Kenneth E. Donner, 15,452, 11,590, 7,727, 11,590, 9,750
and 10,000 shares of Common Stock (the "Management Shares"), respectively,
pursuant to certain management subscription agreements (together, the
"Management Subscription Agreement"). Each Management Subscription Agreement
provides for a purchase price of the Management Shares of $10 per share. As
described below, the Company financed a portion of the purchase price of the
Management Shares.
The Management Subscription Agreement gives the Company the right, but
not the obligation, for 60 days following the employee's cessation of employment
with the Company, for any reason whatsoever, to repurchase the Management Shares
at a formula price and gives the employee the right, but not the obligation, for
an additional 60 days to sell the Management Shares to the Company at a second
formula price. Pursuant to either of the foregoing formulas, the purchase price
per share is equal to the product of (a) a specified multiple of EBITDA (as
defined in the Management Subscription Agreement) of the Company for the most
recent four consecutive full fiscal quarters less the aggregate amount of
consolidated indebtedness of the Company and (b) a fraction, the numerator of
which is equal to the number of Management Shares being repurchased by the
Company and the denominator of which equals the number of fully diluted shares
of capital stock of the Company. The Credit Facilities, the Senior Notes and the
Indenture limits the Company's ability to repurchase the Management Shares. See
"Description of Senior Indebtedness" and "Description of the New Notes."
In connection with the purchase of the Management Shares, each of the
members of senior management who entered into the Management Subscription
Agreement also received financing from the Company with respect to no more than
one half of the purchase price of such manager's stock purchases. In connection
with such financing, each such manager executed a note in favor of the Company
(each, a "Management Note") and a pledge agreement (each a "Management Pledge
Agreement"). The Management Notes total $349,862.50 in principal amount, and are
payable by the following members of senior management in the indicated principal
amount as follows: Edwin P. Kuhn, $77,260; James W. George, $57,950; Timothy L.
Doane, $57,950; Michael H. Hinderliter, $57,950; James F. Blackstock, $48,750;
and Kenneth E. Donner $50,000. With respect to the Management Notes, interest
accrues at an annual rate of 4.76% for Messrs. Kuhn, George and Hinderliter, 7%
for Mr. Doane and 6.42% for Messrs. Blackstock and Donner, in each case,
compounded semi-annually. Accrued and unpaid interest, together with unpaid
principal, if not sooner paid, is due and payable on the earliest of (i) the
date of cessation of employment of such employee, (ii) the date such employee is
no longer the owner of the particular Management Shares and (iii) the tenth
anniversary of the Management Note.
During 1996, Mr. Reynolds was indebted to the Company in the principal
amount of $67,001 respecting certain demand relocation loans, which currently
bear interest at the rate of 6.51% per annum. As of March 10, 1997, the total
amount outstanding was $54,699.30.
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SECURITY OWNERSHIP
Prior to March 6, 1997 the Company had two classes of common stock.
However, pursuant to the amendment and restatement of the Company's Certificate
of Incorporation effected on March 6, 1997, the Company currently has only one
class of common stock ("Common Stock"). For a description of this
Recapitalization, see "Description of Capital Stock--Recapitalization."
The Company has one class of Common Stock outstanding and four classes
of convertible preferred stock outstanding: Series I and Series II Convertible
Preferred Stock, par value $0.01 per share ("Series I Preferred" and "Series II
Preferred," respectively), and Series I and Series II Senior Convertible
Participating Preferred Stock, par value $0.01 per share ("Series I Senior" and
"Series II Senior," respectively).
At the option of the holder thereof, Series I Preferred and Series I
Senior may be converted to Common Stock at any time on a one for one basis.
Series II Preferred and Series II Senior also may be converted to Common Stock
on a one for one basis; however, the total number of shares that may be
converted at any one time is limited to a percentage determined by reference to
a formula reflecting the number of outstanding shares of Common Stock at the
time of conversion. Pursuant to this formula, as of April 15, 1997,
Clipper/Merchant I, L.P. ("Clipper/Merchant"), which holds of record all
outstanding shares of Series II Preferred and Series II Senior, could have
elected to convert a combined total of 429,608 shares of Series II Preferred and
Series II Senior (out of a total of 2,171,718 shares) to an equal number of
shares of Common Stock.
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The following table sets forth the number of shares of capital stock of
the Company beneficially owned, as of April 15, 1997, by each person known by
the Company to beneficially own more than 5% of any class of capital stock of
the Company (other than directors and officers, see "--Directors and Officers").
<TABLE>
<CAPTION>
Amount and PERCENT OF
Nature of STATED
NAME OF BENEFICIAL OWNER Ownership(1) CLASS CLASS(1)
- ------------------------ ------------ ----- --------
<S> <C> <C> <C>
United States Trust Company of New York........ 1,086,250(2) Common 84.3%
770 Broadway
New York, NY 10003
Clipper Capital Associates, L.P.(3)............ 4,880,140 Common(4) 79.1
11 Madison Avenue 2,594,876 Series I Preferred(5) 100.0
New York, NY 10010 1,237,374 Series II Preferred(5) 100.0
1,855,656 Series I Senior(5) 69.2
934,344 Series II Senior(5) 100.0
UBS Capital Corporation........................ 478,680 Common(6) 27.9
299 Park Avenue 425,000 Series I Senior 15.9
New York, NY 10171
First Plaza Group Trust........................ 3,945,391 Common(7) 75.4
c/o Mellon Bank, N.A. 2,044,750 Series I Preferred(8) 78.8
One Mellon Bank Center 1,800,000 Series I Senior(8) 67.1
Pittsburgh, PA 15258
Olympus Private Placement Fund, L.P............ 494,039 Common(9) 27.7
Metro Center 277,500 Series I Preferred(10) 10.7
One Station Place 200,000 Series I Senior 7.5
Stamford, CT 06902
The Travelers Indemnity Company................ 200,000 Common(11) 13.5
One Tower Square 200,000 Series I Senior 7.5
Hartford, CT 06183
Barclays U.S.A., Inc........................... 222,866 Common(12) 14.7
222 Broadway 185,000 Series I Preferred(13) 7.1
New York, NY 10038
Merchant Truckstops, L.P.(14).................. 429,608 Common(15) 25.0
11 Madison Avenue 1,225,000 Series II Preferred 99.0
New York, NY 10010
</TABLE>
- -----------
(1) With respect to Common Stock, reflects beneficial ownership of Common
Stock, assuming the conversion into Common Stock by the listed
shareholder of any preferred stock and the exercise by the listed
shareholder of any warrants to purchase Common Stock owned by such
shareholder to the extent currently convertible or exercisable.
(2) United States Trust Company of New York holds these shares in its
capacity as Voting Trustee under the Voting Trust Agreement. See "Certain
Transactions."
(3) CCA directly owns 62,298 shares of Series I Preferred and 37,474 shares
of Series I Senior and is the general partner of four limited
partnerships which are the record owners of the remainder of these
shares: (i) National I, (ii) National Partners II, L.P. ("National II"),
(iii) National III and (iv) Clipper/Merchant. CCA thus may be said to
beneficially own all such shares owned by these four limited
partnerships. Clipper Capital Associates, Inc. ("CCI") is the general
partner of CCA, and the sole shareholder of CCI is Robert B. Calhoun,
Jr., a director of the Company. By virtue of such relationship, CCI and
Mr. Calhoun may be deemed to beneficially own these shares. CCI and Mr.
Calhoun disclaim beneficial ownership of all such shares except to the
extent of any pecuniary interest they may have therein. See footnote 3 to
the following security ownership table.
(4) Includes shares of Common Stock that could be issued upon conversion of
all outstanding shares of preferred stock of the Company held of record
by the following: (i) CCA: 62,298 shares of Series I Preferred and 37,474
shares of Series I Senior, (ii) National I: 2,065,405 shares of Series I
Preferred and 1,818,182 shares of Series I Senior, (iii) National II:
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186,869 shares of Series I Preferred, (iv) National III: 280,304 shares
of Series I Preferred and (v) Clipper Merchant: 1,237,374 shares of
Series II Preferred and 934,344 shares of Series II Senior. As of March
6, 1997, a combined total of only 429,608 shares of the two Series II
classes held by Clipper/Merchant were convertible, as described above.
For further discussion of National I, National II, National III and
Clipper/Merchant see footnotes 8, 10, 13 and 14 below.
(5) See footnote 4 above.
(6) Includes 53,680 shares of Common Stock held of record and 425,000 shares
of Common Stock that could be issued upon conversion of Series I Senior.
(7) Includes 100,641 shares of Common Stock that could be issued upon
exercise of warrants, 2,044,750 shares of Common Stock that could be
issued upon conversion of Series I Preferred and 1,800,000 shares of
Common Stock that could be issued upon conversion of Series I Senior. For
further discussion of First Plaza's share ownership, see footnote 8
below.
(8) First Plaza, as limited partner of National I and under National I's
partnership agreement, may be deemed to beneficially own 2,044,750 shares
of Series I Preferred and 1,800,000 shares of Series I Senior held of
record by National I.
(9) Includes 16,539 shares of Common Stock that could be issued upon exercise
of warrants, 277,500 shares of Common Stock that could be issued upon
conversion of Series I Preferred and 200,000 shares of Common Stock that
could be issued upon conversion of Series I Senior. For further
discussion of Olympus' share ownership, see footnote 10 below.
(10) Olympus, as limited partner of National III and under National III's
partnership agreement, may be deemed to beneficially own 277,500 shares
of Series I Preferred held of record by National III. Olympus disclaims
beneficial ownership of all such shares, except to the extent of any
pecuniary interest it may have therein.
(11) Includes 200,000 shares of Common Stock of Travelers that could be issued
upon conversion of Series I Senior.
(12) Includes 26,840 shares of Common Stock, 11,026 shares of Common Stock
that could be issued upon exercise of warrants held by an affiliate, and
185,000 shares of Common Stock that could be issued upon conversion of
Series I Preferred. For further discussion of Barclays' share ownership,
see footnote 13 below.
(13) Barclays, as limited partner of National II and under National II's
partnership agreement, may be deemed to beneficially own 185,000 shares
of Series I Preferred held of record by National II. Barclays disclaims
beneficial ownership of all such shares, except to the extent of any
pecuniary interest it may have therein.
(14) Merchant Truckstops, L.P. ("Merchant"), as the limited partner of
Clipper/Merchant and under Clipper/Merchant's partnership agreement, may
be deemed to beneficially own 1,225,000 shares of Series II Preferred
held of record by Clipper/Merchant. Merchant is a limited partnership of
which Merchant Truckstops, Inc. ("Merchant Inc.") is the general partner,
and Merchant Inc. is an indirect wholly-owned subsidiary of Credit Suisse
Group ("CS"). By virtue of such relationship, Merchant Truckstops and CS
may be deemed to beneficially own these shares. Merchant, Merchant Inc.
and CS disclaim beneficial ownership of all such shares, except to the
extent of any pecuniary interest they may have therein.
(15) Includes 429,608 shares of Common Stock that could be issued upon
conversion of shares of Series II Preferred that were eligible for
conversion as of April 15, 1997, as described above.
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DIRECTORS AND OFFICERS
The following table sets forth the number of shares of capital stock of
the Company beneficially owned, as of April 15, 1997, by each of the Company's
executive officers and directors, and all executive officers and directors of
the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF STATED
NAME OWNERSHIP(1) CLASS CLASS(1)
- ---- ------------ ----- --------
<S> <C> <C> <C>
Edwin P. Kuhn......................... 53,237 Common 4.0%
James W. George....................... 34,990 Common 2.7
Timothy L. Doane...................... 23,405 Common 1.8
Michael H. Hinderliter................ 34,990 Common 2.7
James F. Blackstock................... 22,250 Common 1.7
Walter E. Smith, Jr.(2)............... 50,000 Common 3.9
Margaret M. Eisen..................... -- -- --
Robert B. Calhoun, Jr................. 4,880,140 Common(3) 79.1
2,594,876 Series I Preferred(3) 100.0
1,237,374 Series II Preferred(3) 100.0
1,855,656 Series I Senior(3) 69.2
934,344 Series II Senior(3) 100.0
Eugene P. Lynch....................... -- -- --
Louis J. Mischianti................... -- -- --
Rolf H. Towe.......................... -- -- --
(All directors and officers as a group
(11 persons))(2)................... 5,099,012 Common 82.9
2,594,876 Series I Preferred 100.0
1,237,374 Series II Preferred 100.0
1,855,656 Series I Senior 69.2
934,344 Series II Senior 100.0
C. William Osborne(4)................. -- -- --
Kenneth W. Barrios(4)................. -- -- --
</TABLE>
- -----------
(1) In the case of Common Stock, reflects beneficial ownership of Common
Stock, assuming the exercise by the listed shareholder of options to
purchase Common Stock owned by such shareholder to the extent currently
exercisable.
(2) Walter E. Smith, Jr., a director of the Company, owns 50,000 shares of
Common Stock which are held pursuant to the Voting Trust Agreement. See
footnote 2 to the previous table and "Certain Transactions."
(3) CCA, National I, National II, National III and Clipper/Merchant are the
record owners of these shares. Mr. Calhoun is the sole shareholder of
CCI, which is the general partner of CCA. CCA is the general partner of
each of National I, National II, National III and Clipper/Merchant. By
virtue of such relationships, Mr. Calhoun may be deemed to beneficially
own all of such shares. Mr. Calhoun disclaims beneficial ownership of
such shares, except to the extent of any pecuniary interest he may have
therein. See footnotes 3, 4, and 5 to the previous security ownership
table.
(4) Messrs. Osborne and Barrios resigned from all of their positions with
the Company effective January 21, 1997. All shares of Common Stock
beneficially owned by Messrs. Osborne and Barrios were repurchased on
February 28, 1997, pursuant to the terms of the Termination Agreements
between the Company and each of Messrs. Osborne and Barrios,
respectively. See "Management--Termination, Consulting and Release
Agreements with C. William Osborne, Kenneth W. Barrios and Daniel L.
Tennant."
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DESCRIPTION OF CAPITAL STOCK
THE RECAPITALIZATION
As of March 6, 1997 the Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") and by-laws of the
Company and the by-laws of the National Subsidiary, as the case may be, were
amended to: (i) eliminate the supermajority voting requirements of the Company's
stockholders and the Company's and the National Subsidiary's board of directors
that were applicable to certain actions taken with respect to the Company or the
National Subsidiary, (ii) eliminate all designations of classes of common stock,
the convertibility of one class of common stock into another and all class votes
of holders of common stock, (iii) change the names of the Class A Common Stock
and the Class B Common Stock to Common Stock, (iv) provide that all of the
outstanding shares of preferred stock of the Company be convertible into shares
of Common Stock on the same basis as shares of preferred stock are currently
convertible into Class B Common Stock, (v) eliminate class votes for Directors
of the Company and to provide that Directors will be elected by holders of
Common Stock and Series I Preferred Stock voting together as a single class (the
actions in items (i) through (v) being referred to as the "Recapitalization")
and (vi) change the Company's name to "TravelCenters of America, Inc."
THE CAPITAL STOCK
As of April 15, 1997, the authorized capital stock of the Company
consisted of (i) 30,000,000 shares of Common Stock, par value $.01 per share, of
which 1,276,672 shares were issued and outstanding and (ii) 20,000,000 shares of
Preferred Stock, par value $.01 per share, of which (a) 6,000,000 shares were
designated shares of Series I Preferred, 2,594,876 shares of which were issued
and outstanding, (b) 2,500,000 shares were designated shares of Series II
Preferred, 1,237,374 shares of which were issued and outstanding, (together with
the Series I Preferred, the "Junior Preferred Stock"), (c) 3,000,000 were
designated Series I Senior, 2,680,656 shares of which were issued and
outstanding and (d) 1,000,000 shares were designated shares of Series II Senior,
934,344 shares of which were issued and outstanding (together with the Series I
Senior, the "Senior Preferred Stock").
The following are summaries of the terms of the Common Stock, the
Junior Preferred Stock and the Senior Preferred Stock. Such summaries do not
purport to be complete and are subject to, and qualified in their entirety by,
reference to the terms thereof which are set forth in the Restated Certificate
of Incorporation, as amended, of the Company.
COMMON STOCK
VOTING. Each share of Common Stock entitles the holder thereof to one
vote on all matters submitted to a vote of the Company's stockholders. Holders
of Common Stock vote together with holders of Series I Preferred and Series I
Senior as a single class on all matters submitted to a vote of the Company's
stockholders, except as to the election of directors, upon which the Series I
Senior may not vote, or as otherwise required by law.
DIVIDENDS. The holders of the Common Stock and Junior Preferred Stock
are entitled to receive dividends, if, as and when declared by the Board of
Directors of the Company out of funds legally available therefor, except that no
dividends may be paid on Common Stock or Junior Preferred Stock before the
payment or provision for payment of all amounts required to be paid to the
holders of shares of Senior Preferred Stock. Pursuant to the Company's Restated
Certificate of Incorporation, the Company is precluded from paying dividends on
Common Stock and Series I Preferred, except for the distribution of capital
stock of the Company, so long as any shares of Series II Preferred remain
outstanding. In addition, the Company is precluded from paying dividends or
making distributions to the holders of Common Stock or Junior Preferred Stock
while any shares of Senior Preferred Stock are outstanding, except for dividends
or distributions of capital stock of the Company, unless (i) in any fiscal year
the dividends and distributions do not exceed fifty percent of the Company's net
income for the prior fiscal year and (ii) if immediately after payment of such
dividend or the making of any such distribution, the value of the Company's
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stockholder equity would exceed the value of the aggregate liquidation
preference of the outstanding shares of Junior Preferred Stock and Senior
Preferred Stock and the analogous amount payable to holders of Junior Preferred
Stock by at least one dollar.
LIQUIDATION RIGHTS AND OTHER RIGHTS. For a description of the amounts
to be received by holders of Common Stock in the event of the dissolution,
liquidation or winding up of the Company, see "--Senior Preferred
Stock--Liquidation Preference." The holders of the Common Stock do not have any
conversion, redemption or preemptive rights.
JUNIOR PREFERRED STOCK
GENERAL. Except with respect to voting rights and conversion rights,
shares of Series I Preferred and shares of Series II Preferred Stock are
substantially identical in all respects.
VOTING. Holders of the Series I Preferred vote together with holders of
Common Stock and the Series I Senior as a single class on all matters submitted
to a vote of the Company's stockholders, except as to the election of directors,
upon which the Series I Senior may not vote, or as otherwise required by law.
Notwithstanding the previous sentence, a supermajority vote of one or both
series of Junior Preferred Stock is required to change the rights of either of
the series of Junior Preferred Stock, to authorize the issuance of additional
shares of Junior Preferred Stock or to authorize a new class of stock ranking
prior to or on parity with the Junior Preferred Stock. Except as outlined above
or required by applicable law, the Series II Preferred is non-voting.
DIVIDENDS. Shares of Junior Preferred Stock do not have any
preferential right to receive dividends. For a description of restrictions on
payment of dividends on Junior Preferred Stock, see "--Common Stock--Dividends."
CONVERSION. Each share of Series I Preferred is convertible into a
share of Common Stock at any time at the option of the holder. Each share of
Series II Preferred is convertible at any time at the option of the holder into
one share of Common Stock, provided that, after giving effect to such
conversion, the total number of Series II Preferred and Series II Senior
converted into Common Stock account for 25% or less of the total number of
shares of Common Stock outstanding.
MERGERS AND CONSOLIDATIONS. Upon merger or consolidation of the Company
with another entity, if the consideration to be received is capital stock of the
surviving or resulting corporation, the holders of Common Stock, Junior
Preferred Stock and Senior Preferred Stock all must receive capital stock having
the same or as near equivalent as practicable powers, preferences,
participating, optional or other special rights, qualifications and restrictions
as apply to such series of stock pursuant to the provisions of the Company's
Certificate of Incorporation. If the consideration to be received upon merger or
consolidation is cash or property, the holders of Common Stock, Junior Preferred
Stock and Senior Preferred Stock all are entitled to receive cash or property in
the same amount that such holders would otherwise be entitled to receive if all
such cash or property were distributed upon any liquidation, dissolution or
winding up of the corporation pursuant to the applicable provisions in the
Company's Certificate of Incorporation.
LIQUIDATION PREFERENCE. For a description of the amounts to be received
by the holders of Junior Preferred Stock in the event of a dissolution,
liquidation or winding up of the Company, see "--Senior Preferred
Stock--Liquidation Preference."
SENIOR PREFERRED STOCK
GENERAL. Except with respect to voting rights and conversion rights,
shares of Series I Senior and shares of Series II Senior are substantially
identical in all respects.
VOTING RIGHTS. Holders of the Series I Senior vote together with
holders of Common Stock and Series I Preferred on all matters submitted to a
vote of the Company's stockholders, except as to the
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election of directors or as otherwise required by law. Shares of Senior
Preferred Stock do not have any vote with respect to the election of directors.
Notwithstanding the previous sentence, a supermajority vote of one or both
series of Senior Preferred Stock is required to change the rights of either
series of Senior Preferred Stock, to authorize the issuance of additional shares
of Senior Preferred Stock or to authorize a new class of stock ranking prior to
or on parity with the Senior Preferred Stock. Except as outlined above or
pursuant to applicable law, the Series II Senior is non-voting.
DIVIDENDS. Dividends accumulate on the original $10.00 per share
purchase price for Senior Preferred Stock at a rate of 13.50% per annum,
compounded semi-annually. Such dividends are not payable currently but are
cumulated and increase the liquidation preference of the Senior Preferred Stock.
Such dividends accrue whether or not declared by the Board of Directors. The
Senior Preferred Stock also participate pro rata (on a share for share basis)
with the outstanding Junior Preferred Stock and Common Stock, in dividends and
distributions (other than liquidating distributions).
CONVERSION. Each share of Series I Senior is convertible into a share
of Common Stock at any time at the option of the holder. Each share of Series II
Senior is convertible at any time at the option of the holder into one share of
Common Stock, provided that, after giving effect to such conversion, the total
number of Series II Senior and Series II Preferred converted into Common Stock
account for 25% or less of the total number of shares of Common Stock
outstanding. Following the conversion of at least 75% of the outstanding Senior
Preferred Stock into Common Stock, the Company shall be entitled to convert each
remaining share of Senior Preferred Stock into a share of Common Stock. In
addition, if the Company consummates an underwritten public offering of Common
Stock pursuant to which the net offering price per share is equal to or greater
than the Trigger Price (as defined below) and the net proceeds raised in the
offering are at least $50 million, the Company will have the right to require
that each share of Series I Senior be converted into one share of Series I
Preferred and that each share of Series II Senior be converted into one share of
Series II Preferred. The "Trigger Price" will be an amount equal to $10.00 plus
interest thereon at a rate of 13.50% per annum, compounded semi-annually, from
April 14, 1993 to the date of such public offering.
LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or
winding-up of the Company, after payment or provision for payment of the debts
and liabilities of the Corporation and before any payment or provision for
payment shall be made to the holders of Junior Preferred Stock or Common Stock,
the holders of Senior Preferred Stock shall be entitled to receive out of the
assets of the Corporation available for distribution to stockholders an amount
per share in cash equal to the "Senior Liquidation Preference," which is equal
to $10.00 per share and accrued Accretion Dividends (as defined in the Company's
Certificate of Incorporation). The aggregate Senior Liquidation Preference
applicable to the Series II Senior Preferred Stock may not exceed the greater of
(x) $10 per share or (y) 25% of the aggregate amount available for distribution
to the holders of all of the Company's capital stock. If, after payment of the
Senior Liquidation Preference, any amount remains for distribution to
stockholders, such remaining amount shall be distributed, as follows: (i) first,
to the holders of Junior Preferred Stock ratably in the amount of $10.00 per
outstanding share; (ii) second, to the holders of Common Stock ratably in the
amount of $10.00 per outstanding share; (iii) third, to the holders of Common
Stock and Junior Preferred Stock ratably in an amount per outstanding share
equal to the excess of the Senior Liquidation Preference per share over $10.00;
and (iv) last, to the holders of Senior Preferred Stock, Junior Preferred Stock,
Common Stock such that the amount distributed per outstanding share of Senior
Preferred Stock equals 50% of the amount distributed per outstanding share of
Junior Preferred Stock, Common Stock, with each holder of Senior Preferred Stock
to receive the same amount per share, and each holder of Junior Preferred Stock
and Common Stock to receive the same amount per share.
REPURCHASE OFFER. If the Company proposes to declare and pay any
dividends or other distributions (other than stock dividends or distributions)
in respect of Common Stock or Junior Preferred Stock, the Company must offer to
utilize the amount of such proposed dividend or distribution (including the pro
rata share of such dividend or distribution that would otherwise be
distributable to the holders of the Senior Preferred Stock) to redeem shares of
Senior Preferred Stock at a redemption price per share equal to the Senior
Liquidation Preference. Any portion of the proposed dividend amount not used to
redeem shares of
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Senior Preferred Stock may be utilized by the Company to pay dividends pari
passu to the holders of outstanding shares of Senior Preferred Stock, Junior
Preferred Stock and Common Stock.
OPTIONAL REDEMPTION. The Company may, at its option and at any time,
redeem all (but not less than all) of the outstanding shares of Senior Preferred
Stock at a price per share equal to the Senior Liquidation Preference; provided,
that the holders thereof must be provided an opportunity to convert such shares
of Senior Preferred Stock into shares of Common Stock prior to the effectiveness
of such redemption.
MANDATORY REDEMPTION. The Company is required to redeem all of the then
outstanding shares of Senior Preferred Stock on December 10, 2008, at a
redemption price per share equal to the Senior Liquidation Preference.
OTHER PREFERRED STOCK
In addition, the Board of Directors has the authority to issue
preferred stock in one or more classes or series and to fix the designations,
powers, preferences and dividend rates, conversion rights, voting rights, terms
of redemption and liquidation preferences and the number of shares constituting
each such class or series, subject, in the case of the authorization of, or the
increase in the amount of, any class or series of shares ranking prior to or on
a parity with the shares of Junior Preferred Stock or Senior Preferred Stock, to
certain required votes of holders of the Junior Preferred Stock and/or the
Senior Preferred Stock.
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DESCRIPTION OF SENIOR INDEBTEDNESS
The description set forth below does not purport to be complete and is
qualified in its entirety by reference to certain agreements setting forth the
principal terms and conditions of the Credit Facilities and the Senior Notes.
As part of the Refinancing, Chase, together with the Lenders, provided
the Company with senior secured Credit Facilities in an aggregate principal
amount of $120.0 million comprised of the Term Facility in an aggregate
principal amount of $80.0 million and the Revolving Credit Facility in an
aggregate principal amount of up to $40.0 million, of which up to $20.0 million
is available in the form of letters of credit. Chase syndicated the Term
Facility and a portion of its obligations under the Revolving Credit Facility to
the Lenders.
The Company issued $85.5 million aggregate principal amount of its
Senior Notes in exchange for (i) all of the National Subsidiary's Old Senior
Notes and (ii) all of the TA Subsidiary's Old Senior Notes other than the
Redeemed Notes. The Senior Notes and the Credit Facilities are secured by the
same collateral (see "--Credit Facilities--Guarantees; Security" below) and the
Senior Notes will rank PARI PASSU with the Credit Facilities. The relationship
between the Lenders and the holders of the Senior Notes is governed by an
intercreditor agreement, with Chase as Collateral Agent. For a description of
the Senior Notes, see "--Senior Notes."
CREDIT FACILITIES
AVAILABILITY. The availability of the Revolving Credit Facility is
subject to various conditions precedent customary for bank loans of this type.
The full amount of the Term Facility was drawn in a single drawing on the
Closing Date and amounts repaid or prepaid under the Term Facility may not be
reborrowed. Loans and letters of credit under the Revolving Credit Facility are
available at any time prior to, in the case of loans, the final maturity of the
Revolving Credit Facility and, in the case of letters of credit, the fifth
business day prior to the final maturity of the Revolving Credit Facility.
Amounts repaid under the Revolving Credit Facility may be reborrowed. Letters of
credit under the Revolving Credit Facility are issued by Chase or one of its
affiliates (the "Issuing Bank"). Each letter of credit shall expire no later
than the earlier of (i) 12 months after its date of issuance and (ii) the fifth
business day prior to the final maturity of the Revolving Credit Facility.
GUARANTEES; SECURITY. The obligations of the Company under the Credit
Facilities and any interest rate protection agreements entered into with a
Lender (or any affiliate thereof) are unconditionally guaranteed (the "Credit
Facility Guarantees") by each existing or subsequently acquired or organized
subsidiary of the Company, other than TAFSI and other than any foreign
subsidiary if such guarantee would result in adverse tax consequences to the
Company (collectively, the "Subsidiary Senior Guarantors"). The Senior Notes are
also guaranteed (the "Senior Note Guarantees"), on a PARI PASSU basis with the
Credit Facilities, by the Subsidiary Senior Guarantors.
The Credit Facilities, any interest rate protection agreement entered
into with a Lender (or any affiliate thereof) and the Credit Facility Guarantees
are secured by substantially all the assets of the Company and each existing or
subsequently acquired or organized subsidiary of the Company, including but not
limited to (i) a first-priority pledge of 100% (or, in the case of any foreign
subsidiary, 65%) of the capital stock of each such subsidiary of the Company and
(ii) perfected first-priority security interests in, and mortgages on (subject
to certain exceptions), substantially all tangible and intangible assets of the
Company and each such subsidiary, including but not limited to accounts
receivable, inventory, trademarks, trade names, real property, contractual
rights, cash and proceeds of the foregoing (the property referred to in clause
(i) and (ii) collectively, the "Collateral"). The Senior Notes and the Senior
Note Guarantees will also be secured, on a PARI PASSU basis with the Credit
Facilities, by the Collateral.
Certain matters relating to the Collateral will require approval of the
Lenders and the holders of Senior Notes, voting as a single class, holding a
majority of the aggregate amount of loans and
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commitments outstanding under the Credit Facilities and the aggregate amount of
outstanding Senior Notes, which majority shall include, subject to certain
exceptions, (i) Lenders holding at least one-third of the aggregate amount of
loans and commitments outstanding under the Credit Facilities and (ii) holders
of Senior Notes holding at least one-third of the aggregate amount of
outstanding Senior Notes.
FINAL MATURITY AND AMORTIZATION. The Term Facility will mature on the
date that is eight years after the Closing Date. Loans made under the Term
Facility will amortize in nominal quarterly installments during the first six
years of such facility and in quarterly installments thereafter in an aggregate
amount equal to $30.0 million in year seven and $47.0 million in year eight. The
Revolving Credit Facility will mature on the date that is seven years after the
Closing Date.
INTEREST; REDUCTIONS. The interest rate under Term Facility is equal
to, at the option of the Company, (i) the Alternate Base Rate ("ABR") (which is
the highest of (a) Chase's Prime Rate, (b) the Federal Funds Effective Rate plus
0.50% and (c) the Base CD Rate plus 1%) plus 2.00% per annum or (ii) the
adjusted London interbank offered rate ("Adjusted LIBOR") plus 3.00% per annum.
The Company may elect interest periods of one, two, three, or six months for
Adjusted LIBOR borrowings. The interest rates under the Revolving Credit
Facility are, at the option of the Company, equal to ABR plus 1.50% per annum or
Adjusted LIBOR plus 2.50% per annum. Amounts under the Credit Facilities not
paid when due bear interest at a default rate equal to 2.00% above the otherwise
applicable rate. The interest rates in respect of the Term Facility and, after
the first anniversary of the closing date, the Revolving Credit Facility will be
reduced by 0.25% at any time that the Credit Facilities or the Series II Senior
Notes are rated at least Ba2 by Moody's Investors Service, Inc. ("Moody's") or
BB by Standard & Poor's Rating Group ("S&P") so long as the Credit Facilities or
the Series II Senior Notes are rated at least Ba3 by Moody's and BB- by S&P at
such time.
MANDATORY PREPAYMENTS; VOLUNTARY PREPAYMENTS. The Company is required to
make mandatory prepayments, PRO RATA, under the Credit Facilities and the Senior
Notes in each fiscal year with (i) 50% of Excess Cash Flow (as defined in the
credit agreement providing for the Credit Facilities (the "Credit Agreement"))
for the immediately preceding fiscal year and (ii) 100% of the net cash proceeds
(net of selling expenses and taxes, including, in the case of income taxes,
estimated income taxes) of (a) all asset sales or other dispositions of property
by the Company and its subsidiaries (including insurance proceeds in excess of
an agreed-upon amount), (b) any sale and leaseback of any asset or the
mortgaging of any real property and (c) all issuances of debt obligations of the
Company and its subsidiaries, subject in each case to certain exceptions. When
there are no longer outstanding loans under the Term Facility, mandatory
prepayments will be allocated PRO RATA between the Senior Notes and the
Revolving Credit Facility and will be applied permanently to reduce loans (and
simultaneously to reduce commitments) under the Revolving Credit Facility. The
holders of the Senior Notes may decline to accept any mandatory prepayment and,
under such circumstances and subject to certain limitations described below, all
amounts that would otherwise be used to prepay Series I Senior Notes shall be
used to prepay loans under the Term Facility and the Series II Senior Notes, pro
rata. The Lenders holding loans under the Term Facility and holders of the
Series II Senior Notes may, subject to the following sentence, decline to accept
any mandatory prepayment (including any mandatory prepayments declined by the
holders of the Series I Senior Notes) and, under such circumstances, the Company
shall retain all amounts (the "Declined Amounts") that would otherwise be used
to repay loans under the Term Facility and amounts outstanding under the Series
II Senior Notes. In the event that any portion of the Declined Amounts has not
been invested in assets used in the principal lines of business of the Company's
subsidiaries or used to make a voluntary prepayment of Senior Notes or loans
under the Credit Facilities during the one-year period after such Declined
Amounts were so declined, the Company shall be required, on the last day of such
one-year period, to make mandatory prepayment of Senior Notes and loans under
the Term Facility in an amount equal to such remaining portion of the Declined
Amounts, provided that (i) any amounts declined by the holders of Series I
Senior Notes shall be allocated pro rata between the holders of loans under the
Term Facility and the holders of the Series II Senior Notes and (ii) no holder
of loans under the Term Facility and no holder of the Series II Senior Notes
shall be entitled to decline any such mandatory prepayment.
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Voluntary prepayments of loans under the Credit Facilities and the
Senior Notes are permitted in whole or in part, at the option of the Company, in
minimum principal amounts set forth in the Credit Agreement and in the Senior
Note Agreement, respectively, and (a) in the case of loans under the Credit
Facilities and the Series II Senior Notes, without premium or penalty and (b) in
the case of the Series I Senior Notes, subject to the payment of a make-whole
premium set forth in the Series I Senior Notes. Any voluntary prepayment of
loans under the Credit Facilities shall be subject to reimbursement of the
Lender's redeployment costs in the case of a prepayment of Adjusted LIBOR
borrowings other than on the last day of the relevant interest period. Neither
the holders of the Senior Notes nor the lenders holding loans under the Credit
Facilities may decline any voluntary prepayment.
FEES. The Company has agreed to pay certain fees with respect to the
Credit Facilities, including (i) fees on the unused commitments of the Lenders
equal to 0.50% per annum of the undrawn portion of the commitments in respect of
the Credit Facilities; (ii) a per annum letter of credit fee equal to the spread
over Adjusted LIBOR in effect under the Revolving Credit Facility on the
aggregate face amount of outstanding letters of credit plus a per annum fronting
bank fee for the Issuing Bank; and (iii) annual administration fees.
COVENANTS. The Credit Agreement contains a number of covenants that,
among other things, restrict the ability of the Company and its subsidiaries to
dispose of assets, incur additional indebtedness, incur guarantee obligations,
prepay, redeem or repurchase other indebtedness or amend certain other debt
instruments, pay dividends, create liens on assets, enter into sale and
leaseback transactions, make investments, loans or advances, make acquisitions,
engage in mergers or consolidations, change the business conducted by the
Company or its subsidiaries, make capital expenditures or engage in certain
transactions with affiliates and otherwise restrict certain corporate
activities. In addition, the Credit Agreement requires the Company to maintain
specified financial ratios and tests, including minimum interest coverage
ratios, maximum leverage ratios, a minimum working capital requirement and a
minimum net worth requirement.
EVENTS OF DEFAULT. The Credit Agreement contains customary events of
default, including, but not limited to, nonpayment of principal or interest;
violation of covenants; incorrectness of representations and warranties in any
material respect; cross default and cross acceleration; bankruptcy; material
judgments; ERISA; actual or asserted invalidity of security documents; and
Change in Control (as defined in the Credit Agreement).
SENIOR NOTES
GUARANTEES; SECURITY; RANKING. Pursuant to the Senior Note Guarantees,
the obligations of the Company under the Senior Notes are unconditionally
guaranteed by the Subsidiary Senior Guarantors. The Credit Facilities are also
be guaranteed, on a PARI PASSU basis, with the Senior Notes by the Subsidiary
Senior Guarantors.
The Senior Notes and the Senior Note Guarantees are secured by the
Collateral. The Credit Facilities and the Credit Facility Guarantees also
secured, on a PARI PASSU basis with the Senior Notes, by the Collateral.
Certain matters relating to the Collateral will require approval of the
Lenders and the holders of the Senior Notes, voting as a single class, holding a
majority of the aggregate amount of loans and commitments outstanding under the
Credit Facilities and the aggregate amount of outstanding Senior Notes, which
majority shall include, subject to certain exceptions, (i) Lenders holding at
least one-third of the aggregate amount of loans and commitments outstanding
under the Credit Facilities and (ii) holders of the Senior Notes holding at
least one-third of the aggregate amount of outstanding Senior Notes.
AMORTIZATION. The Series I Senior Notes are due on December 31, 2002
and will amortize in the fourth and fifth years after the Closing Date in an
amount equal to $17.75 million in each of years four and five.
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The Series II Senior Notes are due on March 31, 2005, and will amortize
in quarterly installments in the seventh and eighth years after the Closing Date
in an amount equal to $20.0 million in year seven and $30.0 million in year
eight.
INTEREST. Interest on the Series I Senior Notes is payable
semi-annually in arrears at 8.94%.
The interest rate under Series II Senior Notes is LIBOR plus 3.00% per
annum, for interest periods of six months. Amounts under the Series I Senior
Notes and the Series II Senior Notes not paid when due bear interest at a
default rate equal to 2.00% above the otherwise applicable rate. The interest
rates in respect of the Series II Senior Notes will be reduced by 0.25% at any
time after the end of the second six month interest period that the Series II
Senior Notes or the Credit Facilities are rated at least Ba2 by Moody's or BB by
S&P so long as the Series II Senior Notes or the Credit Facilities are rated at
least Ba3 by Moody's and BB- by S&P at such time.
MANDATORY PREPAYMENTS; VOLUNTARY PREPAYMENTS. The Company is required
to make mandatory prepayments, pro rata, under the Credit Facilities and the
Senior Notes in each fiscal year with (i) 50% of Excess Cash Flow (as defined in
the Senior Secured Note Exchange Agreement providing for the Senior Notes (the
"Senior Note Agreement")) for the immediately preceding fiscal year and (ii)
100% of the net cash proceeds (net of selling expenses and taxes, including, in
the case of income taxes, estimated income taxes) of (a) all asset sales or
other dispositions of property by the Company and its subsidiaries (including
insurance proceeds in excess of an agreed-upon amount), (b) any sale and
leaseback of any asset or the mortgaging of any real property (other than
mortgages securing the loans under the Credit Agreement and permitted sale and
leaseback transactions) and (c) all issuances of debt obligations of the Company
and its subsidiaries, subject in each case to certain exceptions. When there are
no longer outstanding loans under the Term Facility, mandatory prepayments will
be allocated pro rata between the Senior Notes and the Revolving Credit Facility
and will be applied permanently to reduce loans (and simultaneously to reduce
commitments) under the Revolving Credit Facility. The holders of the Senior
Notes may decline to accept any mandatory prepayment and, under such
circumstances and subject to certain limitations described below, all amounts
that would otherwise be used to prepay the Series I Senior Notes shall be used
to prepay loans under the Term Facility and the Series II Senior Notes, pro
rata. The Lenders holding loans under the Term Facility and holders of the
Series II Senior Notes may, subject to the following sentence, decline to accept
any mandatory prepayment (including any mandatory prepayments declined by the
holders of the Series I Senior Notes) and, under such circumstances, the Company
shall retain all Declined Amounts that would otherwise be used to repay loans
under the Term Facility and amounts outstanding under the Series II Senior
Notes. In the event that any portion of the Declined Amounts has not been
invested in assets used in the principal lines of business of the Company's
subsidiaries or used to make a voluntary prepayment of the Senior Notes or loans
under the Credit Facilities during the one-year period after such Declined
Amounts were so declined, the Company shall be required, on the last day of such
one-year period, to make mandatory prepayment of Senior Notes and loans under
the Term Facility in an amount equal to such remaining portion of the Declined
Amounts, provided (i) any amounts declined by the Series I Senior Notes shall be
allocated pro rata between the holders of loans under the Term Facility and the
holders of the Series II Senior Notes and (ii) no holder of loans under the Term
Facility and no holder of the Series II Senior Notes shall be entitled to
decline any such mandatory prepayment.
Voluntary prepayments of loans under the Credit Facilities and the
Senior Notes are permitted in whole or in part, at the option of the Company, in
minimum principal amounts set forth in the Credit Agreement and in the Senior
Note Agreement, respectively, and, (a) in the case of the Series I Senior Notes,
subject to the payment of a make-whole premium set forth in the Series I Senior
Notes and (b) in the case of the Series II Senior Notes and loans under the
Credit Facilities, without premium or penalty. Any voluntary prepayment (other
than on the last day of the relevant interest period) of amounts outstanding
under the Series II Senior Notes shall be subject to reimbursement of the
holders of Series II Senior Notes' redeployment costs. Neither the holders of
the Senior Notes nor the lenders holdings loans under the Term Facility may
decline to accept any voluntary prepayment.
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COVENANTS. The Senior Note Agreement contains a number of covenants
that, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur additional indebtedness, incur
guarantee obligations, prepay, redeem or repurchase other indebtedness or amend
certain other debt instruments, pay dividends, create liens on assets, enter
into sale and leaseback transactions, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, change the business conducted
by the Company or its subsidiaries, make capital expenditures or engage in
certain transactions with affiliates and otherwise restrict certain corporate
activities. In addition, the Senior Note Agreement requires the Company to
maintain specified financial ratios and tests, including minimum interest
coverage ratios, maximum leverage ratios, minimum working capital requirement
and a minimum net worth requirement.
FEES. The Company has agreed to pay each holder of Series II Senior
Notes a fee in cash on the closing date in the amount set forth in the Senior
Note Agreement.
EVENTS OF DEFAULT. The Senior Note Agreement contains customary events
of default, including, but not limited to, nonpayment of principal or interest;
violation of covenants; incorrectness of representations and warranties in any
material respect; cross default and cross acceleration; bankruptcy; material
judgments; ERISA; actual or asserted invalidity of security documents; and
Change in Control (as defined in the Senior Note Agreement).
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DESCRIPTION OF NEW NOTES
GENERAL
The Company issued $125.0 million aggregate principal amount of
Existing Notes on March 27, 1997 (the "Issue Date") pursuant to an Indenture
dated as of the Issue Date among the Company, the TA Subsidiary and the National
Subsidiary (the Subsidiary Guarantors as of the Issue Date) and Fleet National
Bank, as Trustee (in such capacity, the "Trustee"). The New Notes will also be
issued under the Indenture which will be qualified under the TIA upon
effectiveness of the Registration Statement of which this Prospectus is a part.
The form and terms of the New Notes are the same as the form and terms of the
Existing Notes except that the New Notes will have been registered under the
Securities Act and, therefore, will not bear legends restricting their transfer
pursuant to the Securities Act. The New Notes and the Existing Notes are
collectively referred to as the "Notes." The terms of the New Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the TIA as in effect on the date of the Indenture. The New Notes are subject
to all such terms, and holders of New Notes are referred to the Indenture and
the TIA for a statement thereof. Certain capitalized terms used herein and not
otherwise defined have the meanings set forth under "--Certain Definitions."
The following summary of certain provisions of the Indenture and the
Notes does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part thereof by the
TIA. A copy of the Indenture has been filed with the Commission as an exhibit to
the Registration Statement of which this Prospectus is a part and is
incorporated herein by reference.
Principal of, premium, if any, and interest on the Notes are and will
be payable, and the Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially shall be the corporate trust office of the Trustee, in New York, New
York), except that, at the option of the Company, payment of interest may be
made by check mailed to the registered holders of the Notes at their registered
addresses.
The New Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
TERMS OF THE NOTES
The Notes are and will be unsecured senior subordinated obligations of
the Company, limited to $125.0 million aggregate principal amount, and will
mature on April 1, 2007. Each Note will bear interest at a rate per annum shown
on the front cover of this Prospectus from the Issue Date or from the most
recent date to which interest has been paid or provided for, payable
semiannually to Holders of record at the close of business on the March 15 or
September 15 immediately preceding the interest payment date on April 1 and
October 1 of each year, commencing October 1, 1997.
OPTIONAL REDEMPTION
The Notes will be redeemable, at the Company's option, in whole or in
part, at any time on or after April 1, 2002, and prior to maturity, upon not
less than 30 nor more than 60 days' prior notice mailed by first-class mail to
each Holder's registered address, at the following redemption prices (expressed
as a percentage of principal amount), plus accrued interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on April 1 of the years set forth
below:
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REDEMPTION
PERIOD PRICE
- ------ -----
2002............................................. 105.125%
2003............................................. 103.417%
2004............................................. 101.708%
2005 and thereafter.............................. 100.000%
In addition, at any time and from time to time prior to April 1, 2000,
the Company may redeem in the aggregate up to 35% of the original aggregate
principal amount of the Notes with the proceeds of one or more Public Equity
Offerings by the Company, at a redemption price (expressed as a percentage of
principal amount thereof) of 110.25% plus accrued interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
PROVIDED, HOWEVER, that at least 65% of the original aggregate principal amount
of the Notes must remain outstanding after each such redemption.
At any time on or prior to April 1, 2002, the Notes may also be
redeemed as a whole at the option of the Company upon the occurrence of a Change
of Control, upon not less than 30 or more than 60 days' prior notice (but in no
event more than 180 days after the occurrence of such Change of Control) mailed
by first-class mail to each Holder's registered address, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium as of,
and accrued but unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
SELECTION
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the notice
of redemption relating to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note.
RANKING
The indebtedness evidenced by the Notes is unsecured Senior
Subordinated Indebtedness of the Company. The payment of the principal of,
premium (if any) and interest (including any liquidated damages payable in
respect of Existing Notes under the Exchange and Registration Rights Agreement
("Additional Interest")) on the Notes is subordinate in right of payment, as set
forth in the Indenture, to all existing and future Senior Indebtedness of the
Company, ranks PARI PASSU in right of payment with all existing and future
Senior Subordinated Indebtedness of the Company and is senior in right of
payment to all existing and future Subordinated Obligations of the Company. The
Notes are also be effectively subordinated to any Secured Indebtedness of the
Company to the extent of the value of the assets securing such Indebtedness.
However, payment from the money or the proceeds of U.S. Government Obligations
held in any defeasance trust described under "Defeasance" below is not
subordinated to any Senior Indebtedness or subject to the restrictions described
herein.
All the operations of the Company are conducted through its
Subsidiaries. The indebtedness evidenced by a Subsidiary Guarantee is unsecured
Senior Subordinated Indebtedness of such Subsidiary Guarantor. The payment of a
Subsidiary Guarantee is subordinate in right of payment, as set forth in the
Indenture, to all existing and future Senior Indebtedness of such Subsidiary
Guarantor, ranks PARI PASSU in right of payment with all existing and future
Senior Subordinated Indebtedness of such Subsidiary Guarantor and is senior in
right of payment to all existing and future Subordinated Obligations of such
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Subsidiary Guarantor. Each Subsidiary Guarantee is also effectively subordinated
to any Secured Indebtedness of the Subsidiary Guarantor to the extent of the
value of the assets securing such Indebtedness.
At December 31, 1996, after giving effect to the Transactions,
including the issuance and sale of the Existing Notes and the application of the
net proceeds therefrom as described herein under "Use of Proceeds," (i) the
aggregate amount of the Company's outstanding Senior Indebtedness would have
been $165.5 million (exclusive of unused commitments), all of which would have
been Secured Indebtedness, (ii) the Company would have had no Senior
Subordinated Indebtedness outstanding other than the Existing Notes and no
indebtedness that is subordinate or junior in right of repayment to the
indebtedness represented by the Existing Notes, (iii) the outstanding Senior
Indebtedness of the Subsidiary Guarantors, consisting entirely of Guarantees of
the Senior Indebtedness of the Company Incurred under the Credit Facilities and
the Senior Notes, would have been $165.5 million and (iv) all liabilities of the
Subsidiaries (including Senior Indebtedness and trade payables, but excluding
the Subsidiary Guarantees) would have been approximately $202.7 million.
Although the Indenture contains restrictions on the Incurrence of additional
Indebtedness by the Company and its Subsidiary Guarantors, under certain
circumstances the amount of such Indebtedness could be substantial and, in any
case, such Indebtedness may be Senior Indebtedness of the Company or a
Subsidiary Guarantor, as the case may be. See "Certain Covenants--Limitation on
Indebtedness" below.
"Senior Indebtedness" means the principal of, premium (if any) and
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization of the Company regardless of whether postfiling
interest is allowed in such proceeding) on, and fees and other amounts owing in
respect of, the Bank Indebtedness, the Senior Note Indebtedness and all other
Indebtedness of the Company, whether outstanding on the Issue Date or thereafter
issued, unless in the instrument creating or evidencing the same or pursuant to
which the same is outstanding it is provided that such obligations are not
superior in right of payment to the Notes; PROVIDED, HOWEVER, that Senior
Indebtedness shall not include (i) any obligation of the Company to any
Subsidiary, (ii) any liability for Federal, state, local or other taxes owed or
owing by the Company, (iii) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (iv) any Indebtedness or
obligation of the Company that by its terms is subordinate or junior in any
respect to any other Indebtedness or obligation of the Company, including any
Senior Subordinated Indebtedness and any Subordinated Obligations, (v) any
Capital Stock or (vi) any Indebtedness Incurred in violation of the Indenture.
If any Designated Senior Indebtedness is disallowed, avoided or subordinated
pursuant to the provisions of Section 548 of Title 11 of the United States Code
or any applicable state fraudulent conveyance law, such Designated Senior
Indebtedness nevertheless will constitute Senior Indebtedness.
"Senior Indebtedness" of any Subsidiary Guarantor has a correlative meaning.
Only Indebtedness of the Company or a Subsidiary Guarantor that is
Senior Indebtedness will rank senior to the Notes and the relevant Subsidiary
Guarantee, respectively, in accordance with the provisions of the Indenture. The
Notes and each Subsidiary Guarantee in all respects rank PARI PASSU with all
other Senior Subordinated Indebtedness of the Company and the relevant
Subsidiary Guarantor, respectively. Each of the Company and the Subsidiary
Guarantors has agreed in the Indenture that it will not Incur, directly or
indirectly, any Indebtedness that by its terms is subordinate or junior in
ranking in any respect to Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness. Unsecured Indebtedness of the Company or a
Subsidiary Guarantor is not deemed to be subordinate or junior to Secured
Indebtedness, as the case may be, merely because it is unsecured.
The Company may not pay principal of, premium (if any) or interest
(including any Additional Interest) on, the Notes or make any deposit pursuant
to the provisions described under "Defeasance" below and may not otherwise
purchase, redeem or otherwise retire any Notes (collectively, "pay the Notes")
if (i) any Senior Indebtedness is not paid when due in cash or (ii) any other
default on Senior Indebtedness occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
the default has been cured or waived and any such acceleration has been
rescinded in
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writing or such Senior Indebtedness has been paid in full in cash. However, the
Company may pay the Notes without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
the Senior Indebtedness with respect to which either of the events set forth in
clause (i) or (ii) of the immediately preceding sentence has occurred and is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Notes for a period (a "Payment Blockage
Period") commencing upon the receipt by the Trustee (with a copy to the Company)
of written notice (a "Blockage Notice") of such default from the Representative
of the Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) by
repayment in full in cash of such Designated Senior Indebtedness or (iii)
because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this paragraph), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders have accelerated the maturity
of such Designated Senior Indebtedness, the Company may resume payments on the
Notes after the end of such Payment Blockage Period. Not more than one Blockage
Notice may be given in any consecutive 360-day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness during such
period. However, if any Blockage Notice within such 360-day period is given by
or on behalf of any holders of Designated Senior Indebtedness other than the
Bank Indebtedness and the Senior Note Indebtedness, the Representative of the
Bank Indebtedness and the Senior Note Indebtedness may give another Blockage
Notice within such period. In no event, however, may the total number of days
during which any Payment Blockage Period or Periods is in effect exceed 179 days
in the aggregate during any 360 consecutive day period.
Upon any payment or distribution of the assets of the Company upon a
total or partial liquidation or dissolution or reorganization of or similar
proceeding relating to the Company or its property, the holders of Senior
Indebtedness will be entitled to receive payment in full in cash of the Senior
Indebtedness before the Noteholders are entitled to receive any payment and
until the Senior Indebtedness is paid in full in cash, any payment or
distribution to which Noteholders would be entitled but for the subordination
provisions of the Indenture will be made to holders of the Senior Indebtedness
as their interest may appear. If a distribution is made to Noteholders that due
to the subordination provisions of the Indenture should not have been made to
them, such Noteholders are required to hold it in trust for the holders of
Senior Indebtedness and pay it over to them as their interests may appear.
If payment of the Notes is accelerated because of an Event of Default,
the Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness (or their Representatives) of the acceleration. If any
Designated Senior Indebtedness is outstanding, the Company may not pay the Notes
until five Business Days after such holders or the Representative of the
Designated Senior Indebtedness receive notice of such acceleration and,
thereafter, may pay the Notes only if the subordination provisions of the
Indenture otherwise permit payment at that time.
The Indebtedness evidenced by each Subsidiary Guarantee (including the
payment of principal of, premium, if any, and interest (including any Additional
Interest) on the Notes) is subordinated to Senior Indebtedness on the same basis
as the Notes are subordinated to Senior Indebtedness.
By reason of such subordination provisions contained in the Indenture,
in the event of insolvency, creditors of the Company or a Subsidiary Guarantor
who are holders of Senior Indebtedness of the Company or a Subsidiary Guarantor,
as the case may be, may recover more, ratably, than the Noteholders, and
creditors of the Company who are not holders of Senior Indebtedness or of Senior
Subordinated Indebtedness (including the Notes) may recover less, ratably, than
holders of Senior Indebtedness of the Company.
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SUBSIDIARY GUARANTEES
The Subsidiary Guarantors, as primary obligors and not merely as
sureties, have irrevocably and unconditionally Guaranteed on an unsecured senior
subordinated basis the performance and punctual payment when due, whether at
Stated Maturity, by acceleration or otherwise, of all obligations of the Company
under the Indenture and the Existing Notes (and upon their issuance will do so
with respect to the New Notes), whether for payment of principal of or interest
on the Notes, expenses, indemnification or otherwise (all such obligations
guaranteed by the Subsidiary Guarantors being herein called the "Guaranteed
Obligations") by executing a Subsidiary Guarantee. The Subsidiary Guarantors
have agreed to pay, in addition to the amount stated above, any and all expenses
(including reasonable counsel fees and expenses) incurred by the Trustee or the
Holders in enforcing any rights under the Subsidiary Guarantee. Each Subsidiary
Guarantee is limited in amount to an amount not to exceed the maximum amount
that can be Guaranteed by the applicable Subsidiary Guarantor without rendering
the Subsidiary Guarantee, as it relates to such Subsidiary Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally. As of the date of this
Prospectus, the Subsidiary Guarantors are the TA Subsidiary and the National
Subsidiary. After such date, the Company will cause each Restricted Subsidiary
that is not a Foreign Subsidiary and that Incurs Indebtedness to execute and
deliver to the Trustee a Subsidiary Guarantee pursuant to which such Restricted
Subsidiary will Guarantee payment of the Notes. See "Certain Covenants--Future
Subsidiary Guarantors" below.
Each Subsidiary Guarantee is a continuing guarantee and shall (a)
remain in full force and effect until payment in full of all the Guaranteed
Obligations, (b) be binding upon each Subsidiary Guarantor and (c) enure to the
benefit of and be enforceable by the Trustee, the Holders and their successors,
transferees and assigns.
A Subsidiary Guarantee will be automatically released (a) upon the sale
(including through merger or consolidation) of the Capital Stock, or all or
substantially all of the assets, of the applicable Subsidiary Guarantor if such
sale is made in compliance with the Indenture or (b) to the extent, but only to
the extent, that all obligations of such Subsidiary Guarantor under the Credit
Agreement and the Senior Note Agreement, and all its Guarantees of, and under
all its pledges of assets or other security interests that secure, any other
Indebtedness of the Company, shall also terminate.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's Notes at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); PROVIDED, HOWEVER, that notwithstanding the occurrence of a Change in
Control, the Company shall not be obligated to purchase the Notes pursuant to
this covenant in the event that it has exercised its right to redeem all the
Notes pursuant to the provisions under "--Optional Redemption":
(i) prior to the first public offering of Voting Stock of the
Company, the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of
the Voting Stock of the Company, whether as a result of issuance of
securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect transfer of
securities by any Permitted Holder or otherwise (for purposes of this
clause (i), the Permitted Holders shall be deemed to own beneficially
any Voting Stock of an entity (the "specified entity") held by any
other entity (the "parent entity") so long as the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the
parent entity);
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(ii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i) above,
except that such person shall be deemed to have "beneficial ownership"
of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total voting
power of the Voting Stock of the Company (including any successor by
merger, consolidation or the sale of all or substantially all assets);
or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders
of the Company was approved by a vote of a majority of the directors of
the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
In the event that at the time of such Change of Control the terms of
the Bank Indebtedness or the Senior Note Indebtedness restrict or prohibit the
repurchase of Notes pursuant to this covenant, then prior to the mailing of the
notice to Holders provided for in the immediately following paragraph but in any
event within 30 days following any Change of Control, the Company shall (i)
repay in full all Bank Indebtedness or Senior Note Indebtedness, as the case may
be, or offer to repay in full all Bank Indebtedness or Senior Note Indebtedness,
as the case may be, and repay the Bank Indebtedness of each lender or Senior
Note Indebtedness of each holder, as the case may be, who has accepted such
offer or (ii) obtain the requisite consent under the agreements governing the
Bank Indebtedness or the Senior Note Indebtedness, as the case may be, to permit
the repurchase of the Notes as provided for in the immediately following
paragraph.
Within 30 days following any Change of Control, unless the Company has
mailed a notice of redemption in connection with such Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee stating:
(a) that a Change of Control has occurred and that such Holder has the right to
require the Company to purchase such Holder's Notes at a purchase price in cash
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of repurchase (subject to the right of Holders of record on
a record date to receive interest on the relevant interest payment date); (b)
the circumstances and relevant facts and financial information regarding such
Change of Control; (c) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and (d) the
instructions determined by the Company, consistent with this covenant, that a
Holder must follow in order to have its Notes purchased.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
The Change of Control purchase feature is a result of negotiations
between the Company and the Initial Purchasers. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could increase the amount of indebtedness outstanding at such time or otherwise
affect the Company's capital structure or credit ratings.
The occurrence of certain of the events which would constitute a Change
of Control would constitute a default under the Credit Agreement and the Senior
Note Agreement. Future Senior Indebtedness of the Company may contain
prohibitions of certain events which would constitute a Change of Control or
require such Senior Indebtedness to be repurchased upon a Change of Control.
Moreover, the exercise by the Holders of their right to require the Company to
repurchase the Notes could cause a default under such Senior Indebtedness, even
if the Change of Control itself does not, due to the financial effect
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of such repurchase on the Company. Finally, the Company's ability to pay cash to
the Holders upon a repurchase may be limited by the Company's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases.
CERTAIN COVENANTS
The Indenture contains covenants including, among others, the
following:
LIMITATION ON INDEBTEDNESS. (a) The Company will not, and will not
permit any Restricted Subsidiary to, Incur any Indebtedness; PROVIDED, HOWEVER,
that the Company or any Restricted Subsidiary may Incur Indebtedness if on the
date thereof the Consolidated Coverage Ratio would be greater than 2.0:1, if
such Indebtedness is Incurred on or prior to March 31, 2000, and 2.25:1 if such
Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness: (i) Bank
Indebtedness and Senior Note Indebtedness collectively not in excess of $225.0
million less the aggregate amount of all payments of principal applied to
permanently reduce any such Indebtedness actually made since the Issue Date
(excluding any payments to the extent refinanced at the time of payment under
replacement Bank Indebtedness or Senior Note Indebtedness); (ii) Indebtedness of
the Company owing to and held by any Subsidiary or Indebtedness of a Restricted
Subsidiary owing to and held by the Company or any Subsidiary; PROVIDED,
HOWEVER, that any subsequent issuance or transfer of any Capital Stock or any
other event that results in any such Subsidiary ceasing to be a Subsidiary or
any subsequent transfer of any such Indebtedness (except to the Company or a
Restricted Subsidiary) will be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof; (iii) Indebtedness
represented by the Notes, the Subsidiary Guarantees, any Indebtedness (other
than the Indebtedness described in clause (i) above) outstanding on the Issue
Date and any Refinancing Indebtedness Incurred in respect of any Indebtedness
described in clause (i), this clause (iii) or paragraph (a); (iv) (A)
Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to
the date on which such Restricted Subsidiary was acquired by the Company (other
than Indebtedness Incurred as consideration in, in contemplation of, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Subsidiary or was otherwise acquired by the
Company); PROVIDED, HOWEVER, that at the time such Restricted Subsidiary is
acquired by the Company, the Company would have been able to Incur $1.00 of
additional Indebtedness pursuant to paragraph (a) after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (iv) and (B) Refinancing
Indebtedness Incurred by a Restricted Subsidiary in respect of Indebtedness
Incurred by such Restricted Subsidiary pursuant to this clause (iv); (v)
Indebtedness (A) in respect of performance bonds, bankers' acceptances, letters
of credit and surety or appeal bonds provided by the Company and the Restricted
Subsidiaries in the ordinary course of their business and which do not secure
other Indebtedness of the Company or any Restricted Subsidiary (except
Indebtedness permitted under the Indenture), and (B) under Currency Agreements
and Interest Rate Agreements, in each case entered into for bona fide hedging
purposes of the Company in the ordinary course of business and not for the
purposes of speculation; PROVIDED, HOWEVER, that, in the case of Currency
Agreements and Interest Rate Agreements, such Currency Agreements and Interest
Rate Agreements do not increase the Indebtedness of the Company outstanding at
any time other than as a result of fluctuations in foreign currency exchange
rates or interest rates or by reason of fees, indemnities and compensation
payable thereunder; and (vi) Indebtedness (which may constitute Bank
Indebtedness or Senior Note Indebtedness) of the Company or any Restricted
Subsidiary (other than Indebtedness permitted to be Incurred pursuant to
paragraph (a) or any other clause of this paragraph (b)) in an aggregate
principal amount on the date of Incurrence which, when added to the principal
amount of all other Indebtedness Incurred pursuant to this clause (vi) and then
outstanding, will not exceed $20.0 million.
(c) Notwithstanding the foregoing, neither the Company nor any
Subsidiary may Incur any Indebtedness pursuant to paragraph (b) above if the
proceeds thereof are used, directly or indirectly, to repay, prepay, redeem,
defease, retire, refund or refinance any Subordinated Obligations unless such
Indebtedness will be subordinated to the Notes to at least the same extent as
such Subordinated
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Obligations. The Company may not Incur any Indebtedness if such Indebtedness is
by its terms expressly subordinate or junior in ranking in any respect to any
Senior Indebtedness of the Company unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness of the Company. In addition, the Company may
not Incur any Secured Indebtedness which is not Senior Indebtedness of the
Company unless contemporaneously therewith effective provision is made to secure
the Notes equally and ratably with (or on a senior basis to, in the case of
Indebtedness subordinated in right of payment to the Notes) such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien. A
Subsidiary Guarantor may not Incur any Indebtedness if such Indebtedness is by
its terms expressly subordinate or junior in ranking in any respect to any
Senior Indebtedness of the Subsidiary Guarantor unless such Indebtedness is
Senior Subordinated Indebtedness of such Subsidiary Guarantor or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness of such
Subsidiary Guarantor. In addition, a Subsidiary Guarantor may not Incur any
Secured Indebtedness which is not Senior Indebtedness of such Subsidiary
Guarantor unless contemporaneously therewith effective provision is made to
secure the Subsidiary Guarantee equally and ratably with (or on a senior basis
to, in the case of Indebtedness subordinated in right of payment to such
Subsidiary Guarantee) such Secured Indebtedness for as long as such Secured
Indebtedness is secured by a Lien.
LIMITATION ON RESTRICTED PAYMENTS. (a) The Company will not, and will
not permit any Restricted Subsidiary, directly or indirectly, to (i) declare or
pay any dividend or make any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or consolidation involving
the Company) except dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock) and except dividends or distributions
payable to the Company or another Restricted Subsidiary (and, if such Restricted
Subsidiary is not wholly owned, to its other shareholders on a pro rata basis in
accordance with their respective ownership of the class of Capital Stock
affected thereby), (ii) purchase, redeem, retire or otherwise acquire for value
any Capital Stock of the Company or any Restricted Subsidiary held by Persons
other than the Company or another Restricted Subsidiary, (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition) or (iv) make any Investment
(other than a Permitted Investment) in any Person (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition,
retirement or Investment being herein referred to as a "Restricted Payment") if
at the time the Company or such Restricted Subsidiary makes such Restricted
Payment: (1) a Default will have occurred and be continuing (or would result
therefrom); (2) the Company could not Incur at least $1.00 of additional
Indebtedness under paragraph (a) of the covenant described under "--Limitation
on Indebtedness"; or (3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination will be
conclusive and evidenced by a resolution of the Board of Directors) declared or
made subsequent to the Issue Date would exceed the sum of: (A) 50% of the
Consolidated Net Income accrued during the period (treated as one accounting
period) from the Issue Date to the end of the most recent fiscal quarter for
which financial statements are then available but ending not more than 60 days
prior to the date of such Restricted Payment (or, in case such Consolidated Net
Income will be a deficit, minus 100% of such deficit); (B) the aggregate Net
Cash Proceeds received by the Company from the issue or sale of its Capital
Stock (other than Disqualified Stock) or other cash contribution subsequent to
the Issue Date (other than an issuance or sale to a Subsidiary of the Company or
an employee stock ownership plan or other trust established by the Company or
any of its Subsidiaries); (C) the amount by which Indebtedness of the Company or
its Restricted Subsidiaries is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary) of any Indebtedness issued
subsequent to the Issue Date of the Company or its Restricted Subsidiaries
convertible or exchangeable for Capital Stock (other than Disqualified Stock) of
the Company (less the amount of any cash or other assets of the Company or any
Subsidiary distributed to holders of such Indebtedness by the Company or any
Restricted Subsidiary upon such conversion or exchange); (D) the amount equal to
the net reduction in Investments in Unrestricted Subsidiaries resulting from (i)
payments of dividends, repayments of the principal of loans or advances or other
transfers of assets to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries or
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(ii) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investment") not to
exceed, in the case of any Unrestricted Subsidiary, the amount of Investments
previously made by the Company or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the calculation of the amount of
Restricted Payments and (E) to the extent that any Investment (other than a
Permitted Investment or Investment referred to in clause (D)) that was made
after the Issue Date is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (x) the cash received with respect to such sale, liquidation
or repayment of such Investment (less the cost of such sale, liquidation or
repayment, if any) and (y) the amount of such Investment that was included in
calculating the amount of Restricted Payments.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(i) any purchase or redemption of Capital Stock of the Company or Subordinated
Obligations made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
(unless otherwise permitted to be Incurred under the Indenture) and other than
Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan
or other trust established by the Company or any of its Subsidiaries); PROVIDED,
HOWEVER, that (A) such purchase or redemption will be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash Proceeds
applied to make such purchase or redemption from such sale will be excluded from
clause (3)(B) of paragraph (a) above; (ii) any purchase or redemption of
Subordinated Obligations made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of the Company that is permitted
to be Incurred pursuant to the covenant described under "--Limitation on
Indebtedness"; provided, however, that such purchase or redemption will be
excluded in the calculation of the amount of Restricted Payments; (iii) any
purchase or redemption of Subordinated Obligations from Net Available Cash to
the extent permitted by the covenant described under "--Limitation on Sales of
Assets and Subsidiary Stock"; PROVIDED, HOWEVER, that such purchase or
redemption will be excluded in the calculation of the amount of Restricted
Payments; (iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied with
this covenant; PROVIDED, HOWEVER, that such dividend will be included in the
calculation of the amount of Restricted Payments; (v) the repurchase of shares
of, or options to purchase shares of, or the payment of the stock appreciation
on any options to purchase, common stock of the Company or any of its
Subsidiaries from employees, former employees, directors or former directors of
the Company or any of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former directors), pursuant to the
terms of agreements (including employment agreements), plans (or amendments
thereto) or other arrangements approved by the Board of Directors or the board
of directors of the applicable Subsidiary, as the case may be; PROVIDED,
HOWEVER, that the aggregate amount of such repurchases shall not exceed $2.0
million in any calendar year and $5.0 million in the aggregate (which amount
shall be increased by the amount of any cash proceeds to the Company from sales
of its Capital Stock to employees, former employees, directors or former
directors subsequent to the Issue Date); PROVIDED FURTHER, HOWEVER, that such
repurchases shall be included in the calculation of the amount of Restricted
Payments; and (vi) the repurchase of shares of Capital Stock of the Company in
an aggregate amount not in excess of $15.0 million from Lessee Operators or
their Affiliates in connection with the termination of one or more lease
agreements and one or more franchise agreements in respect of one or more
TravelCenters operated directly or indirectly by such Lessee Operator or its
Affiliates.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES. The Company will not, and will not permit any Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (i)
pay dividends or make any other distributions on its Capital Stock or pay any
Indebtedness owed to the Company, (ii) make any loans or advances to the Company
or (iii) transfer any of its property or assets to the Company, except: (A) any
encumbrance or restriction pursuant to an agreement in effect at or entered into
on the Issue Date, including the Credit Agreement and the Senior Note Agreement;
(B) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary prior to the date on which such Restricted Subsidiary was
acquired by the Company (other than Indebtedness Incurred as consideration in,
in contemplation of, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was otherwise acquired
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by the Company) and outstanding on such date; (C) any encumbrance or restriction
assumed pursuant to an agreement constituting Bank Indebtedness, Senior Note
Indebtedness or Refinancing Indebtedness Incurred in compliance with the
Indenture; provided, however, that the encumbrances and restrictions contained
in such Senior Bank Documents, Senior Note Documents or any other agreement
providing for Refinancing Indebtedness are no less favorable to the Noteholders
than encumbrances and restrictions contained in the agreements relating to the
Indebtedness being replaced; (D) any encumbrance or restriction assumed pursuant
to an agreement relating to an acquisition of property, so long as the
encumbrances or restrictions in any such agreement relate solely to the property
so acquired (and are not or were not created in anticipation of or in connection
with the acquisition thereof); (E) in the case of clause (iii), any encumbrance
or restriction (1) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (2) contained in security
agreements or mortgages securing Indebtedness of a Subsidiary to the extent such
encumbrance or restrictions restrict the transfer or the property subject to
such security agreements or mortgages or (3) arising or agreed to in the
ordinary course of business and that does not, individually or in the aggregate,
detract from the value of property or assets of the Company or any of its
Subsidiaries in any manner material to the Company or any such Restricted
Subsidiary; (F) restrictions on the transfer of assets subject to any Lien
permitted under the Indenture imposed by the holder of such Lien; and (G) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary pending the closing of
such sale or disposition.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) The Company
will not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration (including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the fair market value as determined
in good faith by the Board of Directors, whose determination will be conclusive
and evidenced by a resolution of the Board of Directors (including as to the
value of all noncash consideration) of the shares and assets disposed of by the
Company or such Restricted Subsidiary pursuant to such Asset Disposition, (ii)
at least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or Designated Consideration and
(iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as the
case may be) (A) FIRST, to the extent the Company elects or is required to
prepay, repay or purchase Senior Indebtedness (in each case other than
Indebtedness owed to the Company or an Affiliate of the Company) within 180 days
after the later of the date of such Asset Disposition or the receipt of such Net
Available Cash; (B) SECOND, to the extent of the balance of Net Available Cash
after application in accordance with clause (A), to the extent the Company or
such Restricted Subsidiary elects, to reinvest in Additional Assets (including
by means of an Investment in Additional Assets by a Restricted Subsidiary with
Net Available Cash received by the Company or another Restricted Subsidiary) by
the later of (x) December 31, 1999, or (y) 365 days from the later of such Asset
Disposition or the receipt of such Net Available Cash; (C) THIRD, to the extent
of the balance of such Net Available Cash after application in accordance with
clauses (A) and (B), to make an Offer (as defined below) to purchase Notes
pursuant to and subject to the conditions set forth in section (b) of this
covenant, and (D) FOURTH, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A), (B) and (C), to fund (to
the extent consistent with any other applicable provision of the Indenture) any
corporate purpose; PROVIDED, HOWEVER, that in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A) or (C) above, the
Company or such Restricted Subsidiary will retire such Indebtedness and will
cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this covenant, the Company and the
Restricted Subsidiaries will not be required to apply any Net Available Cash in
accordance with this covenant except to the extent that the aggregate Net
Available Cash from all Asset Dispositions that is not applied in accordance
with this covenant exceeds $2.0 million.
For the purposes of this covenant, the following are deemed to be cash:
(x) the assumption of Indebtedness of the Company (other than Disqualified Stock
of the Company) or any Restricted Subsidiary
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and the release of the Company or such Restricted Subsidiary from all liability
on such Indebtedness in connection with such Asset Disposition (in which case
the Company shall, without further action, be deemed to have applied such
assumed Indebtedness in accordance with clause (A) of the preceding paragraph)
and (y) securities or instruments received by the Company or any Restricted
Subsidiary from the transferee that are promptly converted by the Company or
such Restricted Subsidiary into cash.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries will be permitted to consummate any Asset Swap if (i) at the time
of entering into such Asset Swap or immediately after giving effect to such
Asset Swap, no Default or Event of Default shall have occurred or be continuing
or would occur as a consequence thereof, (ii) in the event such Asset Swap
involves an aggregate amount in excess of $2.0 million, the terms of such Asset
Swap have been approved by a majority of the members of the Board of Directors
and (iii) in the event such Asset Swap involves an aggregate amount in excess of
$10.0 million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Asset Swap
is fair to the Company or such Restricted Subsidiary, as the case may be, from a
financial point of view.
The proceeds of any sale of Capital Stock of a Subsidiary will be
treated as Net Available Cash from an Asset Disposition and must be applied in
accordance with the terms of this covenant.
(b) In the event of an Asset Disposition that requires an Offer
pursuant to clause (a)(iii)(C) of this covenant, the Company will be required to
purchase Notes tendered pursuant to an offer by the Company for the Notes (the
"Offer") at a purchase price of 100% of their principal amount plus accrued
interest to the date of purchase in accordance with the procedures (including
prorationing in the event of oversubscription) set forth in the Indenture. If
the aggregate purchase price of Notes tendered pursuant to the Offer is less
than the Net Available Cash allotted to the purchase of the Notes, the Company
will apply the remaining Net Available Cash in accordance with clause
(a)(iii)(D) of this covenant. The Company will not be required to make an Offer
for Notes pursuant to this covenant if the Net Available Cash available therefor
(after application of the proceeds as provided in clauses (A) and (B) of this
covenant section (a)(iii)) is less than $10.0 million (which lesser amount will
be carried forward for purposes of determining whether an Offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly, enter
into or conduct any transaction (including, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
the Company (an "Affiliate Transaction") on terms (i) that are less favorable to
the Company or such Restricted Subsidiary, as the case may be, than those that
could be obtained at the time of such transaction in arm's-length dealings with
a Person who is not such an Affiliate and (ii) that, in the event such Affiliate
Transaction involves an aggregate amount in excess of $5.0 million, are not in
writing and have not been approved by a majority of the members of the Board of
Directors having no personal stake in such Affiliate Transaction. In addition,
if such Affiliate Transaction involves an amount in excess of $10.0 million
(other than fees to investment banking firms constituting customary underwriting
discounts for offerings of securities or customary advisory fees for merger and
acquisition or recapitalization transactions), a fairness opinion must be
provided by a nationally recognized appraisal or investment banking firm.
(b) The provisions of the foregoing paragraph (a) will not prohibit (i)
any Restricted Payment permitted to be paid pursuant to the covenant described
under "--Limitation on Restricted Payments," (ii) any issuance of securities, or
other payments, awards or grants in cash, securities or otherwise pursuant to,
or the funding of, employment arrangements, stock options, stock appreciation
rights and stock ownership plans approved by the Board of Directors, (iii) loans
or advances for the purposes set forth under
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clauses (vi) and (viii) of the definition of Permitted Investments, (iv)
indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Company and its Restricted
Subsidiaries, in each case in the ordinary course of business, (v) any
employment, noncompetition or confidentiality agreements entered into by the
Company or any of its Restricted Subsidiaries with its employees in the ordinary
course of business or (vi) any transaction between the Company and a Wholly
Owned Subsidiary or between Wholly Owned Subsidiaries.
SEC REPORTS. Notwithstanding that the Company may not be required to be
or remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will file with the SEC (if then permitted to do so)
and provide (whether or not so filed with the SEC) the Trustee and Noteholders
and prospective Noteholders (upon request) within 15 days after it files (or
would be obligated to file, if subject to Section 13 or 15(d) of the Exchange
Act) them with the SEC, copies of its annual report and the information,
documents and other reports that are specified in Sections 13 and 15(d) of the
Exchange Act. In addition, following a Public Equity Offering, the Company shall
furnish to the Trustee and the Noteholders, promptly upon their becoming
available, copies of the annual report to shareholders and any other information
provided by the Company to its public shareholders generally. The Company also
will comply with the other provisions of Section 314(a) of the TIA.
FUTURE SUBSIDIARY GUARANTORS. The Company will cause each Restricted
Subsidiary that is not a Foreign Subsidiary and that Incurs Indebtedness to
execute and deliver to the Trustee a Subsidiary Guarantee pursuant to which such
Subsidiary will Guarantee payment of the Notes. Each Subsidiary Guarantee will
be limited to an amount not to exceed the maximum amount that can be Guaranteed
by such Subsidiary without rendering the Subsidiary Guarantee, as it relates to
such Subsidiary, voidable under applicable law relating to fraudulent conveyance
or fraudulent transfer or similar laws affecting the rights of creditors
generally.
LIMITATION ON LINES OF BUSINESS. The Company will not, and will not
permit any Restricted Subsidiary to, engage in any business, other than a
Related Business; provided, however, that the foregoing limitation shall not
prohibit the acquisition of Additional Assets otherwise permitted hereunder.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Company will not, and
will not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction with respect to any property unless (a) the Company or such
Subsidiary would be entitled to (i) Incur Indebtedness in an amount equal to the
Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to
the covenant described under "--Limitation on Indebtedness" and (ii) create a
Lien on such property securing such Attributable Debt without equally and
ratably securing the Notes pursuant to the covenant described under
"--Limitation on Indebtedness", (b) the net cash proceeds received by the
Company or any Subsidiary in connection with such Sale/Leaseback Transaction are
at least equal to the fair value (as determined in good faith by the Board of
Directors) of such property and (c) the transfer of such property is permitted
by, and the Company applies the proceeds of such transaction in compliance with,
the covenant described under "--Limitation on Sale of Assets and Subsidiary
Stock".
MERGER AND CONSOLIDATION
The Company will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor Company") will
be a corporation, partnership, limited liability company or business trust
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia and the Successor Company (if not the
Company) will expressly assume, by an indenture supplemental to the Indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Notes and the Indenture; (ii)
immediately after giving effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Successor Company or any
Restricted Subsidiary as a result of such transaction as having been Incurred by
the Successor Company or such Restricted Subsidiary at the time of such
transaction), no Default will have occurred and be continuing; (iii) immediately
after giving effect to such transaction, the Successor
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Company would be able to Incur an additional $1.00 of Indebtedness under
paragraph (a) of the covenant described under "--Limitation on Indebtedness";
and (iv) the Company will have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture (if any) comply with the Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture.
Notwithstanding the foregoing clauses (ii) and (iii), (a) any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company and (b) the Company may merge with
an Affiliate incorporated for the purpose of reincorporating the Company in
another jurisdiction.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in any
payment of interest on any Note when due, whether or not prohibited by the
provisions described under "Ranking" above, continued for 30 days, (ii) a
default in the payment of principal of any Note when due at its Stated Maturity,
upon redemption, upon required repurchase, upon declaration or otherwise,
whether or not such payment is prohibited by the provisions described under
"Ranking" above, (iii) the failure by the Company to comply with its obligations
under the covenant described under "Merger and Consolidation" above, (iv) the
failure by the Company to comply for 30 days after notice with any of its
obligations under the covenants described under "Change of Control" or "Certain
Covenants" above (in each case, other than a failure to purchase Notes), (v) the
failure by any of the Company or the Subsidiary Guarantors to comply for 60 days
after notice with its other agreements contained in the Securities, the
Indenture or the Subsidiary Guarantees, (vi) the failure by the Company or any
Significant Subsidiary to pay any Indebtedness within any applicable grace
period after final maturity or the acceleration of any such Indebtedness by the
holders thereof because of a default if the total amount of such Indebtedness
unpaid or accelerated exceeds $5.0 million or its foreign currency equivalent
(the "cross acceleration provision"), (vii) certain events of bankruptcy,
insolvency or reorganization of the Company or a Significant Subsidiary (the
"bankruptcy provisions"), (viii) the rendering of any judgment or decree for the
payment of money in excess of $5.0 million or its foreign currency equivalent
against the Company or a Significant Subsidiary if (A) an enforcement proceeding
thereon is commenced and is not promptly stayed or (B) such judgment or decree
remains outstanding for a period of 60 days following such judgment and is not
discharged, waived or stayed (the "judgment default provision") or (ix) any
Subsidiary Guarantee ceases to be in full force and effect or any Subsidiary
Guarantor denies or disaffirms its obligations under the Indenture or any
Subsidiary Guarantee and such Default continues for 10 days (in each case other
than by reason of release of such Subsidiary Guarantee in accordance with the
terms of the Indenture).
The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
However, a default under clause (iv) or (v) will not constitute an
Event of Default until the Trustee or the Holders of at least 25% in principal
amount of the outstanding Notes notify the Company of the default and the
Company does not cure such default within the time specified in clauses (iv) and
(v) hereof after receipt of such notice.
If an Event of Default (other than an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of the Company)
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Notes by notice to the Company may declare
the principal of and accrued but unpaid interest on all the Notes to be due and
payable. Upon such a declaration, such principal and interest will be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs, the principal of
and interest on all the Notes will become immediately due and payable without
any declaration or other act on the part of the
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Trustee or any Holders. Under certain circumstances, the Holders of a majority
in principal amount of the outstanding Notes may rescind any such acceleration
with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of
the Trustee, in case an Event of Default occurs and is continuing, the Trustee
will be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
Holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such Holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity and (v) the
Holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day
period. Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other Holder or that would involve the Trustee in personal liability. Prior
to taking any action under the Indenture, the Trustee will be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and
is known to the Trustee, the Trustee must mail to each Holder notice of the
Default within the earlier of 90 days after it occurs or 30 days after it is
known to a Trust Officer or written notice of it is received by the Trustee.
Except in the case of a Default in the payment of principal of, premium (if any)
or interest on any Note, the Trustee may withhold notice if and so long as a
committee of its Trust Officers in good faith determines that withholding notice
is in the interests of the Noteholders. In addition, the Company is required to
deliver to the Trustee, within 120 days after the end of each fiscal year, a
certificate indicating whether the signers thereof know of any Default that
occurred during the previous year. The Company also is required to deliver to
the Trustee, within 30 days after the occurrence thereof, written notice of any
event which would constitute certain Defaults, their status and what action the
Company is taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding and any past default or compliance with any provisions may be waived
with the consent of the Holders of a majority in principal amount of the Notes
then outstanding. However, without the consent of each Holder of an outstanding
Note affected, no amendment may, among other things, (i) reduce the amount of
Notes whose Holders must consent to an amendment, (ii) reduce the rate of or
extend the time for payment of interest on any Note, (iii) reduce the principal
of or extend the Stated Maturity of any Note, (iv) reduce the premium payable
upon the redemption of any Note or change the time at which any Note may be
redeemed as described under "Optional Redemption" above, (v) make any Note
payable in money other than that stated in the Note, (vi) make any change to the
subordination provisions of the Indenture that adversely affects the rights of
any Holder, (vii) impair the right of any Holder to receive payment of principal
of and interest on such Holder's Notes on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such
Holder's Notes, (viii) make any change in the amendment provisions which require
each Holder's consent or in the waiver provisions or (ix) modify the Subsidiary
Guarantees in any manner adverse to the Holders.
Without the consent of any Holder, the Company and Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation
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of the obligations of the Company under the Indenture, to provide for
uncertificated Notes in addition to or in place of certificated Notes (provided
that the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated Notes
are described in Section 163(f)(2)(B) of the Code), to change the subordination
provisions to limit or terminate the benefits to any holder of Senior
Indebtedness, to add further Guarantees with respect to the Notes, to secure the
Notes, to add to the covenants of the Company for the benefit of the Noteholders
or to surrender any right or power conferred upon the Company, to make any
change that does not adversely affect the rights of any Holder, to provide for
the issuance and authorization of Exchange Notes or to comply with any
requirement of the SEC in connection with the qualification of the Indenture
under the TIA. However, no amendment may be made to the subordination provisions
of the Indenture that adversely affects the rights of any holder of Senior
Indebtedness of the Company or of a Subsidiary Guarantor then outstanding unless
the holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
The consent of the Noteholders is not necessary under the Indenture to
approve the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company
is required to mail to Noteholders a notice briefly describing such amendment.
However, the failure to give such notice to all Noteholders, or any defect
therein, will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A Noteholder may transfer or exchange Notes in accordance with the
Indenture. Upon any transfer or exchange, the registrar and the Trustee may
require a Noteholder, among other things, to furnish appropriate endorsements
and transfer documents and the Company may require a Noteholder to pay any taxes
required by law or permitted by the Indenture. The Company is not required to
transfer or exchange any Note selected for redemption or to transfer or exchange
any Note for a period of 15 days prior to a selection of Notes to be redeemed.
The Notes will be issued in registered form and the registered holder of a Note
will be treated as the owner of such Note for all purposes.
DEFEASANCE
The Company at any time may terminate all its obligations under the
Notes and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under the covenants
described under "Certain Covenants" and the provisions described under "Change
of Control", the operation of the cross acceleration provision, the bankruptcy
provisions with respect to Subsidiaries and the judgment default provision
described under "Defaults" above and the limitations contained in clauses (iii)
and (iv) under "Merger and Consolidation" above ("covenant defeasance"). If the
Company exercises its legal defeasance option or its covenant defeasance option,
each Subsidiary Guarantor will be released from all of its obligations with
respect to its Subsidiary Guarantee.
The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option. If the Company exercises
its legal defeasance option, payment of the Notes may not be accelerated because
of an Event of Default with respect thereto. If the Company exercises its
covenant defeasance option, payment of the Notes may not be accelerated because
of an Event of Default specified in clause (iv), (vi), (vii) with respect only
to Subsidiaries, (viii) or (ix) under "Defaults" above or because of the failure
of the Company to comply with clause (iii) under "Merger and Consolidation"
above.
In order to exercise either defeasance option, the Company must
irrevocably deposit in trust (the "defeasance trust") with the Trustee money or
U.S. Government Obligations for the payment of principal,
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premium (if any) and interest on the Notes to redemption or maturity, as the
case may be, and must comply with certain other conditions, including delivery
to the Trustee of an Opinion of Counsel to the effect that holders of the Notes
will not recognize income, gain or loss for Federal income tax purposes as a
result of such deposit and defeasance and will be subject to Federal income tax
on the same amount and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred (and, in the case
of legal defeasance only, such Opinion of Counsel must be based on a ruling of
the Internal Revenue Service or other change in applicable Federal income tax
law).
CONCERNING THE TRUSTEE
Fleet National Bank is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary; or (iii) Capital Stock
constituting a minority interest in any Person that at such time is a Restricted
Subsidiary; PROVIDED, HOWEVER, that any such Restricted Subsidiary described in
clauses (ii) or (iii) above is, or following such acquisition will be, in the
good faith judgment of the Company's management, primarily engaged in a Related
Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Premium" means, with respect to a Note at any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value of all remaining required interest and principal
payments due on such Note, computed using a discount rate equal to the Treasury
Rate plus 75 basis points, over (B) the then-outstanding principal amount of
such Note.
"Asset Disposition" means any sale, lease, transfer or other
disposition of shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares), property or other assets (each referred to for
the purposes of this definition as a "disposition") by the Company or any of its
Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction) in one transaction or in a series of
related transactions other than (i) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Subsidiary, (ii) a
disposition of inventory in the ordinary course of business, (iii) dispositions
with a fair market value of less than $500,000 in the aggregate in any fiscal
year, (iv) for purposes of the provisions described under "--Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition subject to the covenant described under "--Certain
Covenants--Limitation on Restricted Payments" and (v) the disposition of all or
substantially all the assets of the Company permitted by the covenant described
under "Merger and Consolidation".
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"Asset Swap" means the execution of a definitive agreement, subject
only to customary closing conditions that the Company's management in good faith
believes will be satisfied, for a substantially concurrent purchase and sale, or
exchange, of Productive Assets between the Company or any of its Restricted
Subsidiaries and another Person or group of affiliated Persons; PROVIDED,
HOWEVER, that any amendment to or waiver of any closing condition that
individually or in the aggregate is material to the Asset Swap shall be deemed
to be a new Asset Swap.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale/Leaseback Transaction (including any period for which such lease has
been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Senior Bank Documents and any Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism), in whole or in part, Indebtedness under such
Senior Bank Documents including Indebtedness that refinances such Indebtedness,
as amended from time to time, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for postfiling interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof (including, without limitation, cash
collateralization of letters of credit).
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other day
on which banking institutions in a place of payment, or receipt are authorized
or required by law to close.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the Lessee without payment of a
penalty.
"Chase" means The Chase Manhattan Bank, a New York banking corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters for which financial statements are then
available but ending at least 60 days prior to the date of such determination to
(ii) Consolidated Interest Expense for such four fiscal quarters; PROVIDED,
HOWEVER, that (A) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding on such
date of determination or if the transaction giving rise to the need to calculate
the
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Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such period, (B) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive) directly
attributable to the assets that are the subject of such Asset Disposition for
such period or increased by an amount equal to the EBITDA (if negative) directly
attributable thereto for such period and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to
the Company or its continuing Restricted Subsidiaries in connection with such
Asset Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (C) if since the beginning of such period the
Company or any Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
under the Indenture, which constitutes all or substantially all of an operating
unit of a business (it being understood that a TravelCenter constitutes such an
operating unit), EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving pro forma effect thereto (including the Incurrence of
any Indebtedness) as if such Investment or acquisition occurred on the first day
of such period and (D) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Asset Disposition or any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (B) or (C) above if made by
the Company or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or acquisition
of assets occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of Consolidated Net Income relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating or adjustable rate of interest and is being given
pro forma effect, the interest expense on such Indebtedness shall be calculated
as if the rate in effect on the date of determination had been the applicable
rate for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term as at the date of determination in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of the Company and its Restricted Subsidiaries,
plus, to the extent Incurred by the Company and its Restricted Subsidiaries in
such period but not included in such interest expense, (i) interest expense
attributable to Capitalized Lease Obligations and Attributable Debt, (ii)
amortization of debt discount, (iii) capitalized interest, (iv) noncash interest
expense, (v) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing, (vi) net costs associated
with Hedging Obligations (including amortization of fees), (vii) Preferred Stock
dividends in respect of all Preferred Stock of Subsidiaries and Disqualified
Stock of the Company held by Persons other than the Company or a Wholly Owned
Subsidiary, (viii) the interest portion of any deferred payment obligation, (ix)
interest actually paid on any Indebtedness of any other Person and (x) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Company) in connection with Indebtedness Incurred
by such plan or trust, but in no event shall Consolidated Interest Expense
include the amortization of fees Incurred on or prior to the Issue Date in
respect of the Credit Agreement, the Senior Notes or the Notes.
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"Consolidated Net Income" means, for any period, the net income (loss)
of the Company and its consolidated Subsidiaries; PROVIDED, HOWEVER, that there
shall not be included in such Consolidated Net Income: (i) any net income (loss)
of any Person if such Person is not a Restricted Subsidiary, except that (A)
subject to the limitations contained in clause (iv) below, the Company's equity
in the net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in clause
(iii) below) and (B) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income; (ii) any net income (loss) of any
person acquired by the Company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any net
income (loss) of any Restricted Subsidiary if such Restricted Subsidiary is
subject to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (A) subject to the limitations contained
in clause (iv) below, the Company's equity in the net income of any such
Restricted Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been distributed by
such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend that
could have been made to another Restricted Subsidiary, to the limitation
contained in this clause) and (B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in determining such
Consolidated Net Income; (iv) any gain or loss realized upon the sale or other
disposition of any asset of the Company or its consolidated Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) that is not sold or
otherwise disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any Person;
(v) any extraordinary gain or loss; and (vi) the cumulative effect of a change
in accounting principles. Notwithstanding the foregoing, for the purpose of the
covenant described under "Certain Covenants--Limitation on Restricted Payments"
only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets from Unrestricted
Subsidiaries to the Company or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under such covenant pursuant to clause (a)(3)(D) thereof.
"Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; PROVIDED, HOWEVER, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of March 21,
1997, as amended, waived or otherwise modified from time to time, among the
Company, Chase, as administrative agent, and the several lenders party thereto.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Designated Consideration" means a purchase money note or other noncash
consideration received in connection with the sale by the Company of a
TravelCenter (including any related personal or real property) or any portion
thereof; provided that the aggregate amount of Designated Consideration that the
Company or any Restricted Subsidiary may receive from Asset Dispositions shall
not exceed $10.0 million in fair market value as determined in good faith by the
Board of Directors plus the amount of cash received pursuant to the terms or
from the disposition of Designated Consideration.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
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"Designated Senior Indebtedness" means (i) the Bank Indebtedness, (ii)
the Senior Note Indebtedness and (iii) any other Senior Indebtedness which, at
the date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof, are committed to
lend up to, at least $25.0 million and is specifically designated by the Company
in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the Stated Maturity of the Notes.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
other than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest
Expense; (iii) any payments made in respect of Attributable Debt in excess of
the amount of such payments included in Consolidated Interest Expense; (iv)
Transition Expenses not in excess of $7.0 million in any year and $11.0 million
in the aggregate; (v) depreciation expense; (vi) amortization expense; and (vii)
any other noncash charge, in each case for such period, but excluding any other
noncash charge to the extent it represents an accrual or reserve for a cash
charge for any future period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
of, a Subsidiary of the Company shall be added to Consolidated Net Income to
compute EBITDA only to the extent (and in the same proportion) that the net
income of such Subsidiary was included in calculating Consolidated Net Income
and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated as of the Issue Date between the Company and
the Initial Purchaser.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company
that is not organized under the laws of the United States of America or any
State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect
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thereof (in whole or in part); PROVIDED, HOWEVER, that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Subsidiary. With respect to Indebtedness to be
borrowed under a binding commitment previously entered into that provides for
the Company to Incur Indebtedness on a revolving basis, the Company shall be
deemed to have Incurred the greater of (a) the Indebtedness actually Incurred or
(b) all or a portion of the amount of such commitment, if the Company shall have
so designated such amount of Indebtedness to be Incurred in an Officers'
Certificate delivered to the Trustee. If such an Officers' Certificate is so
delivered and the amount specified therein is then permitted to be Incurred
pursuant to the covenant described under "--Certain Covenants--Limitation on
Indebtedness", any subsequent Incurrence of Indebtedness pursuant to such
commitment, as in existence on the date of such Officers' Certificate, shall be
permitted pursuant to the covenant described under "--Certain
Covenants--Limitation on Indebtedness". A change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an Incurrence of such Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money; (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto); (iv) all obligations
of such Person to pay the deferred and unpaid purchase price of property or
services (except Trade Payables), which purchase price is due more than six
months after the date of placing such property in service or taking delivery and
title thereto or the completion of such services; (v) all Capitalized Lease
Obligations and all Attributable Debt of such Person; (vi) the amount of all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock or, with respect to any Subsidiary of the
Company, any Preferred Stock (but excluding, in each case, any accrued
dividends); (vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; PROVIDED, HOWEVER, that the amount of Indebtedness of such Person shall
be the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other Persons;
(viii) all Indebtedness of other Persons to the extent Guaranteed by such
Person; and (ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person. Notwithstanding the foregoing, Indebtedness
shall not include any liability for Federal, state, local or other taxes owed or
owing by the Company to any governmental entity or obligations arising from
agreements of the Company or any Restricted Subsidiary providing for
indemnification, adjustment of purchase price, earn out or other obligations, in
each case, incurred or assumed in connection with the disposition of any
business, assets or Restricted Subsidiary, other than Guarantees of Indebtedness
incurred by any Person acquiring all or a portion of such business, assets or
Restricted Subsidiary.
"Initial Purchaser" means Chase Securities Inc.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
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"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and the covenant described under "Certain
Covenants--Limitation on Restricted Payments," (i) "Investment" shall include
the portion (proportionate to the Company's equity interest in such Subsidiary)
of the fair market value of the net assets of any Subsidiary of the Company at
the time that such Subsidiary is designated an Unrestricted Subsidiary;
PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Board of Directors.
"Issue Date" means the date on which the Notes are originally issued.
"Lessee Operator" means a Person who operates a TravelCenter pursuant
to a lease agreement and a franchise agreement, in each case with the Company or
a Restricted Subsidiary, with respect to such TravelCenter.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise (other than
amounts constituting interest thereon), but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring person of Indebtedness or other obligations relating to the properties
or assets that are the subject of such Asset Disposition or received in any
other noncash form) therefrom, in each case net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all Federal, state, provincial, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien upon
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Disposition and (iv) appropriate amounts to
be provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition (including without limitation amounts reserved for the cost of any
indemnification payments (fixed or contingent) attributable to the seller's
indemnities to the purchaser in respect of such Asset Disposition).
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Officer" means the Chairman of the Board, the Chief Executive Officer,
the Chief Financial Officer, the President, any Vice President, the Treasurer,
the Secretary, any Assistant Treasurer or Assistant Secretary of the Company.
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"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holders" means: (i) U.S. Trust; (ii) Clipper Capital
Associates, L.P., UBS Capital Corporation, First Plaza Group Trust, Olympus
Private Placement Fund, L.P., The Travelers Indemnity Company, Barclays U.S.A.,
Inc., Credit Suisse Group, Phoenix Insurance Company and their respective
Affiliates; and (iii) any Person acting in the capacity of an underwriter in
connection with a public or private offering of the Company's Capital Stock.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary; PROVIDED,
HOWEVER, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
PROVIDED, HOWEVER, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; PROVIDED,
HOWEVER, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees of the Company or such Restricted Subsidiary
and not exceeding $1.0 million in the aggregate outstanding at any one time;
(vii) stock, obligations or securities received in settlement of debts
(including payment obligations of customers) created in the ordinary course of
business and owing to the Company or any Restricted Subsidiary or in
satisfaction of judgments; (viii) loans to employees for the purchase of Capital
Stock or the payment of the exercise price of options to purchase Capital Stock
of the Company or loans to satisfy Federal or state income tax withholding
requirements relating to the issuance of Capital Stock of the Company pursuant
to the Company's employee stock plans, in an aggregate amount with respect to
all loans described in this clause (viii) not to exceed $2.0 million outstanding
at any one time; (ix) a Person to the extent such Investment represents the
noncash consideration otherwise permitted to be received by the Company or its
Restricted Subsidiaries in connection with an Asset Disposition; (x) prepayments
and other credits to suppliers made in the ordinary course of business
consistent with the past practices of the Company and its Restricted
Subsidiaries; (xi) payments to customers in consideration for such customers'
agreements with the Company to purchase goods and inventory made in the ordinary
course of business consistent with past practices of the Company and its
Restricted Subsidiaries; and (xii) performance bonds or similar Investments in
connection with pledges, deposits or payments made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or environmental
regulations.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Note means the principal of the Note plus the premium,
if any, payable on the Note which is due or overdue or is to become due at the
relevant time.
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"Productive Assets" means assets of a kind used or usable by the
Company and its Restricted Subsidiaries in the Company's business or any Related
Business.
"Public Equity Offering" means an underwritten primary public offering
of common stock of the Company pursuant to an effective registration statement
under the Securities Act (or the equivalent if the current registration system
of the Securities Act is changed).
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
renews, replaces or extends any Indebtedness permitted to be Incurred by the
Company or any Restricted Subsidiary pursuant to the terms of the Indenture,
whether involving the same or any other lender or creditor or group of lenders
or creditors, but only to the extent that (i) the Refinancing Indebtedness is
subordinated to the Notes to at least the same extent as the Indebtedness being
refunded, refinanced or extended, if at all, (ii) the Refinancing Indebtedness
is scheduled to mature either (a) no earlier than the Indebtedness being
refunded, refinanced or extended or (b) at least 91 days after the maturity date
of the Notes, (iii) the Refinancing Indebtedness has a weighted average life to
maturity at the time such Refinancing Indebtedness is Incurred that is equal to
or greater than the weighted average life to maturity of the Indebtedness being
refunded, refinanced or extended, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is less than or equal to the sum of (a) the
aggregate principal or accreted amount (in the case of any Indebtedness issued
with original issue discount, as such) then outstanding under the Indebtedness
being refunded, refinanced or extended, (b) the amount of accrued and unpaid
interest, if any, and premiums owed, if any, not in excess of preexisting
prepayment provisions on such Indebtedness being refunded, refinanced or
extended and (c) the amount of customary fees, expenses and costs related to the
incurrence of such Refinancing Indebtedness and (v) such Refinancing
Indebtedness is Incurred by the same Person (or its successor) that initially
Incurred the Indebtedness being refunded, refinanced or extended, except that
the Company may Incur Refinancing Indebtedness to refund, refinance or extend
Indebtedness of any Restricted Subsidiary of the Company.
"Related Business" means any business in which the Company engages on
the Issue Date and any business related, ancillary or complementary (in the good
faith judgment of the Board of Directors) to any of the businesses of the
Company or any of its Restricted Subsidiaries on the Issue Date.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Indebtedness. In the case of the Bank Indebtedness and
Senior Note Indebtedness, the term "Representative" includes any Person
designated to act in such capacity pursuant to the procedures set forth in the
intercreditor agreement dated as of the Issue Date, among the Company, Chase, as
collateral agent, the lenders party to the Credit Agreement and the holders of
Senior Note Indebtedness. In the case of other Senior Indebtedness that does not
by its terms designate a representative, the term "Representative" means any
Person designated to act in such capacity by the holders of a majority in
principal amount of such Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property
whether owned as of the Issue Date or thereafter acquired, whereby the Company
or a Restricted Subsidiary transfers such property to a Person and the Company
or a Restricted Subsidiary leases it from such Person, other than leases between
the Company and a Restricted Subsidiary or between Restricted Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by
a Lien.
"Senior Bank Documents" means the collective reference to the Credit
Agreement, any notes issued pursuant thereto and the Guarantee thereof, and the
Security Agreement, the Mortgages and the Pledge Agreement (each as defined in
the Credit Agreement).
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"Senior Credit Documents" means the collective reference to the Senior
Bank Documents and the Senior Note Documents.
"Senior Note Agreement" means each of the Senior Secured Note Exchange
Agreements, dated as of the Issue Date, as amended, waived or otherwise modified
from time to time, between the Company and the several purchasers party thereto.
"Senior Note Documents" means the collective reference to the Senior
Note Agreement, the Senior Notes issued pursuant thereto and the Guarantees
thereof, and the Security Agreement, the Mortgages and the Pledge Agreement
(each as defined in the Senior Note Agreement).
"Senior Note Indebtedness" means any and all amounts payable under and
in respect of the Senior Note Documents and any Indebtedness that is incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) Indebtedness under such Senior Note Documents
including Indebtedness that refinances such Indebtedness, as amended from time
to time, including principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not a claim for postfiling
interest is allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, Guarantees and all other amounts payable thereunder or in respect
thereof (including, without limitation, cash collateralization of letters of
credit).
"Senior Notes" means the fixed rate and floating rate Senior Secured
Notes of the Company due 2002 and 2005, respectively, issued pursuant to the
Senior Note Agreement in exchange for certain other Indebtedness of
Subsidiaries.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank PARI PASSU with the Notes and is not subordinated by its terms to any
Indebtedness or other obligation of the Company which is not Senior
Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) that by its terms
is subordinate or junior in right of payment to the Notes pursuant to a written
agreement.
"Subsidiaries" means subsidiaries of the Company, whether now existing
or hereafter organized or acquired.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person or (ii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantee" means the Guarantee of the Notes by TA and
National and any Guarantee of the Notes that may from time to time be executed
and delivered by a Subsidiary pursuant to the terms
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<PAGE>
of the Indenture. Each such future Subsidiary Guarantee will be substantially in
the form prescribed in the Indenture.
"Subsidiary Guarantors" means TA Operating Corporation, a Delaware
corporation, and National Auto/Truckstops, Inc., a Delaware corporation, and
each Subsidiary acquired or organized after the Issue Date that becomes a
Subsidiary Guarantor in accordance with the terms of the Indenture.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof or in the shares of a money market mutual fund registered under the
Investment Company Act of 1940, the principal of which is invested only in such
obligations, (ii) investments in time deposit accounts, certificates of deposit
and money market deposits maturing within 365 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and undivided
profits aggregating in excess of $250,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act), (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above, (iv) investments in
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time as
of which any investment therein is made of "P-1" (or higher) according to
Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and
Poor's Ratings Service, currently a division of The McGraw-Hill Companies, Inc.
("S&P"), and (v) investments in securities with maturities of 365 days or fewer
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by
Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Transition Expenses" means to the extent deducted in determining
Consolidated Net Income, transition costs in connection with effecting the
Company's conversion of owned or franchised TravelCenters from the National
network to the TA network, disposition of TravelCenters or termination of lease
or franchise agreements and consolidation of the management and operation of its
Subsidiaries' two TravelCenter networks into a single network, including but not
limited to any severance or relocation expenses related thereto.
"TravelCenter" means a facility owned, operated or franchised by the
Company or a Restricted Subsidiary that provides fuel and nonfuel products,
services and amenities primarily to the trucking industry.
"Trustee" means the party named as such in the Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer in the corporate trust administration
department of the Trustee or any other officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
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"U.S. Trust" means United States Trust Company of New York, as trustee
under the voting trust agreement dated as of April 14, 1993, as amended as of
March 6, 1997, among the Company, the United States Trust Company of New York
and certain beneficial holders of common stock of the Company, and as the same
may be further amended without allowing any beneficial owners thereunder other
than current or future Lessee Operators, franchisees of the Company or their
permitted transferees (as defined in such voting trust agreement).
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Restricted Subsidiary of the
Company; PROVIDED, HOWEVER, that either (A) the Subsidiary to be so designated
has total consolidated assets of $10,000 or less or (B) if such Subsidiary has
consolidated assets greater than $10,000, then such designation would be
permitted under the covenant entitled "Limitation on Restricted Payments." The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED, HOWEVER, that immediately after giving effect to such
designation (x) the Company could Incur $1.00 of additional Indebtedness under
paragraph (a) of the covenant described under "Limitation on Indebtedness" and
(y) no Default shall have occurred and be continuing. Any such designation shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company
all the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or another Wholly Owned Subsidiary.
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BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes will initially be issued in
the form of one or more registered New Notes in global form without coupons
(each a "Global Note"). Each Global Note will be deposited on the date of the
closing of the exchange of the New Notes for Existing Notes (the "Exchange Offer
Closing Date") with, or on behalf of, DTC and registered in the name of Cede &
Co., as nominee of DTC, or will remain in the custody of the Trustee pursuant to
the FAST Balance Certificate Agreement between DTC and the Trustee.
DTC has advised the Company that it is (i) a limited purpose trust
company organized under the laws of the State of New York, (ii) a member of the
Federal Reserve system, (iii) a "clearing corporation" within the meaning of the
Uniform Commercial Code, as amended, and (iv) a "Clearing Agency" registered
pursuant to Section 17A of the Exchange Act. DTC was created to hold securities
for its participants (collectively, the "Participants") and facilitates the
clearance and settlement of securities transactions between Participants through
electronic book-entry changes to the accounts of its Participants, thereby
eliminating the need for physical transfer and delivery of certificates. DTC's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities such
as banks, brokers, dealers and trust companies (collectively, the "Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Holders who are not Participants may
beneficially own securities held by or on behalf of the Depository only through
Participants or Indirect Participants.
The Company expects that pursuant to procedures established by DTC (i)
upon deposit of the Global Notes, DTC will credit the accounts of Participants
with an interest in the Global Note and (ii) ownership of the New Notes will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the interest of Participants), the
Participants and the Indirect Participants. The laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own and that security interests in negotiable instruments can only be
perfected by delivery of certificates representing the instruments.
Consequently, the ability to transfer New Notes or to pledge the New Notes as
collateral will be limited to such extent.
So long as DTC or its nominee is the registered owner of a Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the New Notes represented by the Global Note for all purposes under
the Indenture. Except as provided below, owners of beneficial interests in a
Global Note will not be entitled to have New Notes represented by such Global
Note registered in their names, will not receive or be entitled to receive
physical delivery of certificated securities (the "Certificated Securities"),
and will not be considered the owners or Holders thereof under the Indenture for
any purpose, including with respect to the giving of any directions, instruction
or approval to the Trustee thereunder. As a result, the ability of a person
having a beneficial interest in New Notes represented by a Global Note to pledge
or transfer such interest to persons or entities that do not participate in
DTC's system or to otherwise take action with respect to such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Accordingly, each holder owning a beneficial interest in a Global Note
must rely on the procedures of DTC and, if such holder is not a Participant or
an Indirect Participant, on the procedures of the Participant through which such
holder owns its interest, to exercise any rights of a holder of Notes under the
Indenture or such Global Note. The Company understands that under existing
industry practice, in the event the Company requests any action of holders of
Notes or a holder that is an owner of a beneficial interest in a Global Note
desires to take any action that DTC, as the holder of such Global Note, is
entitled to take, DTC would authorize the Participants to take such action and
the Participant would authorize holders owning through such Participants to take
such action or would otherwise act upon the instruction of such holders. Neither
the Company nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of Notes by DTC,
or for maintaining, supervising or reviewing any records of DTC relating to such
Notes.
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<PAGE>
Payments with respect to the principal of, premium, if any, and
interest on, any New Notes represented by a Global Note registered in the name
of DTC or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of DTC or its nominee in its capacity as the
registered holder of the Global Note representing such New Notes under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the New Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payment and
for any and all other purposes whatsoever. Consequently, neither the Issuer nor
the Trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of interest in the Global Note (including
principal, premium, if any, and interest), or to immediately credit the accounts
of the relevant Participants with such payment, in amounts proportionate to
their respective holdings in principal amount of beneficial interest in the
Global Note as shown on the records of DTC. Payments by the Participants and the
Indirect Participants to the beneficial owners of interests in the Global Note
will be governed by standing instructions and customary practice and will be the
responsibility of the Participants or the Indirect Participants and DTC.
CERTIFICATED SECURITIES
If (i) the Company notifies the Trustee in writing that DTC is no
longer willing or able to act as a depositary or DTC ceases to be registered as
a clearing agency under the Exchange Act and the Company is unable to locate a
qualified successor within 90 days, (ii) the Issuer, at its option, notifies the
Trustee in writing that it elects to cause the issuance of New Notes in
definitive form under the Indenture or (iii) upon the occurrence of certain
other events, then, upon surrender by DTC of its Global Notes, Certificated
Securities will be issued to each person that DTC identifies as the beneficial
owner of the New Notes represented by the Global Notes. Upon any such issuance,
the Trustee is required to register such Certificated Securities in the name of
such person or persons (or the nominee of any thereof), and cease the same to be
delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by
DTC or any Participant or Indirect Participant in identifying the beneficial
owners of the related New Notes and each such person may conclusively rely on,
and shall be protected in relying on, instructions from DTC for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the New Notes to be issued).
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<PAGE>
DESCRIPTION OF EXISTING NOTES
On March 27, 1997, the Company issued and sold $125.0 million aggregate
principal amount of the Existing Notes. The form and terms of the Existing Notes
are the same as the form and terms of the New Notes except that the Existing
Notes are not registered under the Securities Act and bear legends restricting
the transfer thereof. See "Description of New Notes."
In connection with the issuance of the Existing Notes, the Company, the
Subsidiary Guarantors and the Initial Purchasers entered into the Registration
Rights Agreement to provide for the Exchange Offer. The Registration Rights
Agreement also obligates the Company and each of the Subsidiary Guarantors under
certain circumstances to file with the Commission a Shelf Registration
Statement. The Registration Rights Agreement further provides that if the
Company or the Subsidiary Guarantors fail to complete the Exchange Offer or have
a Shelf Registration Statement become effective under the Securities Act, within
and for certain specified time periods, the Company and each of the Subsidiary
Guarantors would become obligated to pay to the holders of affected Existing
Notes liquidated damages in an amount equal to $0.192 per week per $1,000
principal amount of the affected Existing Notes. Except as described under "Plan
of Distribution," completion of the Exchange Offer with respect to tendered
Existing Notes on or before September 8, 1997 will satisfy the Company's and the
Subsidiary Guarantors' obligations under the Registration Rights Agreement with
respect to the Exchange Offer. Following completion of the Exchange Offer, the
Company and each of the Subsidiary Guarantors will be obligated to file and
cause to become effective under the Securities Act a Shelf Registration
Statement only if (i) any holder of Existing Notes is not permitted by
applicable law to participate in the Exchange Offer or (ii) a participant in the
Exchange Offer does not receive a freely tradable New Note in exchange for such
Holder's Existing Note.
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CERTAIN UNITED STATES TAX CONSIDERATIONS
The following discussion of certain of the anticipated United States
federal income tax consequences of an exchange of Existing Notes for New Notes
and of the purchase, ownership, and disposition of the New Notes is based upon
the provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
the final, temporary, and proposed regulations promulgated thereunder, and
administrative rulings and judicial decisions now in effect, all of which are
subject to change (possibly with retroactive effect) or different
interpretations. This summary does not purport to deal with all aspects of
federal income taxation that may be relevant to a particular investor, nor any
tax consequences arising under the laws of any state, locality, or foreign
jurisdiction, and it is not intended to be applicable to all categories of
investors, some of which, such as dealers in securities, banks, insurance
companies, tax-exempt organizations, foreign persons, persons that hold New
Notes as part of a straddle or conversion transaction, or holders subject to the
alternative minimum tax, may be subject to special rules. In addition, the
summary is limited to persons that will hold the New Notes as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Code. ALL INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE EXCHANGE AND THE
OWNERSHIP AND DISPOSITION OF NEW NOTES.
TAXATION OF HOLDERS ON EXCHANGE
Although the matter is not free from doubt, an exchange of Existing
Notes for New Notes should not be a taxable event to holders of Existing Notes
and holders should not recognize any taxable gain or loss as a result of such an
exchange. Accordingly, a holder would have the same adjusted basis and holding
period in the New Notes as it had in the Existing Notes immediately before the
exchange. Further, the tax consequences of ownership and disposition of any New
Notes should be the same as the tax consequences of ownership and disposition of
Existing Notes.
MARKET DISCOUNT
If a holder purchases a Note for an amount that is less than its
principal amount, the amount of the difference will be treated as "market
discount" for federal income tax purposes, unless such difference is less than a
specified de minimis amount. Under the market discount rules, a holder will be
required to treat any principal payment on, or any gain on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to the extent of
the market discount which has not previously been included in income and is
treated as having accrued on such a Note at the time of such payment or
disposition. In addition, the holder may be required to defer, until the
maturity of the Note or its earlier disposition in a taxable transaction, the
deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless the
holder elects to accrue on a constant interest method. A holder of a Note may
elect to include market discount in income currently as it accrues (on either a
ratable or constant interest method), in which case the rule described above
regarding deferral of interest deductions will not apply. This election to
include market discount in income currently, once made, applies to all market
discount obligations acquired on or after the first taxable year to which the
election applies and may not be revoked without the consent of the Internal
Revenue Service (the "IRS").
AMORTIZABLE BOND PREMIUM
A holder that purchases a Note for an amount in excess of the sum of
its principal amount will be considered to have purchased the Note at a
"premium." A holder generally may elect to amortize the premium over the
remaining term of the Note on a constant yield method. The amount amortized in
any year will be treated as a reduction of the holder's interest income from the
Note. Bond premium on a Note held by a holder that does not make such an
election will decrease the gain or increase the loss otherwise recognized on
disposition of the Note. The election to amortize premium on a constant yield
method once
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made applies to all debt obligations held or subsequently acquired by the
electing holder on or after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A holder's tax basis in a Note will, in general, be the holder's cost
therefor, increased by market discount previously included in income by the
holder and reduced by any amortized premium. Upon the sale, exchange or
retirement of a Note, a holder will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange or retirement
(less any accrued interest, which will be taxable as such) and the adjusted tax
basis of the Note. Except as described above with respect to market discount,
such gain or loss will be capital gain or loss and will be long-term capital
gain or loss if at the time of sale, exchange or retirement the Note has been
held for more than one year. Under current law, long-term capital gains of
individuals are, under certain circumstances, taxed at lower rates than items of
ordinary income. The deductibility of capital losses is subject to limitations.
BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal, interest and premium paid on Notes and to the proceeds of
sale of a Note made to holders other than certain exempt recipients (such as
corporations). A 31% backup withholding tax will apply to such payments if the
holder fails to provide a taxpayer identification number or certification of
foreign or other exempt status or fails to report in full dividend and interest
income.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
THE FOREGOING SUMMARY OF THE PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES
TO HOLDERS DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE
RELEVANT TO A PARTICULAR HOLDER OF NOTES IN LIGHT OF HIS PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATION. EACH HOLDER OF NOTES SHOULD CONSULT SUCH
HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE
OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, OR SUBSEQUENT VERSIONS THEREOF.
ERISA CONSIDERATIONS
Sections 406 and 407 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and Section 4975 of the Code prohibit certain
employee benefit plans, individual retirement accounts, individual retirement
annuities, and employee annuity plans ("Plans") from engaging in certain
transactions with persons who, with respect to such Plan, are "parties in
interest" under ERISA or "disqualified persons" under the Code. A violation of
these "prohibited transaction" rules may generate excise taxes under the Code
and other liabilities under ERISA for such persons. Possible violations of the
prohibited transaction rules could occur if the Notes are purchased with the
assets of any Plan if the Company or any of its affiliates is a party in
interest or disqualified person with respect to such Plan, unless such
acquisition is subject to a statutory or administrative exemption.
The foregoing discussion is general in nature and is not intended to be
all-inclusive. Any fiduciary of a Plan considering the purchase of the Notes
should consult its legal advisors regarding the consequences of such purchases
under ERISA and the Code. If the Plan is not subject to ERISA, the fiduciary
should consult its legal advisors regarding the consequences of any state law or
Code considerations.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Existing Notes
where such Existing Notes were acquired as a result of market-making activities
or other trading activities. The Company has agreed that, for a period of 180
days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until
, 1997, all dealers effecting transactions in the New Notes may
be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any commission
or concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the close of the Exchange Offer the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel
for the holders of the Existing Notes) other than commissions or concessions of
any brokers or dealers and will indemnify the holders of the Existing Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the
Company by Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York.
EXPERTS
The financial statements of the Company, the National Subsidiary and
the TA Subsidiary as of December 31, 1995 and 1996 and for each of the three
years in the period ended December 31, 1996 included in this Prospectus have
been so included in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
TravelCenters of America, Inc.
Report of Independent Accountants.................................................... F-2
Consolidated Balance Sheet at December 31, 1995 and 1996............................. F-3
Consolidated Statement of Income and Retained Earnings for the years ended
December 31, 1994, 1995 and 1996................................................... F-4
Consolidated Statement of Cash Flows for the years ended December 31, 1994,
1995 and 1996...................................................................... F-5
Notes to the Consolidated Financial Statements....................................... F-6
TA Operating Corporation
Report of Independent Accountants.................................................... F-40
Consolidated Balance Sheet at December 31, 1995 and 1996............................. F-41
Consolidated Statement of Income and Retained Earnings for the years ended
December 31, 1994, 1995 and 1996................................................... F-42
Consolidated Statement of Cash Flows for the years ended December 31, 1994,
1995 and 1996...................................................................... F-43
Notes to the Consolidated Financial Statements....................................... F-44
NATIONAL Auto/Truckstops, Inc.
Report of Independent Accountants.................................................... F-55
Balance Sheet at December 31, 1995 and 1996.......................................... F-56
Statement of Income and Retained Earnings for the years ended December 31,
1994, 1995 and 1996................................................................ F-57
Statement of Cash Flows for the years ended December 31, 1994, 1995 and 1996......... F-58
Notes to the Financial Statements.................................................... F-59
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
TravelCenters of America, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of
TravelCenters of America, Inc. and its subsidiaries at December 31, 1995 and
1996, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
March 6, 1997
F-2
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS OF DOLLARS)
ASSETS
<S> <C> <C>
Current assets:
Cash ................................................................ $ 3,191 $ 23,779
Accounts receivable (less allowance for doubtful accounts of
$2,920 for 1995 and $3,502 for 1996) .............................. 36,966 54,371
Inventories ......................................................... 2,116 29,082
Deferred income taxes ............................................... 2,792 3,877
Other current assets ................................................ 6,989 10,530
-------- --------
Total current assets ............................................ 52,054 121,639
Notes receivable, net .................................................. -- 1,835
Property and equipment, net ............................................ 183,079 269,366
Intangible assets ...................................................... 12,542 19,657
Deferred financing costs ............................................... 6,904 8,379
Net assets of subsidiary held for disposition (Note 2) ................. 41,484 --
Other assets ........................................................... 1,168 5,013
-------- --------
Total assets .................................................... $297,231 $425,889
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving loans ..................................................... $ -- $ 14,000
Current maturities of long-term debt ................................ 11,125 17,250
Accounts payable .................................................... 22,366 37,201
Other accrued liabilities ........................................... 8,691 29,422
-------- --------
Total current liabilities ....................................... 42,182 97,873
Commitments and contingencies (Note 15)
Long-term debt (net of unamortized discount) ........................... 128,866 193,185
Deferred income taxes .................................................. 8,406 9,452
Other long-term liabilities ............................................ 3,133 5,914
-------- --------
182,587 306,424
Mandatorily redeemable senior convertible participating preferred stock 46,195 51,075
Other preferred stock, common stock and other shareholders' equity ..... 51,455 50,743
Retained earnings ...................................................... 16,994 17,647
-------- --------
Total shareholders' equity ...................................... 68,449 68,390
-------- --------
Total liabilities and shareholders' equity ...................... $297,231 $425,889
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1994 1995 1996
--------- --------- ---------
(In Thousands of Dollars except
per share amounts)
<S> <C> <C> <C>
Revenues:
Fuel ..................................... $ 396,748 $ 376,148 $ 550,212
Nonfuel .................................. 19,882 29,332 101,278
Rent ..................................... 48,424 47,840 41,762
--------- --------- ---------
Total revenues ........................... 465,054 453,320 693,252
Cost of revenues (excluding depreciation) ... 391,148 376,823 568,226
--------- --------- ---------
Gross profit (excluding depreciation) ....... 73,906 76,497 125,026
Operating expenses .......................... 7,711 9,521 54,001
Selling, general and administrative expenses 22,322 30,885 30,803
Refinancing, transition and development costs 4,117 831 2,197
Depreciation and amortization ............... 10,398 11,379 17,838
Other (income) expense, net ................. (138) 196 1,324
Income of subsidiary held for disposition ... -- (6,199) (5,255)
--------- --------- ---------
Income from operations ...................... 29,496 29,884 24,118
Interest (expense), net ..................... (13,243) (13,344) (15,236)
Income before provision for income taxes .... 16,253 16,540 8,882
Provision for income taxes .................. 6,561 6,614 3,349
Net income .................................. 9,692 9,926 5,533
Less: preferred dividends ................ (4,880) (4,880) (4,880)
Retained earnings-beginning of the year ..... 7,136 11,948 16,994
--------- --------- ---------
Retained earnings-end of the year ........... $ 11,948 $ 16,994 $ 17,647
========= ========= =========
Net income per common share and common share
equivalent (Note 2) ...................... $ 0.54 $ 0.56 $ 0.07
========= ========= =========
Weighted average number of shares and common
share equivalents (in thousands) ......... 8,934 8,948 8,929
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................. $ 9,692 $ 9,926 $ 5,533
Adjustments to reconcile net income to net cash provided
by operating activities:
Net income of subsidiary held for disposition ............. -- (3,754) (3,153)
Depreciation and amortization ............................. 10,398 11,379 17,838
Deferred income taxes ..................................... 2,502 1,693 394
Provision for doubtful accounts ........................... 1,169 2,089 2,545
Loss on sale of property and equipment .................... -- 351 1,459
Changes in assets and liabilities, adjusted for the effects
of acquisitions of network assets and the
reconsolidation of a subsidiary previously held for
disposition:
Accounts receivable ..................................... 2,354 (3,256) 5,822
Inventories ............................................. (332) 284 (1,588)
Other current assets .................................... 1,250 (4,537) (3,617)
Accounts payable ........................................ 6,608 5,043 1,719
Other current liabilities ............................... (7,284) 218 2,203
Other, net ................................................ -- -- (1,535)
-------- -------- --------
Net cash provided by operating activities ................. 26,357 19,436 27,620
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of network assets .............................. -- (575) (2,352)
Proceeds from sales of property and equipment ............... -- 1,404 643
Capital expenditures ........................................ (10,993) (19,930) (20,545)
Refund of purchase price .................................... -- 1,500 --
-------- -------- --------
Net cash used in investing activities ..................... (10,993) (17,601) (22,254)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving loan borrowings ................................... 1,000 -- 14,000
Revolving loan repayments ................................... (1,000) -- --
Long-term debt repayments ................................... (3,500) (14,075) (12,375)
Proceeds from issuance of stock ............................. 195 -- 39
Repurchase of common stock .................................. (141) (66) (751)
Reconsolidation of subsidiary previously held for
disposition ............................................... -- -- 14,309
-------- -------- --------
Net cash (used in) provided by financing activities ....... (3,446) (14,141) 15,222
-------- -------- --------
Net increase (decrease) in cash ......................... 11,918 (12,306) 20,588
Cash at the beginning of the year .............................. 3,579 15,497 3,191
-------- -------- --------
Cash at the end of the year .................................... $ 15,497 $ 3,191 $ 23,779
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1. BUSINESS DESCRIPTION AND SUMMARY OF OPERATING STRUCTURE
TravelCenters of America, Inc., formerly National Auto/Truckstops Holdings
Corporation (collectively with its subsidiaries, the "Company"), was
incorporated on December 2, 1992, to raise equity and to function as the holding
company of its wholly-owned operating subsidiary, National Auto/Truckstops, Inc.
("National"). National was incorporated to acquire the travel center network
("the National Network") of Unocal Corporation ("Unocal") ("the National
Acquisition"). On December 10, 1993, the Company capitalized a second
wholly-owned subsidiary, TA Holdings Corporation ("TAHC"), which in turn
capitalized a wholly-owned subsidiary, TA Operating Corporation ("TA"). TA was
incorporated to acquire the truckstop network assets ("the TA Network") of BP
Exploration and Oil Company ("BP") (the "TA Acquisition"), and has a
wholly-owned subsidiary, TA Franchise Systems Inc. ("TAFSI"), which holds all of
the TA franchise agreements. The National Acquisition was consummated on April
13, 1993 and the TA Acquisition was consummated on December 10, 1993.
The Company, through its operating subsidiaries, is a nationwide marketer of
truck and auto fuel and related products and services through a network of 170
full-service travel centers (122 operated under the "Unocal 76" trademark and 48
operated under the "TA" and "Truckstops of America" trademark) in 36 states. Of
the 170 network locations at December 31, 1996, the Company owns or leases 135
locations, 77 of which are leased to independent operators, and 58 of which are
operated by the Company. During 1996, the Company took over the operations of 11
locations from independent operators. The remaining 35 locations are owned and
operated by independent franchisees with whom the Company has contractual
arrangements to supply motor fuels to a majority of the franchisees, as well as
related products and services. The Company purchases and resells diesel fuel,
gasoline and other truckstop products and services to consumers, commercial
fleets, operators and independent franchisees; provides fleet credit card and
customer information services through its proprietary ACCESS 76 system and STAR
Billing system; conducts centralized purchasing programs; creates promotional
programs; and, as a franchisor, assists the operators and independent
franchisees in providing service to commercial fleets and the motoring public.
The Company grants credit to its customers and may require letters of credit
or other collateral.
As of December 31, 1996, 71 of the operators and 20 of the independent
franchisees operating under the Unocal 76 trademark had entered into new
franchise agreements with the Company. The remaining operators and independent
franchisees operating under the Unocal 76 trademark continue to operate under
fuel supply and lease agreements transferred and assigned to the Company by
Unocal as part of the National Acquisition.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The TA Acquisition required the consent of the operators and independent
franchisees who are holders of the Company's Class A Common Stock (the "Operator
Shareholders"). The Operator Shareholders consented to the TA Acquisition and,
in connection therewith, the Company was granted an option to repurchase, for
cash and its stock in TAHC, all of its equity securities, including its
mandatorily redeemable preferred stock, and warrants not held by the Operator
Shareholders and senior management of National. Accordingly, the financial
statements presented the net assets of TAHC as held for disposition. The
carrying value thereof represented the purchase price paid to acquire TAHC plus
TAHC's results of operations subsequent to December 31, 1994. The results of
operations of TAHC
F-6
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
were excluded from the Company's consolidated results of operations until
December 31, 1994, but subsequently have been included therein, as a single
amount, through September 30, 1996. Effective September 30, 1996, a decision was
made to retain TAHC and, subsequently, the Company chose to pursue the
combination of the operations of the TA and National Networks. Accordingly, at
that date, the carrying value of the Company's investment in TAHC of $44,637,000
was allocated to the identifiable assets and liabilities based on the current
fair values as of that date. In addition, the results of operations and cash
flows of TAHC are included in the consolidated results of operations and cash
flows of the Company from October 1, 1996. TAHC had net income of $3,989,000,
$3,754,000 and $3,153,000 in the years ended December 31, 1994 and 1995 and the
nine months ended September 30, 1996, respectively. See Note 19 for the
condensed financial statements of TAHC.
For a pro forma presentation of the Company's consolidated financial
position and results of operations as of December 31, 1995 and 1996 and for each
of the three years ended December 31, 1996, as though TAHC had not been held for
disposition for the period January 1, 1994 through September 30, 1996, see Note
20.
See Note 21 for a discussion of the planned combination of the National and
TA Networks.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Fuel sales and related costs are recognized at the time of delivery of motor
fuel and other products to customers at either the terminal or the leased and
independent franchisee locations and at the time of final sale to consumers at
the owned and operated location and at those locations that operate under fuel
consignment agreements.
Franchise and royalty revenues are recognized at the point such revenues are
earned, typically when collectible and when the Company has fulfilled
substantially all of its obligations under the related agreements.
INVENTORIES
Inventories are stated at cost, which approximates market value, cost being
determined on the first in, first out basis for petroleum products and
principally as the weighted average costs for nonfuel merchandise.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, initially determined in
accordance with purchase accounting principles and based largely on independent
professional appraisals. Depreciation is computed on a straight-line basis over
the following estimated useful lives of the assets:
F-7
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Buildings and site improvements................................. 15-25 years
Pumps and underground storage tanks............................. 5-10 years
Machinery and equipment......................................... 3-10 years
Furniture and fixtures.......................................... 5-10 years
Repair and maintenance costs are charged to expense as incurred, while major
renewals and betterments are capitalized. The cost and related accumulated
depreciation of property and equipment sold, replaced or otherwise disposed are
removed from the accounts. Any resulting gains or losses are recognized in
operations.
DEFERRED FINANCING COSTS AND INTANGIBLE ASSETS
Deferred financing costs were recorded in conjunction with the National and
TA Acquisitions and are being amortized on a basis approximating the interest
method over the lives of the related debt instruments, ranging from five to ten
years. The intangible assets are being amortized on a straight-line basis over
their estimated lives, principally the terms of the related contractual
agreements giving rise to them (see Note 6).
ADVERTISING COSTS
Costs of advertising are expensed as incurred.
CLASSIFICATION OF COSTS AND EXPENSES
Cost of revenues represents the costs of fuels and other products sold,
including freight. Operating expenses consist primarily of labor, maintenance,
supplies, utilities, warehousing, purchasing and occupancy costs. Development
expenses represent costs incurred to primarily acquire and establish new Network
locations. Refinancing expenses represent nonrecurring costs incurred in
attempts to refinance the Company's indebtedness. Transition expenses represent
the nonrecurring costs incurred by the Company in establishing TAHC as an entity
separate from BP, consisting primarily of costs to implement computerized
information systems previously provided by BP.
ENVIRONMENTAL REMEDIATION
The Company provides for remediation costs and penalties when the
responsibility to remediate is probable and the amount of associated costs is
reasonably determinable. Generally, the timing of remediation accruals coincides
with completion of a feasibility study or the commitment to a formal plan of
action. If recoveries of remediation costs from third parties are probable, a
receivable is recorded. Accruals are not recorded for the costs of remediation
activities undertaken on behalf of the Company by Unocal and BP, at Unocal's and
BP's sole expense (see Note 15).
INCOME TAXES
Deferred income tax assets and liabilities are established to reflect the
future tax consequences of differences between the tax bases and financial
statement bases of assets and liabilities.
F-8
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an initial maturity of three months or less to be
cash equivalents.
DERIVATIVE INSTRUMENTS
On a limited basis, the Company engages in commodity risk management
activities within the normal course of its business as an end-user of derivative
instruments. These commodity-based instruments are used to manage exposure to
price fluctuations related to the anticipated purchase of diesel fuel.
Changes in market value of derivative instruments are deferred and are
subsequently recognized in income in the same period as the underlying
transaction. Recorded deferred gains or losses are reflected within other
current assets or other current liabilities.
At December 31, 1995 and 1996 the amount of open derivative contracts and
the related fair market value and deferred gains and losses were immaterial.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which estimation is practicable:
CASH AND SHORT-TERM INVESTMENTS, ACCOUNTS RECEIVABLE AND ACCOUNTS
PAYABLE: The fair values of financial instruments classified as current
assets or liabilities approximate the carrying values due to the
short-term maturity of the instruments.
LONG-TERM DEBT: The fair value of the Company's long-term debt is
estimated based on the current borrowing rates available to the Company
for financings with similar terms and maturities (see Note 9).
EARNINGS PER SHARE
Earnings per common share and common share equivalent were computed by
subtracting preferred dividends from net income and dividing the resulting
amount by the weighted average number of shares of common stock and common stock
equivalents outstanding during the year. The Mandatorily Redeemable Senior
Participating Preferred Stock Series I and II and Convertible Preferred Stock
Series I and II are considered to be equivalents of common stock. The number of
shares issuable on conversion of the preferred stock was added to the number of
common shares. The number of shares was also increased by the number of shares
issuable on the exercise of vested stock options when the formula price of the
common stock exceeds the exercise price of the options and by the number of
outstanding common stock warrants. The increase in the number of common shares
was reduced by the number of common shares which are assumed to have been
purchased with the proceeds from the exercise of the options.
The weighted average number of shares of common stock and common share
equivalents outstanding during the years ended December 31, 1994, 1995 and 1996
were 8,934,000, 8,948,000 and 8,929,000, respectively.
F-9
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS
Certain reclassifications of prior years' data have been made to conform
with the current year presentation.
3. INVENTORIES
Inventories consist of the following:
DECEMBER 31,
-------------------------
1995 1996
------- -------
(IN THOUSANDS)
Nonfuel merchandise ........................ $ 1,628 $26,090
Petroleum products ......................... 488 2,992
------- -------
Total inventories ..................... $ 2,116 $29,082
======= =======
4. NOTES RECEIVABLE
During 1996, the Company entered into notes receivable agreements with
certain operator and franchisee customers to finance on a long-term basis past
due accounts receivable owed by those customers. Certain of these customers are
related parties (See Note 14). The notes have terms ranging from six months to
six years and principally accrue interest at a variable rate of the prime
lending rate plus 2 percent. Notes receivable consists of the following:
DECEMBER 31, 1996
-----------------
(IN THOUSANDS)
Principal amount of notes outstanding ......................... $4,652
Less: amounts due within one year ............................. 1,501
------
3,151
Less: allowance for doubtful accounts ......................... 1,316
------
Notes receivable, net ......................................... $1,835
======
The amount due within one year is included within other current assets on
the balance sheet.
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
Land and land improvements ............................. $ 42,462 $ 52,028
Buildings and improvements ............................. 136,729 213,573
Machinery, equipment and furniture ..................... 16,500 52,225
Construction in progress ............................... 7,538 8,647
Total cost ............................................. 203,229 326,473
Less: accumulated depreciation ......................... 20,150 57,107
Property and equipment, net ............................ $183,079 $269,366
======== ========
F-10
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
During 1995, the Company received from Unocal a refund of $1,500,000 of the
purchase price paid in 1993 in consideration of property improvements required
by the asset purchase agreement but not yet completed by Unocal. This amount was
recorded as a reduction to property and equipment.
6. INTANGIBLE ASSETS
Intangible assets consist of the following:
December 31,
-----------------------
1995 1996
------- -------
(in Thousands)
Noncompetition agreements ...................... $17,200 $26,200
Leasehold interest ............................. -- 1,724
Trademarks ..................................... -- 2,313
Franchise goodwill ............................. -- 994
------- -------
Total cost ..................................... 17,200 31,231
Less: accumulated amortization ................. 4,658 11,574
Intangible assets, net ......................... $12,542 $19,657
======= =======
As part of the National and the TA Acquisitions, the Company entered into
noncompetition agreements with Unocal and BP pursuant to which Unocal and BP
agreed to refrain from re-entering the truckstop business for periods of 10 and
7 years, respectively, from the acquisition dates. The intangible assets related
to these noncompetition agreements represent the present values of the estimated
cash flows the Company would lose due to competition resulting from re-entry of
Unocal or BP into the travel center market were they not constrained from doing
so. The intangible assets are being amortized over the 10 and 7 year periods.
Leasehold interest represents the value, obtained through the TA
Acquisition, of favorable lease provisions at one TA Network location, the lease
for which extended 11 1/2 years from the TA Acquisition. The leasehold interest
is being amortized over the 11 1/2 year period. Trademarks relates primarily to
the Company's purchase of the "Truckstops of America" and "Country Pride"
trademarks, service marks, trade names and commercial symbols. The trademarks
are being amortized over their estimated economic life of 15 years.
Franchise goodwill results from the acquisitions during 1996 of the
businesses and operating assets related to seven Company-owned travel centers
previously leased to independent operators, and represents the excess of amounts
paid to those operators over the fair values of the tangible assets acquired.
This goodwill is being amortized on a straight-line basis over fifteen years.
F-11
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
7. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
December 31,
---------------------
1995 1996
------- -------
(in Thousands)
Taxes payable, other than income taxes ............. $ 6,110 $ 8,305
Accrued wages and benefits ......................... -- 4,872
Interest payable ................................... 2,191 2,525
Other accrued liabilities .......................... 390 13,720
------- -------
Total other accrued liabilities .................... $ 8,691 $29,442
======= =======
8. REVOLVING LOAN
The Company has available revolving loan facilities of $45,000,000 (See Note
9). The interest rate for borrowings under these revolving loan facilities are
based on the bank's prime lending rate and LIBOR rates, and was 8.3 percent at
December 31, 1996. The average effective interest rate for the year ended
December 31, 1996 was 8.2 percent. There were no outstanding borrowings at
December 31, 1995. The borrowings outstanding under these revolving loan
facilities were $14,000,000 at December 31, 1996.
9. LONG-TERM DEBT
Long-term debt consists of the following:
DECEMBER 31,
-------------------
INTEREST
RATE MATURITY 1995 1996
-------- -------- -------- --------
(IN THOUSANDS)
Senior secured term loans (a) ....... (b) 1999 $ 50,925 $ 39,800
Senior secured term loans (c) ....... (d) 2000 -- 42,000
Senior secured notes (e) ............ 8.76% 2002 65,000 65,000
Senior secured notes (f) ............ 8.63% 2002 -- 25,000
Subordinated notes (g) .............. 12.50% 2003 25,000 25,000
Subordinated notes (h) .............. 12.00% 2003 -- 15,000
-------- --------
Total ........................ 140,925 211,800
Less: amounts due within one year ... 11,125 17,250
Less: unamortized discount .......... 934 1,365
-------- --------
Total ........................ $128,866 $193,185
======== ========
- --------------------------
(a) On April 13, 1993, the Company entered into a $100,000,000 Credit Agreement
with a group of banks. This Credit Agreement consists of three components:
term loans of a maximum $70,000,000, swingline loans not to exceed
$3,000,000, and revolving loans (See Note 8) not to exceed $30,000,000
(including any swingline loans outstanding). On November 5, 1993, the
Company
F-12
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
9. LONG-TERM DEBT (CONTINUED)
reduced the revolving portion of the Credit Agreement to $25,000,000. No
borrowings under the swingline loan were outstanding at December 31, 1995 or
1996. Payments of principal, interest and commitment fees related to the
Credit Agreement are due quarterly on March 31, June 30, September 30 and
December 31 in installments of principal ranging from $500,000 to
$5,500,000, with the last payment due on December 31, 1999. In addition,
annual prepayments of principal may be required based on excess cash flows
generated by the Company. At December 31, 1996, no prepayment of principal
was required as a result of 1996 cash flows. Commitment fees are calculated
as 1 1/2 of 1 percent on the average daily unused amount of the revolving
loan commitment.
(b) Interest accrues at variable rates based on either an alternate base rate
(ABR) or an adjusted London Interbank Offered Rate (LIBOR). The rate at
which interest accrues is calculated as either the ABR rate (8.25% at
December 31, 1996) plus 1 3/4 percent or the LIBOR rate (5.625% at December
31, 1996) plus 2 3/4 percent. Management has the option of selecting which
rate is to be applied at the beginning of each loan period, the term of
which varies from one day to six months. The average effective interest
rates for the years ended December 31, 1995 and 1996 were 9.4 percent and
9.5 percent, respectively.
(c) On December 9, 1993, the Company entered into a $73,000,000 Credit Agreement
with a group of banks. This Credit Agreement consists of three components:
term loans of a maximum $53,000,000 swingline loans not to exceed
$3,000,000, and revolving loans (See Note 8) not to exceed $20,000,000
(including any swingline loans outstanding and letters of credit issued).
There have been no borrowings under the swingline loan or revolving loan
commitments to date. Payments of principal, interest and commitment fees
related to the Credit Agreement are scheduled at each quarter end in
installments of principal ranging from $500,000 to $4,000,000, with the
first payment made on March 31, 1994, and the last payment due on December
9, 2000; in addition, annual prepayments of principal may be required based
on excess cash flows generated by the Company. At December 31, 1996, no
prepayment of principal was required as a result of 1996 cash flows.
Commitment fees are calculated as 1/2 of 1 percent on the average daily
unused amount of the revolving loan commitment. There were $1,529,000 of
outstanding letters of credit under the Credit Agreement at December 31,
1996 (see Notes 2 and 19).
(d) Interest accrues at variable rates based on either an alternate base rate
(ABR) or an adjusted London Interbank Offered Rate (LIBOR). The rate at
which interest accrues is calculated as either the ABR rate plus 1 3/4
percent or the LIBOR rate plus 2 3/4 percent. Management has the option to
select which rate is to be applied at the beginning of each loan period, the
term of which varies from 1 day to 6 months. Upon meeting certain
conditions, the spread added to the baseline rates can be reduced to 1 1/2
percent and 2 1/2 percent, respectively. The average effective interest
rates for the years ended December 31, 1995 and 1996 were 9.1 percent and
8.9 percent, respectively.
(e) On April 13, 1993, the Company issued $65,000,000 of Senior Secured Notes.
Interest payments on these notes are due semiannually on April 14 and
October 14. Optional prepayments are allowed under the note purchase
agreement, and required payments are due on April 14, 2001 and 2002, in the
amount of $32,500,000 each, such amounts to be reduced by certain other
prepayments. In the event of prepayments, the Company may be subject to the
make-whole provision of the note agreement, which requires payment of a
prepayment premium to the noteholders.
(f) On December 9, 1993, the Company issued $25,000,000 of Senior Secured Notes.
Interest payments on these notes are due semiannually on June 10 and
December 10. Optional
F-13
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
9. LONG-TERM DEBT (CONTINUED)
prepayments are allowed under the note purchase agreement and required
payments are due on December 10, 2001 and 2002 in the amount of $12,500,000
each, such amounts to be reduced by certain other prepayments. In the event
of prepayments, the Company may be subject to the make-whole provision of
the note agreement, which requires payment of a prepayment premium to the
noteholders (see Notes 2 and 19).
(g) On April 13, 1993, the Company issued $25,000,000 of Subordinated Notes.
Interest payments on these notes are due semiannually on April 14 and
October 14. Optional prepayments are allowed under certain circumstances,
under the note purchase agreement, any such payments reducing the required
repayment due April 14, 2003. The holders of the Subordinated Notes also
received warrants to purchase 128,206 shares of the Company's common stock,
resulting in a discount of $1,282,000 to the principal balance of these
Subordinated Notes.
(h) On December 10, 1993, the Company issued $15,000,000 of Subordinated Notes.
Interest payments on these notes are due semiannually on June 10 and
December 10. Optional prepayments are allowed, under certain circumstances,
under the note purchase agreement, any such payments reducing the required
payment due December 10, 2003. The holders of the Subordinated Notes also
received 80,520 shares of the Company's common stock, resulting in a
discount of $805,000 to the principal balance of these Subordinated Notes
(see Notes 2 and 19).
The borrowings under the Credit Agreements and Senior Secured Notes are
secured by mortgages on all of the property and equipment acquired by the
Company as a result of the National and TA Acquisitions in the manner described
in the Master Collateral and Intercreditor Agreements negotiated between the
lending banks under the Credit Agreements and the Senior Secured Note
purchasers. In the event of a change in control of the Company, the total amount
outstanding under the debt agreements described above may be declared
immediately due and payable.
Under the terms of the Credit Agreements and the Senior Note Purchase
Agreements, the Company is required to maintain certain financial covenants,
including minimum interest coverage, minimum debt service coverage, minimum
consolidated net worth, minimum current ratio, maximum leverage ratio and
maximum amounts of capital expenditures. On May 24, 1996 and December 31, 1996,
the Credit Agreement of April 13, 1993 was amended to revise certain of these
covenants and the Senior Note Purchase Agreement of April 13, 1997 was similarly
amended. The Company was in compliance with the amended covenants at December
31, 1996, and was also in compliance with the covenants set forth in the Credit
Agreement of December 9, 1993.
Under the terms of the Subordinated Note Purchase Agreements, the Company is
required to maintain financial covenants that provide for minimum net worth and
maximum amounts of capital expenditures. These covenants have been met as of and
for the year ended December 31, 1996.
Scheduled payments of long-term debt in the next five years are $17,250,000
in 1997; $19,625,000 in 1998; $28,925,000 in 1999; $16,000,000 in 2000 and
$45,000,000 in 2001.
Based on the borrowing rates currently available to the Company for bank
loans and other indebtedness with similar terms and average maturities, the fair
values of long-term debt at December 31, 1995 and 1996 approximated the recorded
values.
F-14
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
10. LEASE COMMITMENTS
The Company has entered into lease agreements covering certain of its
travel center locations, warehouse and office space, computer and office
equipment and vehicles. Most long-term leases include renewal options and, in
certain cases, purchase options. Future minimum lease payments required under
operating leases that have remaining noncancelable lease terms in excess of one
year, as of December 31, 1996, were as follows:
YEAR ENDING
DECEMBER 31,
- ------------ (in Thousands)
1997 ........................................................... $ 4,087
1998 ........................................................... 4,105
1999 ........................................................... 4,001
2000 ........................................................... 3,748
2001 ........................................................... 3,541
Thereafter...................................................... 31,790
-------
$51,272
=======
Total rental expenses on all operating leases were approximately $596,000,
$676,000 and $3,456,000 for the years ended December 31, 1994, 1995 and 1996,
respectively.
11. MANDATORILY REDEEMABLE SENIOR CONVERTIBLE PARTICIPATING PREFERRED STOCK
December 31,
-----------------
1995 1996
------- -------
(in Thousands)
Series I--3,000,000 shares authorized, $0.01 par value;
2,680,656 shares issued and outstanding, shown at
redemption value ....................................... $34,255 $37,874
Series II--1,000,000 shares authorized, $0.01 par value;
934,344 shares issued and outstanding, shown at
redemption value ........................................ 11,940 13,201
------- -------
Total ............................................... $46,195 $51,075
======= =======
VOTING RIGHTS. Holders of Series I Mandatorily Redeemable Senior Convertible
Preferred Stock are entitled to vote on all matters, other than the election of
directors (see Note 12--Common Stock-Voting Rights below), submitted to a vote
of the Company's shareholders. Series II Mandatorily Redeemable Senior
Convertible Preferred Stock is non-voting.
DIVIDENDS. Dividends accumulate on the original $10.00 per share purchase
price at a rate of 13.5 percent per annum, compounded semi-annually, and are not
paid currently but accumulate and increase the liquidation preference. Such
dividends accrue whether or not declared by the Board of Directors. Accrued
dividends totaled $10,045,000 and $14,925,000 at December 31, 1995 and 1996,
respectively.
F-15
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
11. MANDATORILY REDEEMABLE SENIOR CONVERTIBLE PARTICIPATING PREFERRED STOCK
(CONTINUED)
Holders also participate pro rata, on a share for share basis, with the
outstanding Convertible Preferred Stock and Common Stock, in dividends and
distributions, other than liquidating distributions.
CONVERSION. The conversion rights of the holders are the same as those for
holders of the Series I and Series II Convertible Preferred Stock, respectively,
(see Note 12-Convertible Preferred Stock-Conversion below) except, if the
Company consummates an underwritten public offering of Class B Common Stock
pursuant to which the net offering price per share is equal to or greater than
the Trigger Price (defined as an amount equal to $10.00 plus interest at a rate
of 13.5 percent per annum, compounded semi-annually, from the closing date of
the TA Acquisition to the date of such public offering) and the net proceeds
raised in the offering are at least $50 million, the Company will have the right
to require that each share of Series I Mandatorily Redeemable Senior Convertible
Participating Preferred Stock be converted into one share of Series I
Convertible Preferred Stock and that each share of Series II Mandatorily
Redeemable Senior Convertible Participating Preferred Stock be converted into
one share of Series II Convertible Preferred Stock.
LIQUIDATION PREFERENCE. Upon liquidation, holders are entitled to receive
the Senior Liquidation Preference, defined as $10.00 plus the amount of all
accrued and unpaid dividends to the liquidation date, before any payment is made
to holders of Convertible Preferred Stock or Common Stock. Any remaining amounts
available for distribution to the Company's equity holders will be distributed
in the following order of priority:
(i) holders of Convertible Preferred Stock shall be entitled to receive
$10.00 for each outstanding share,
(ii) holders of Common Stock shall be entitled to receive $10.00 for
each outstanding share of Common Stock,
(iii) holders of Convertible Preferred Stock and Common Stock shall be
entitled to receive an amount such that, including such amounts distributed
in (i) and (ii) above, they have each received an amount equal to the Senior
Liquidation Preference,
(iv) holders of Mandatorily Redeemable Senior Convertible Participating
Preferred Stock, Convertible Preferred Stock and Common Stock shall be
entitled to receive amounts such that the amount distributed in respect of
each outstanding share of Mandatorily Redeemable Senior Convertible
Participating Preferred Stock pursuant to this clause shall equal 50 percent
of the amount distributed in respect of each outstanding share of
Convertible Preferred Stock and Common Stock pursuant to this clause.
OPTIONAL REDEMPTION. If the Company proposes to declare and pay any
dividends or other distributions in respect of Convertible Preferred Stock or
Common Stock, the Company shall first offer to utilize such proceeds to redeem
shares of the Mandatorily Redeemable Senior Convertible Participating Preferred
Stock at a redemption price per share equal to the Senior Liquidation
Preference. Any portion not used to redeem shares of Mandatorily Redeemable
Senior Convertible Participating Preferred Stock may be utilized by the Company
to pay dividends pari passu to the holders of outstanding shares of Mandatorily
Redeemable Senior Convertible Participating Preferred Stock, Convertible
Preferred Stock and Common Stock.
CALL OPTION. The Company may, at its option and at any time, call for
redemption all (but not less than all) of the outstanding shares at a price per
share equal to the Senior Liquidation Preference. The
F-16
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
11. MANDATORILY REDEEMABLE SENIOR CONVERTIBLE PARTICIPATING PREFERRED STOCK
(CONTINUED)
holders will be provided an opportunity to convert such shares into shares of
Class B Common Stock prior to the redemption.
MANDATORY REDEMPTION. The Company shall redeem all of the then outstanding
shares on December 10, 2008, at a redemption price per share equal to the Senior
Liquidation Preference.
12. OTHER PREFERRED STOCK, COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Convertible Preferred Stock:
Series I--3,000,000 shares authorized, $0.01 par value;
2,594,876 shares outstanding ............................ $ 26 $ 26
Series II--1,500,000 shares authorized, $0.01 par value;
1,237,374 shares outstanding ............................ 12 12
Common Stock: Class A--5,000,000 shares authorized, $0.01
par value; 1,111,250 and 1,036,250 shares outstanding at
December 31, 1995 and 1996, respectively ............... 11 11
Class B-25,000,000 shares authorized, $0.01 par value;
248,770 and 256,198 shares outstanding at December 31,
1995 and 1996, respectively ............................. 3 3
Additional paid-in capital ................................. 51,610 51,649
Treasury stock--at cost; 13,200 and 88,200 shares at
December 31, 1995 and 1996, respectively ................ (207) (958)
-------- --------
Total ............................................... $ 51,455 $ 50,743
======== ========
</TABLE>
In April 1993, the Company issued 1,111,250 shares of Class A Common Stock,
56,500 shares of Class B Common Stock and 3,832,250 shares of Convertible
Preferred Stock, which consists of 2,594,876 shares of Series I Convertible
Preferred Stock and 1,237,374 shares of Series II Convertible Preferred Stock.
In December 1993, the Company issued 165,520 shares of Class B Common Stock
and 3,615,000 shares of Mandatorily Redeemable Senior Convertible Participating
Preferred Stock, which consists of 2,680,656 shares of Series I Mandatorily
Redeemable Senior Convertible Participating Preferred Stock and 934,344 shares
of Series II Mandatorily Redeemable Senior Convertible Participating Preferred
Stock (see Note 11).
CONVERTIBLE PREFERRED STOCK
VOTING RIGHTS. Each share of Series I Convertible Preferred Stock entitles
the holder to one vote on all matters, other than the election of directors,
submitted to a vote of the Company's shareholders.
Series II Convertible Preferred Stock is non-voting.
DIVIDENDS. See Common Stock--Dividends below.
F-17
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
12. OTHER PREFERRED STOCK, COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY
(CONTINUED)
CONVERSION. Each share of Series I Convertible Preferred Stock is
convertible into a share of Class B Common Stock at any time at the option of
the holder. See Note 21 for a discussion of changes to the Company's Common
Stock that were made subsequent to December 31, 1996.
Each share of Series II Convertible Preferred Stock is convertible at any
time at the option of the holder into such number of shares of Class B Common
Stock that in the aggregate do not exceed the lesser of (i) one share of Class B
Common Stock for each share of Series II Convertible Preferred Stock converted
or (ii) the number that equals 25% of the outstanding shares of Class B Common
Stock immediately following such conversion. Following the conversion of at
least 75% of the outstanding Convertible Preferred Stock into Class B Common
Stock, the Company is entitled to convert each remaining share of Convertible
Preferred Stock into a share of Class B Common Stock.
LIQUIDATION PREFERENCE. See Note 11--Mandatorily Redeemable Senior
Convertible Participating Preferred Stock-Liquidation Preference above.
COMMON STOCK
VOTING RIGHTS. The Class A and Class B Common Stock are identical in all
respects for purposes of voting other than for the election of directors. Each
share of Class A and Class B Common Stock entitles the holder to one vote on all
matters, other than election of directors, submitted to a vote of the Company's
shareholders. See Note 21 for a discussion of changes to the Company's Common
Stock that were made subsequent to December 31, 1996.
The Board of Directors of the Company consists of eleven members, four of
whom are elected by the holders of the Class A Common Stock, voting separately
as a class, six of whom are elected by the holders of the Series I Convertible
Preferred Stock and the Class B Common Stock (the Investor Stockholders), voting
together as a single class, and one of whom is the Chief Executive Officer of
the Company, as elected from time to time by majority vote of the other
directors.
The holders of Class A Common Stock will no longer be entitled to vote
separately as a class if either the number of outstanding shares of Class A
Common Stock owned by the Operator Shareholders falls below 722,313, or the
Voting Trust Agreement is terminated pursuant to a vote of 75% of the shares in
the voting trust or the expiration of its initial ten year term, unless 65% of
the then remaining Operator Shareholders elect to continue the voting trust.
DIVIDENDS. Holders of Common Stock are entitled to receive dividends if, and
when, declared by the Board of Directors of the Company. The Company is
precluded from paying dividends or making distributions to the holders of any of
its equity securities while any shares of Convertible Preferred Stock or
Mandatorily Redeemable Senior Convertible Participating Preferred Stock are
outstanding except for dividends and distributions of capital stock of the
Company; unless (i) in any fiscal year the dividends and distributions do not
exceed 50% of the Company's net income for the prior fiscal year and (ii) if
immediately after payment of such dividends or the making of any such
distributions, the value of the Company's shareholder equity would exceed the
value of the aggregate liquidation preference of the outstanding shares of
Convertible Preferred Stock and Mandatorily Redeemable Senior Convertible
Participating Preferred Stock by at least one dollar.
LIQUIDATION PREFERENCE. See Note 11--Mandatorily Redeemable Senior
Convertible Participating Preferred Stock--Liquidation Preference above.
F-18
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
12. OTHER PREFERRED STOCK, COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY
(CONTINUED)
WARRANTS. The purchasers of the $25,000,000 Subordinated Notes received
warrants with an exercise price of $0.01 per share which are exercisable for
128,206 shares of Class B Common Stock, resulting in a discount of $1,282,000 to
the principal balance of the Subordinated Notes.
REPURCHASE RIGHTS. Certain members of the Company's senior management have
purchased shares of the Company's Class B Common Stock pursuant to individual
management subscription agreements. The Company has the right to repurchase, and
the employees have the right to require the Company to repurchase, at formula
prices, the common stock upon termination of employment. The formula prices are
based on the consolidated operating results and indebtedness of the Company. At
December 31, 1996, the relevant price was $15.69 per share. Compensation expense
recognized with regard to these shares during the year ended December 31, 1996
was $336,000. No compensation expense was recognized with regard to these shares
in 1994 and 1995 as the formula prices in those years did not exceed the
purchase price of the shares.
STOCK AWARD AND OPTION PLAN
The 1993 Stock Incentive Plan (the "Plan") was approved by the Company's
Board of Directors and was effective as of December 10, 1993. The Plan provides
for the granting of stock options and other stock-based awards to employees and
directors of the Company. Stock awards granted under the Plan may be in the form
of (i) stock options, (ii) stock appreciation rights related to an option
("SAR"), and (iii) unrelated SAR's. Stock options granted under the Plan allow
the purchase of Class B Common Stock at prices generally not less than fair
market value as determined by the Compensation Committee of the Company's Board
of Directors. The total number of shares of Common Stock with respect to which
awards may be granted is 572,000. Common stock obtained as a result of the
exercise of the options is subject to call and put rights at formula prices upon
termination of employment. The formula prices are based on the consolidated
operating results and indebtedness of the Company. A portion of the options vest
at the end of each year in the five year period ending December 31, 1997, based
on attainment of certain specified financial objectives at the end of each year,
but no more quickly than ratably from the date of grant through December 31,
1996. Options that fail to vest by December 31, 1997 shall be forfeited. Vested
options must be exercised within 10 years of the date of grant. The purchase
prices at December 31, 1994, 1995 and 1996 used to determine compensation
expense related to these options were $13.59, $11.69 and $15.69, respectively.
Based on these prices and the number of vested options in each year,
compensation expense recognized in relation to these options for the years ended
December 31, 1994 and 1996 were $149,000, and $331,000, respectively. No
compensation expense was recognized for the year ended December 31, 1995.
F-19
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
12. OTHER PREFERRED STOCK, COMMON STOCK AND OTHER SHAREHOLDERS' EQUITY
(CONTINUED)
The following table reflects the status and activity of options under the
Plan:
Year Ended
December 31,
--------------------------------
1994 1995 1996
-------- -------- --------
Options outstanding, beginning of year ...... -- 493,280 520,181
Granted .................................. 523,280 69,900 11,000
Exercised ................................ -- -- --
Canceled ................................. (30,000) (42,999) --
-------- -------- --------
Options outstanding, end of year ............ 493,280 520,181 531,181
======== ======== ========
Options exercisable, end of year ............ 189,820 213,440 330,436
Options available for grant, end of year .... 78,720 51,819 40,819
The weighted-average exercise price was $19.04 for all years presented. The
following table summarizes information about options outstanding at December 31,
1996:
EXERCISE Options Options
PRICE Outstanding Exercisable
- -------- ----------- -----------
$10.00............................................ 163,695 101,821
$17.49............................................ 172,788 107,477
$28.56............................................ 183,698 114,263
------- -------
520,181 323,561
======= =======
The weighted-average remaining contractual life of all options outstanding
at December 31, 1996 was seven years.
13. INCOME TAXES
The provision for income taxes is as follows:
Year Ended
December 31,
--------------------------------------
1994 1995 1996
--------------------------------------
(in Thousands)
Current:
Federal ..................... $3,463 $4,106 $2,557
State ....................... 596 815 398
------ ------ ------
4,059 4,921 2,955
------ ------ ------
Deferred:
Federal ..................... 2,108 1,297 74
State ....................... 394 396 320
------ ------ ------
2,502 1,693 394
------ ------ ------
Total ................... $6,561 $6,614 $3,349
====== ====== ======
F-20
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
13. INCOME TAXES (CONTINUED)
The difference between taxes calculated at the U. S. federal statutory tax
rate of 35 percent and the Company's total income tax provision is as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
---------------------------
1994 1995 1996
------- ------- -------
(in Thousands)
<S> <C> <C> <C>
U.S. Federal statutory rate applied to income before tax . $ 5,689 $ 5,789 $ 3,109
State income taxes, net of federal income tax benefit .... 644 787 467
Other--net ............................................... 228 38 (227)
------- ------- -------
Total ............................................. $ 6,561 $ 6,614 $ 3,349
======= ======= =======
</TABLE>
Deferred income tax assets and liabilities resulted from the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
------------------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accounts receivable ................................... $ 1,812 $ 2,252
Inventory ............................................. 317 254
Organization and start-up costs ....................... 284 156
Federal benefit of state deferred tax liabilities ..... 416 515
Intangible assets ..................................... 11,123 10,582
Deferred revenues ..................................... 1,020 710
Minimum tax credit .................................... 1,429 2,647
General business credits (expiring 2009-2011) ......... 538 769
Other accrued liabilities ............................. 725 1,106
------- -------
Total deferred tax assets ......................... 17,664 18,991
------- -------
Deferred tax liabilities:
Property and equipment ................................ 22,845 24,566
------- -------
Total deferred tax liabilities .................... 22,845 24,566
------- -------
Net deferred tax liabilities ...................... $ 5,181 $ 5,575
======= =======
</TABLE>
The tax returns of the Company for 1993 through 1996 are subject to
examination by the Internal Revenue Service and state tax authorities. The
Company believes it has made adequate provision for income taxes and interest
that may become payable for years not yet examined.
F-21
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
14. RELATED PARTY TRANSACTIONS
The Company conducts a significant amount of its business with related
parties. Certain shareholders of the Company have an ownership interest in one
or more of the franchisee customers to whom the Company sells fuel and from whom
the Company receives rental income and/or royalty income. The transactions with
affiliates are at prices and terms that are the same as for similar transactions
with unrelated entities.
The following table is a summary of balances and transactions with related
parties at December 31, 1996 and 1995, and for each of the three years December
31, 1996:
DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------
1995 1996 1994 1995 1996
-------- -------- -------- -------- --------
(in Thousands)
Accounts receivable...... $ 18,398 $ 15,052
Notes receivable ........ $ -- $ 2,307
Fuel revenue ............ $237,541 $238,343 $269,179
Rent revenue ............ $ 34,233 $ 35,543 $ 32,266
Other revenues .......... $ 9,948 $ 7,264 $ 5,534
Cost of revenues ........ $231,670 $239,651 $268,343
During 1995 and 1996, the Company acquired the travel center businesses and
operating assets of four and five independent operators who are related parties,
respectively. Total consideration of $2,140,285 in 1995 and $3,185,000 in 1996
was paid to these operators.
At December 31, 1995 and 1996, certain of the Company's convertible
preferred shareholders are owed all of the $25,000,000 of debt related to the
Company's issuance of Senior Subordinated Notes and certain mandatorily
redeemable preferred shareholders are owed $20,000,000 of debt relating to the
Company's issuance of Senior Secured Notes. Interest expense incurred related to
debt owed to these shareholders was $4,877,000 in each of 1994, 1995 and 1996.
Certain members of the Company's senior management have purchased common
stock of the Company pursuant to management subscription agreements. (See Note
12--Other Preferred Stock, Common Stock and Other Shareholder's
Equity--Repurchase Rights). As a result of such purchases, the Company has notes
receivable from the management shareholders totaling $421,000 and $909,000 at
December 31, 1995 and 1996, respectively.
15. COMMITMENTS AND CONTINGENCIES
CAPITAL COMMITMENTS
At December 31, 1996, commitments for capital expenditures for property and
equipment totaled approximately $2,461,000.
ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to extensive federal,
state and local laws, regulations and ordinances relating to environmental
matters that (i) govern activities and operations that may have adverse
environmental effects, such as discharges to air, soil and water, as well as
handling,
F-22
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
15. COMMITMENTS AND CONTINGENCIES (CONTINUED)
storage and disposal practices for petroleum products and solid and hazardous
substances or (ii) impose liability and damages for the cost of remediating
sites affected by, and damage resulting from, past spills and disposal or other
releases of petroleum products and hazardous substances.
The Company owns and uses underground storage tanks (USTs) and above-ground
storage tanks (ASTs) at company-operated and operator locations to store
petroleum products and waste oils. These tanks must comply with statutory and
regulatory requirements regarding tank construction, integrity testing, leak
detection and monitoring, overfilling and spill control, release reporting,
financial assurance and corrective action in case of a release from a UST or AST
into the environment. To meet minimum federal requirements, all existing USTs
owned by the Company must conform to certain construction requirements, have
installed tank leak detection systems, and have installed corrosion protection
and spill-overfill prevention equipment by December 22, 1998. The Company has
established a program of tank replacement and equipment installation to meet the
requirements by that time.
While the costs of compliance for these matters have not had a material
adverse impact on the Company, it is impossible to predict accurately the
ultimate effect these changing laws and regulations may have on the Company in
the future. The Company incurred capital expenditures, maintenance, remediation
and other environmental related costs of approximately $2,224,000, $3,968,000
and $7,172,000 in 1994, 1995 and 1996, respectively.
As part of each of the National and TA Acquisitions, the Company negotiated
environmental agreements with the sellers, pursuant to which Unocal and BP each
indemnified the Company for a period of eleven years from the acquisition dates
for the remediation of any environmental contamination present at any of the
acquired locations as of the acquisition dates and which required Unocal and BP
to directly pay any required remediation costs. The environmental agreements
with Unocal and BP expire on April 14, 2004 and December 11, 2004 respectively.
In connection with the acquisitions, Phase I investigations were conducted
at all of the acquired travel centers. Pursuant to the environmental agreements,
Phase II investigations on all sites are required to be completed by the year
2000. As of December 31, 1996, 31 Phase II investigations were in progress and
84 had been completed. The Company is now evaluating the results of these
investigations to establish what, if any, remedial actions will be required and
are notifying federal, state and local authorities regarding any contamination
that is discovered. The Company expects that the remaining 18 investigations
will be completed by 1998. Unocal and the Company agreed to share the costs of
the Phase II environmental investigations to be conducted at the National
Network locations, with the Company's share of such costs limited to $500,000,
which has been fully paid, for all of such investigations. The environmental
agreements further provide that Unocal and BP are directly responsible for all
such costs and expenses incurred for remediation of environmental contamination
(based on the standards in effect on the date the remedial action is completed),
for bringing the facilities into compliance with environmental laws (based on
requirements in effect as of the respective acquisition dates) and for any other
environmental liabilities that arise out of conditions at, or ownership or
operations of, the Network prior to the respective acquisition dates. In
addition, Unocal and BP are continuing remedial actions regarding conditions
identified at certain travel centers prior to the acquisitions by the Company.
Unocal and BP do not have any responsibility for any environmental liabilities
arising out of the ownership and operations of the Network after April 14, 1993
and December 9, 1993 respectively, unless such liabilities are a result of
conditions existing at the time of the National and TA Acquisitions. There can
be no assurance that, if additional environmental claims or liabilities arise
under the environmental agreements, Unocal or BP would not dispute the Company's
claims for indemnification thereunder.
F-23
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
15. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company is in the process of resolving alleged violations of wastewater
discharge permits in several states relating to travel center operations and is
conducting investigatory and/or remedial actions with respect to petroleum
product releases that have occurred subsequent to the acquisition at 21 travel
centers. Remediation activities have been completed at other travel centers and
the Company anticipates no further actions to be required by the respective
state agencies in regard to those matters at those locations. Most of the
wastewater discharge notices have been resolved by the Company without penalty.
However, given the status of the proceedings with respect to matters still
pending, ultimate investigative and remediation costs cannot accurately be
predicted. The Company expects that some or all of any fines paid or costs
incurred in connection with the wastewater discharge violations noted above will
be paid by Unocal and BP pursuant to the environmental agreements.
The Company has estimated the current ranges of remediation costs at
currently active sites and what it believes will be its ultimate share for such
costs after required indemnification and remediation is performed by Unocal and
BP under the environmental agreements and has recorded a reserve of $745,000,
for such matters. While it is not possible to quantify with certainty the
environmental exposure, in the opinion of management, the potential liability,
beyond that considered in the reserve, for all environmental proceedings, based
on information known to date, will not have a material adverse effect on the
financial condition, results of operations or liquidity of the Company.
PENDING LITIGATION
In connection with the acquisition of the Network, the Company acquired six
travel centers located in California that are currently members of the Network.
In January 1993, the operators of four of these travel centers (the "California
Plaintiffs") commenced litigation against Unocal and the Company in California
state court seeking, among other things, specific performance by Unocal of their
alleged rights, either under the California Business and Professions Code (the
"California Statute") or, in the alternative, pursuant to alleged statements
made by Unocal, to purchase their travel centers at a fair market price and
seeking compensatory and punitive damages against the Company and others for
both tortious interference with the California Plaintiffs' alleged rights and
civil conspiracy. The operator of a fifth California travel center also asserted
a purchase right, but never filed suit. This property, together with the four
properties operated by the California Plaintiffs, are referred to herein as the
"California Properties".
Under the asset purchase agreements pursuant to which the Company acquired
the California Properties from Unocal, and related agreements, (i) the Company
purchased the California Properties for $39 million and (ii) Unocal agreed to
indemnify the Company for, among other things, claims arising under the
California Statute arising out of or resulting from the sale of the California
Properties, including any amounts ("Excess Amounts") by which the original
purchase price paid by the Company for the California Properties exceeds the
price at which the Company might be ordered by a court to resell such
properties. Pursuant to such agreements, Unocal is not required to indemnify the
Company for awards of punitive damages. The Company cannot predict whether it
ultimately will be required to resell any or all of the California Properties to
the California operators. However, in such event, the Company would seek
indemnification from Unocal for any Excess Amounts. The Company believes that
the claims asserted by the operators of the California Properties against the
Company are without merit and has engaged in a vigorous defense.
During 1995, the trial commenced and two of the California Plaintiffs
elected to settle their portion of the litigation with Unocal and the Company.
In resolution, the Company entered into an agreement whereby the Company
acquired the assets and operations of one of the related travel centers and paid
F-24
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
15. COMMITMENTS AND CONTINGENCIES (CONTINUED)
approximately $900,000 for the operations and certain assets used in the
operations. The other operator's issues were resolved at no cost to the Company
and that operator continues to operate the travel center under the existing
lease agreement.
On May 1, 1995, the jury rendered a verdict in favor of the two remaining
California Plaintiffs and against Unocal and the Company. The jury determined
that the two remaining California Plaintiffs were entitled to total compensatory
damages of $4,012,000, all payable by Unocal. On May 3, 1995, the jury rendered
a verdict assessing punitive damages against Unocal and the Company in the
amounts of $7,000,000 and $3,100,000, respectively. Also on May 3, 1995, the
California State Court rendered a tentative decision in favor of Unocal and the
Company on the equitable claims asserted by the California Plaintiffs and
denying Plaintiffs' request for rescission of the asset purchase agreements for
the related California Properties. The Company then filed motions with the trial
court to enter judgement in its favor on plaintiff's damages claims
notwithstanding the verdict, or in the alternative, to order a new trial. On
August 1, 1995, the California Court denied the motion for judgement
notwithstanding the verdict, but granted the Company's motion for a new trial on
all issues. Unocal and the Company have appealed the court's denial of their
motions for judgement notwithstanding the verdict, and the California Plaintiffs
have appealed the court's granting of a new trial and its ruling on the
equitable claims. Decisions on the pending appeals are expected by late 1997.
The Company's ultimate liability in the disposition of this matter is difficult
to estimate. However, it is management's belief that the outcome, while
potentially material to the Company's results of operations, is not likely to
have a material adverse effect on the Company's financial position.
The Company believes all compensatory damages ultimately awarded and legal
fees incurred in this matter are covered under the indemnification agreement
with Unocal. Legal costs incurred by the Company through December 31, 1996 total
$5,189,000, of which Unocal has paid $1,000,000 to the Company to date. Unocal
has stated, however, that it may contest portions of the Company's claims for
such indemnification. However, the Company believes that the effect on the
financial statements of any amounts not ultimately collected from Unocal will
not be material.
In April 1996, a group of 11 operators filed a complaint which was styled as
a class action lawsuit alleging that the Company or its representatives had
engaged in certain inappropriate practices or activities including breach of
contract and fraud in connection with acquiring and operating the Network. No
specific dollar damages are claimed in the complaint, but the plaintiffs
generally seek compensatory and punitive damages. In January 1997, the complaint
was amended to include an additional six operators as plaintiffs and to assert
the additional claims of tortious interference with contractual relations and of
civil conspiracy. In 1997, settlement agreements were reached with three of the
plaintiffs at an immaterial cost to the Company. The Company believes that the
claims made in the complaint are baseless and intends to defend this litigation
vigorously. It is management's belief that the outcome is not likely to have a
material adverse effect on the Company's results of operations, financial
position or liquidity.
In addition to the above matters, the Company is the subject of, or party
to, a number of pending or threatened legal actions, contingencies and
commitments involving a variety of matters, including laws and regulations
relating to the environment. The ultimate resolution of these contingencies
could, individually or in the aggregate, be material to the Company's results of
operations, but is not expected to be material to the Company's financial
position or liquidity.
F-25
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
16. OPERATING LEASE COMMITMENTS
Of the 135 travel centers owned by the Company as of December 31, 1996, 77
locations are leased to independent operators, several of whom are related
parties of the Company, under operating lease arrangements. These cancelable
lease arrangements generally are for terms of three to five years. Rent revenue
from such operating lease arrangements totaled $48,424,000, $47,840,000 and
$41,762,000 for 1994, 1995 and 1996, respectively.
17. OTHER INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
--------------------------------
(IN THOUSANDS)
-------- -------- --------
<S> <C> <C> <C>
Operating and Selling, general and administrative expenses
include the following:
Repairs and maintenance expenses ...................... $ 2,225 $ 1,264 $ 7,689
Advertising expenses (net of franchisee payments) ..... $ 561 $ 504 $ 3,110
Taxes other than payroll and income taxes ............. $ 2,974 $ 3,391 $ 2,429
Interest income (expense):
Interest expense ...................................... $(13,918) $(14,190) $(15,965)
Interest income ....................................... 675 846 729
-------- -------- --------
$(13,243) $(13,344) $(15,236)
======== ======== ========
</TABLE>
18. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
--------------------------------
(IN THOUSANDS)
-------- -------- --------
<S> <C> <C> <C>
Cash paid during the year for:
Interest .............................................. $13,383 $14,055 $16,597
Income Taxes .......................................... $ 5,987 $ 482 $ 1,321
</TABLE>
During 1995 and 1996, the Company received $3,201,000 and $3,207,000,
respectively, of inventory and property and equipment in liquidation of trade
accounts receivable (See Notes 2 and 19).
F-26
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
19. CONDENSED FINANCIAL STATEMENTS OF TAHC
The Company's consolidated financial statements presented TAHC as held for
disposition until September 30, 1996 (see Note 2). The following sets forth the
condensed financial statement schedules of TAHC on a stand-alone basis.
CONDENSED BALANCE SHEET SCHEDULE:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and short term investments ................................ $ 12,426 $ 13,838
Accounts receivable, net ....................................... 19,622 22,532
Inventories .................................................... 24,149 24,619
Other current assets ........................................... 2,652 5,673
-------- --------
Total current assets .................................... 58,849 66,662
Property and equipment, net .................................... 84,150 85,015
Other noncurrent assets ........................................ 13,926 12,385
-------- --------
Total assets ............................................ $156,925 $164,062
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable ............................................... $ 11,313 $ 10,499
Accrued liabilities ............................................ 18,528 26,628
-------- --------
Total current liabilities ............................... 29,841 37,127
Long-term debt, net ............................................ 81,360 74,441
Other noncurrent liabilities ................................... 387 3,431
-------- --------
Total liabilities ....................................... 111,588 114,999
Paid-in capital ................................................ 37,730 37,730
Retained earnings .............................................. 7,607 11,333
-------- --------
Total shareholders' equity .............................. 45,337 49,063
-------- --------
Total liabilities and shareholders' equity .............. $156,925 $164,062
======== ========
</TABLE>
F-27
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
19. CONDENSED FINANCIAL STATEMENTS OF TAHC (CONTINUED)
CONDENSED STATEMENT OF INCOME SCHEDULE:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1994 1995 1996
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Fuel ......................................... $ 206,971 $ 214,250 $ 284,378
Non-fuel ..................................... 167,830 172,201 182,488
--------- --------- ---------
Total revenues ........................... 374,801 386,451 466,866
Cost of sales (excluding depreciation) .......... 243,447 255,999 323,636
--------- --------- ---------
Gross profit (excluding depreciation)............ 131,354 130,452 143,230
Operating expenses .............................. 93,279 92,099 100,085
Selling, general and administrative expenses..... 13,039 12,313 15,839
Transition and development costs ................ 1,412 1,035 1,303
Depreciation and amortization ................... 9,950 11,232 12,663
Other (income) expense, net ..................... (77) 51 21
--------- --------- ---------
Operating income ............................. 13,751 13,722 13,319
Interest expense ................................ (7,294) (7,523) (7,381)
Income before income taxes ................... 6,457 6,199 5,938
Income tax expense .............................. 2,468 2,445 2,212
--------- --------- ---------
Net income ...................................... $ 3,989 $ 3,754 $ 3,726
========= ========= =========
</TABLE>
F-28
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
20. UNAUDITED PRO FORMA PRESENTATION
The following schedules set forth the consolidated financial position and
results of operations of the Company as though TAHC had not been held for
disposition and instead been fully consolidated since January 1, 1994.
UNAUDITED PRO FORMA BALANCE SHEET SCHEDULE:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and short term investments .............................. $ 15,617 $ 23,779
Accounts receivable, net ..................................... 56,858 54,371
Inventories .................................................. 26,265 29,082
Deferred income taxes ........................................ 3,561 3,877
Other current assets ......................................... 8,939 10,530
-------- --------
Total current assets ....................................... 111,240 121,639
Notes receivable ................................................ -- 1,835
Property and equipment, net ..................................... 267,229 273,219
Intangible assets ............................................... 22,265 19,657
Deferred financing costs ........................................ 10,518 8,379
Other assets .................................................... 2,114 5,013
-------- --------
Total assets ............................................... $413,366 $429,742
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving loans .............................................. $ -- $ 14,000
Current maturities of long-term debt: ........................ 16,125 17,250
Accounts payable ............................................. 34,373 37,201
Other accrued liabilities .................................... 22,230 29,422
-------- --------
Total current liabilities .................................. 72,728 97,873
Long-term debt, net ............................................. 210,226 193,185
Deferred income taxes ........................................... 9,872 9,452
Other long-term liabilities ..................................... 3,133 5,914
-------- --------
Total liabilities .......................................... 295,959 306,424
Mandatorily redeemable senior convertible participating preferred
stock ........................................................ 46,195 51,075
Other preferred stock, common stock and other shareholders'
equity ....................................................... 51,455 50,743
Retained earnings ............................................... 19,757 21,500
-------- --------
Total stockholders' equity ................................... 71,212 72,243
-------- --------
Total liabilities and shareholders' equity ................. $413,366 $429,742
======== ========
</TABLE>
F-29
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
UNAUDITED PRO FORMA STATEMENT OF INCOME SCHEDULE:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1994 1995 1996
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Fuel ........................................ $ 603,719 $ 590,398 $ 752,266
Nonfuel ..................................... 187,712 201,533 239,449
Rent ........................................ 48,424 47,840 41,762
----------- ----------- -----------
Total revenues ............................ 839,855 839,771 1,033,477
Cost of revenues (excluding depreciation) ... 634,595 632,822 801,665
----------- ----------- -----------
Gross profit (excluding depreciation)........ 205,260 206,949 231,812
Operating expenses .......................... 100,990 101,620 128,773
Selling, general and administrative expenses 35,361 43,198 42,349
Refinancing, transition and development costs 5,529 1,866 2,687
Depreciation and amortization ............... 20,348 22,611 26,970
Other (income) expense, net ................. (215) 247 1,324
----------- ----------- -----------
Income from operations .................... 43,247 37,407 29,709
Interest income (expense), net .............. (20,537) (20,867) (20,827)
----------- ----------- -----------
Income before provision for income taxes .. 22,710 16,540 8,882
Provision for income taxes .................. 9,029 6,614 3,349
----------- ----------- -----------
Net income ................................ $ 13,681 $ 9,926 $ 5,533
=========== =========== ===========
</TABLE>
21. SUBSEQUENT EVENTS
On January 21, 1997, the Company's Board of Directors approved a plan to
combine the operations of its National and TA Networks under the existing TA
Network management. This plan provides for the divesting of certain National
Network locations, the transfer of operations of all National Network
company-operated locations to the TA Network and rebranding of certain National
Network locations to TA . Related to this combination plan, the Company is
pursuing a recapitalization. The recapitalization will, if consummated,
refinance the Company's indebtedness of $225,800,000 at December 31, 1996, which
will require the write-off of the remaining unamortized balance of the deferred
financing costs and unamortized debt discount of $8,379,000 and $1,365,000,
respectively, at December 31, 1996. Certain elements of the combination plan are
dependent upon the successful recapitalization of the Company.
As of March 6, 1997, the Company's certificate of incorporation and by-laws
were amended: (i) to eliminate the supermajority voting requirements that were
applicable to certain actions, (ii) to eliminate all designations of classes of
common stock, the convertibility of one class of common stock into another and
all class votes of holders of common stock, (iii) to change the names of the
Class A Common Stock and the Class B Common Stock to Common Stock, (iv) to
provide that all of the outstanding shares of preferred stock of the Company be
convertible into shares of Common Stock on the same basis as they previously had
been convertible into Class B Common Stock, (v) to eliminate class votes for
directors and to provide that directors shall be elected by holders of common
stock and voting preferred stock voting together as a class and (vi) to change
the Company's name to "TravelCenters of America, Inc.". These actions did not
change the numbers of shares of various classes of stock that are authorized or
outstanding, nor did they alter the par value or dividend or other rights of the
various classes of stock.
F-30
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES
The following schedules set forth the consolidated balance sheets of the
Company as of December 31, 1995 and 1996 and the statements of income and
retained earnings and statements of cash flows of the Company for the years
ended December 31, 1994, 1995 and 1996. In the following schedules, "Parent
Company" refers to the unconsolidated balances of TravelCenters of America,
Inc., "Guarantor Subsidiaries" refers to the combined unconsolidated balances of
TA and National, and "Nonguarantor Subsidiary" refers to the balances of TAFSI.
"Eliminations" represent the adjustments necessary to (a) eliminate intercompany
transactions, (b) eliminate the Company's investments in its subsidiaries and
(c) present TAHC as a subsidiary held for disposition until September 30, 1996
(see Note 2).
F-31
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET SCHEDULES
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-----------------------------------------------------------
PARENT GUARANTOR NONGUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
--------- --------- --------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash ................................... $ -- $ 15,617 $ -- $ (12,426) $ 3,191
Accounts receivable, net ............... -- 56,475 915 (20,424) 36,966
Inventories ............................ -- 26,265 -- (24,149) 2,116
Deferred income taxes .................. -- 3,561 -- (769) 2,792
Other current assets ................... -- 8,861 5 (1,877) 6,989
--------- --------- --------- --------- ---------
Total current assets ............... -- 110,779 920 (59,645) 52,054
Notes receivable, net ..................... -- -- -- -- --
Property and equipment, net ............... -- 267,229 -- (84,150) 183,079
Intangible assets ......................... -- 22,265 -- (9,723) 12,542
Deferred financing costs .................. -- 10,518 -- (3,614) 6,904
Investment in subsidiary held for
disposition ............................ -- -- -- 41,484 41,484
Other assets .............................. 2,500 2,114 -- (3,446) 1,168
Investment in subsidiaries ................ 82,434 -- -- (82,434) --
--------- --------- --------- --------- ---------
Total assets ....................... $ 84,934 $ 412,905 $ 920 $(201,528) $ 297,231
========= ========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving loans ........................ $ -- $ -- $ -- $ -- $ --
Current maturities of long-term
debt ................................. -- 16,125 -- (5,000) 11,125
Accounts payable ....................... 350 34,270 -- (12,254) 22,366
Other accrued liabilities .............. -- 22,214 216 (13,739) 8,691
--------- --------- --------- --------- ---------
Total current liabilities .......... 350 72,609 216 (30,993) 42,182
Long-term debt (net of unamortized
discount) .............................. -- 210,226 -- (81,360) 128,866
Deferred income taxes ..................... -- 8,783 -- (377) 8,406
Other liabilities ......................... -- 5,644 -- (2,511) 3,133
--------- --------- --------- --------- ---------
Total liabilities .................. 350 297,262 216 (115,241) 182,587
Mandatorily redeemable senior
convertible participating
preferred stock ........................ 46,195 -- -- -- 46,195
Other preferred stock, common
stock and other shareholders'
equity ................................. 52,709 85,033 -- (86,287) 51,455
Retained earnings ......................... (14,320) 30,610 704 -- 16,994
--------- --------- --------- --------- ---------
Total shareholders' equity ......... 38,389 115,643 704 (86,287) 68,449
--------- --------- --------- --------- ---------
Total liabilities and
shareholders' equity ............. $ 84,934 $ 412,905 $ 920 $(201,528) $ 297,231
========= ========= ========= ========= =========
</TABLE>
F-32
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------------------------------
PARENT GUARANTOR NONGUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
------- ------------ ---------- ------------ ------------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash ................................... $ -- $ 23,779 $ -- $ -- $ 23,779
Accounts receivable, net ............... -- 54,294 1,051 (974) 54,371
Inventories ............................ -- 29,082 -- -- 29,082
Deferred income taxes .................. -- 3,877 -- -- 3,877
Other current assets ................... 499 10,236 2 (207) 10,530
-------- -------- -------- -------- --------
Total current assets ............... 499 121,268 1,053 (1,181) 121,639
Notes receivable, net ..................... -- 1,835 -- -- 1,835
Property and equipment, net ............... -- 273,219 -- (3,853) 269,366
Intangible assets ......................... -- 19,657 -- -- 19,657
Deferred financing costs .................. -- 8,379 -- -- 8,379
Other assets .............................. 2,500 7,348 -- (4,835) 5,013
Investment in subsidiaries ................ 82,434 -- -- (82,434) --
-------- -------- -------- -------- --------
Total assets ....................... $ 85,433 $431,706 $ 1,053 $(92,303) $425,889
======== ======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving loans ........................ $ -- $ 14,000 $ -- $ -- $ 14,000
Current maturities of long-term
debt ................................. -- 17,250 -- -- 17,250
Accounts payable ....................... 1,555 37,945 -- (2,299) 37,201
Other accrued liabilities .............. 450 29,553 105 (686) 29,422
-------- -------- -------- -------- --------
Total current liabilities .......... 2,005 98,748 105 (2,985) 97,873
Long-term debt (net of unamortized
discount) .............................. -- 193,185 -- -- 193,185
Deferred income taxes ..................... 92 9,891 -- (531) 9,452
Other liabilities ......................... 1 8,413 -- (2,500) 5,914
-------- -------- -------- -------- --------
Total liabilities .................. 2,098 310,237 105 (6,016) 306,424
Mandatorily redeemable senior
convertible participating
preferred stock ........................ 51,075 -- -- -- 51,075
Other preferred stock, common
stock and other shareholders'
equity ................................. 51,997 85,033 -- (86,287) 50,743
Retained earnings ......................... (19,737) 36,436 948 -- 17,647
-------- -------- -------- -------- --------
Total shareholders' equity ......... 32,260 121,469 948 (86,287) 68,390
-------- -------- -------- -------- --------
Total liabilities and
shareholders' equity ............. $ 85,433 $431,706 $ 1,053 $(92,303) $425,889
======== ======== ======== ======== ========
</TABLE>
F-33
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS SCHEDULES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-------------------------------------------------------------
PARENT GUARANTOR NONGUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
--------- --------- --------- --------- ---------
(In Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Revenues:
Fuel ............................ $ -- $ 603,719 -- $(206,971) $ 396,748
Nonfuel ......................... -- 186,292 1,420 (167,830) 19,882
Rent ............................ -- 48,424 -- -- 48,424
--------- --------- --------- --------- ---------
Total revenues .................. -- 838,435 1,420 (374,801) 465,054
Cost of revenues (excluding
depreciation) ................... -- 634,595 -- (243,447) 391,148
--------- --------- --------- --------- ---------
Gross profit (excluding
depreciation) ................... -- 203,840 1,420 (131,354) 73,906
Operating expenses ................. -- 100,990 -- (93,279) 7,711
Selling, general and
administrative ................. 526 33,896 939 (13,039) 22,322
Refinancing, transition and
development costs ............... -- 5,529 -- (1,412) 4,117
Depreciation and amortization ...... -- 20,348 -- (9,950) 10,398
Other (income) expense, net ........ -- (215) -- 77 (138)
Income from operations ............. 526 43,292 481 (13,751) 29,496
Interest (expense), net ............ -- (20,537) -- 7,294 (13,243)
--------- --------- --------- --------- ---------
Income before provision for income
taxes ........................... (526) 22,755 481 (6,457) 16,253
Provision for income taxes ......... (205) 9,065 169 (2,468) 6,561
--------- --------- --------- --------- ---------
Net income ......................... (321) 13,690 312 (3,989) 9,692
Less: preferred dividends ....... (4,880) -- -- -- (4,880)
Retained earnings (deficit) -
beginning of the year ........... (4,138) 7,281 4 3,989 7,136
--------- --------- --------- --------- ---------
Retained earnings (deficit) - end of
the year ........................ $ (9,339) $ 20,971 $ 316 $ -- $ 11,948
========= ========= ========= ========= =========
</TABLE>
F-34
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------
PARENT GUARANTOR NONGUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
--------- --------- --------- --------- ---------
(In Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Revenues:
Fuel ............................. $ -- $ 590,398 -- $(214,250) $ 376,148
Nonfuel .......................... -- 199,968 1,565 (172,201) 29,332
Rent ............................. -- 47,840 -- -- 47,840
--------- --------- --------- --------- ---------
Total revenues ................... -- 838,206 1,565 (386,451) 453,320
Cost of revenues (excluding
depreciation)..................... -- 632,822 -- (255,999) 376,823
--------- --------- --------- --------- ---------
Gross profit (excluding depreciation) -- 205,384 1,565 (130,452) 76,497
Operating expenses .................. -- 101,620 -- (92,099) 9,521
Selling, general and
administrative ................... 168 42,080 950 (12,313) 30,885
Refinancing, transition and
development costs ................ -- 1,866 -- (1,035) 831
Depreciation and amortization ....... -- 22,611 -- (11,232) 11,379
Other (income) expense, net ......... -- 247 -- (51) 196
Income of subsidiary held for
disposition ...................... -- -- -- (6,199) (6,199)
--------- --------- --------- --------- ---------
Income from operations .............. (168) 36,960 615 (7,523) 29,884
Interest (expense), net ............. -- (20,867) -- 7,523 (13,344)
--------- --------- --------- --------- ---------
Income before provision for income
taxes ............................ (168) 16,093 615 -- 16,540
Provision for income taxes .......... (67) 6,454 227 -- 6,614
--------- --------- --------- --------- ---------
Net income .......................... (101) 9,639 388 -- 9,926
Less: preferred dividends ........ (4,880) -- -- -- (4,880)
Retained earnings (deficits) -
beginning of the year ............ (9,339) 20,971 316 -- 11,948
--------- --------- --------- --------- ---------
Retained earnings (deficits) - end of
the year ......................... $ (14,320) $ 30,610 $ 704 $ -- $ 16,994
========= ========= ========= ========= =========
</TABLE>
F-35
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------
PARENT GUARANTOR NONGUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ----------- -----------
(In Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Revenues:
Fuel ......................... $ -- $ 752,266 -- $ (202,054) $ 550,212
Nonfuel ...................... -- 238,067 1,382 (138,171) 101,278
Rent ......................... -- 41,762 -- -- 41,762
----------- ----------- ----------- ----------- -----------
Total revenues ............... -- 1,032,095 1,382 (340,225) 693,252
Cost of revenues (excluding
depreciation) ................ -- 801,665 -- (233,439) 568,226
----------- ----------- ----------- ----------- -----------
Gross profit (excluding
depreciation)................. -- 230,430 1,382 (106,786) 125,026
Operating expenses .............. -- 128,773 -- (74,772) 54,001
Selling, general and
administrative ............... 736 40,613 1,000 (11,546) 30,803
Refinancing, transition and
development costs ............ -- 2,687 -- (490) 2,197
Depreciation and amortization ... -- 26,970 -- (9,132) 17,838
Other (income) expense, net ..... -- 1,324 -- -- 1,324
Income of subsidiary held for
disposition .................. -- -- -- (5,255) (5,255)
----------- ----------- ----------- ----------- -----------
Income from operations .......... (736) 30,063 382 (5,591) 24,118
Interest (expense), net ......... -- (20,827) -- 5,591 (15,236)
----------- ----------- ----------- ----------- -----------
Income before provision for
income taxes ................. (736) 9,236 382 -- 8,882
Provision for income taxes ...... (199) 3,410 138 -- 3,349
----------- ----------- ----------- ----------- -----------
Net income ...................... (537) 5,826 244 -- 5,533
Less: preferred dividends .... (4,880) -- -- -- (4,880)
Retained earnings (deficit) -
beginning of the year ........ (14,320) 30,610 704 -- 16,994
----------- ----------- ----------- ----------- -----------
Retained earnings (deficit) - end
of the year .................. $ (19,737) $ 36,436 $ 948 $ -- $ 17,647
=========== =========== =========== =========== ===========
</TABLE>
F-36
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES (CONTINUED)
CONSOLIDATED STATEMENT OF CASH FLOWS SCHEDULES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
---------------------------------------------------------------
PARENT GUARANTOR NONGUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- -------- -------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS (USED IN) PROVIDED
BY OPERATING ACTIVITIES: ....... $ (54) $ 32,376 $ -- $ (5,965) $ 26,357
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from sales of property
and equipment ................ -- 1,277 -- (1,277) --
Capital expenditures ........... -- (20,841) -- 9,848 (10,993)
-------- -------- -------- -------- --------
Net cash used in investing
activities ................. -- (19,564) -- 8,571 (10,993)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Revolving loan borrowings ...... -- 1,000 -- -- 1,000
Revolving loan repayments ...... -- (1,000) -- -- (1,000)
Long-term debt repayments ...... -- (5,500) -- 2,000 (3,500)
Other .......................... 54 -- -- -- 54
-------- -------- -------- -------- --------
Net cash (used in) provided
by financing activities .... 54 (5,500) -- 2,000 (3,446)
-------- -------- -------- -------- --------
Net increase in cash ....... -- 7,312 -- 4,606 11,918
Cash at the beginning of the year . -- 28,527 -- (24,948) 3,579
-------- -------- -------- -------- --------
Cash at the end of the year ....... $ -- $ 35,839 $ -- $(20,342) $ 15,497
======== ======== ======== ======== ========
</TABLE>
F-37
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------
PARENT GUARANTOR NONGUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- -------- -------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS (USED IN) PROVIDED
BY OPERATING ACTIVITIES: ....... $ 66 $ 27,341 $ -- $ (7,971) $ 19,436
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisitions of network assets . -- (575) -- -- (575)
Proceeds from sales of property 1,404
and equipment ................ -- 1,770 -- (366)
Capital expenditures ........... -- (32,183) -- 12,253 (19,930)
Refund of purchase price ....... -- 1,500 -- 1,500
-------- -------- -------- -------- --------
Net cash used in investing
activities ................. -- (29,488) -- 11,887 (17,601)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Long-term debt repayments ...... -- (18,075) -- 4,000 (14,075)
Other .......................... (66) -- -- -- (66)
-------- -------- -------- -------- --------
Net cash (used in) provided
by financing activities .... (66) (18,075) -- 4,000 (14,141)
-------- -------- -------- -------- --------
Net increase (decrease) in
cash ..................... -- (20,222) -- 7,916 (12,306)
Cash at the beginning of the year . -- 35,839 -- (20,342) 15,497
-------- -------- -------- -------- --------
Cash at the end of the year ....... $ -- $ 15,617 $ -- $(12,426) $ 3,191
======== ======== ======== ======== ========
</TABLE>
F-38
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
22. CONDENSED CONSOLIDATING FINANCIAL STATEMENT SCHEDULES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------------------
PARENT GUARANTOR NONGUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED
-------- -------- -------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS (USED IN) PROVIDED
BY OPERATING ACTIVITIES: ........ $ 712 $ 38,763 $ -- $(11,855) $ 27,620
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisitions of network assets .. -- (2,352) -- -- (2,352)
Proceeds from sales of property
and equipment ................. -- 965 -- (322) 643
Capital expenditures ............ -- (27,089) -- 6,544 (20,545)
-------- -------- -------- -------- --------
Net cash used in investing
activities .................. -- (28,476) -- 6,222 (22,254)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Revolving loan borrowings ....... -- 14,000 -- -- 14,000
Long-term debt repayments ....... -- (16,125) -- 3,750 (12,375)
Reconsolidation of subsidiary
previously held for disposition -- -- -- 14,309 14,309
Other ........................... (712) -- -- -- (712)
-------- -------- -------- -------- --------
Net cash (used in) provided
by financing activities ..... (712) (2,125) -- 18,059 15,222
-------- -------- -------- -------- --------
Net increase in cash ........ -- 8,162 -- 12,426 20,588
Cash at the beginning of the year .. -- 15,617 -- (12,426) 3,191
-------- -------- -------- -------- --------
Cash at the end of the year ........ $ -- $ 23,779 $ -- $ -- $ 23,779
======== ======== ======== ======== ========
</TABLE>
F-39
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholder of
TA Operating Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of TA Operating
Corporation and its subsidiary at December 31, 1995 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
March 6, 1997
F-40
<PAGE>
TA OPERATING CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
-------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C>
ASSETS
Current assets:
Cash and short term investments ............................... $ 12,426 $ 13,838
Accounts receivable (less allowance for doubtful accounts of
$341 for 1995 and $393 for 1996) ............................ 19,622 22,532
Inventories ................................................... 24,149 24,619
Deferred income taxes ......................................... 769 600
Other current assets .......................................... 1,883 5,073
-------- --------
Total current assets ...................................... 58,849 66,662
Property and equipment, net ................................... 84,150 85,015
Intangible assets ............................................. 9,723 8,133
Deferred financing costs ...................................... 3,614 3,084
Deferred income taxes ......................................... 41 534
Other assets .................................................. 548 634
-------- --------
Total assets .............................................. $156,925 $164,062
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable .............................................. $ 11,313 $ 10,499
Other accrued liabilities ..................................... 13,388 19,129
Taxes payable to parent ....................................... 140 499
Long-term debt due within one year ............................ 5,000 7,000
-------- --------
Total current liabilities ................................. 29,841 37,127
Commitments and contingencies (Note 10)
Long-term debt, less unamortized discount ..................... 81,360 74,441
Other long-term liabilities ................................... 11 3,122
Deferred income taxes ......................................... 376 309
-------- --------
Total liabilities ......................................... 111,588 114,999
Shareholder's equity
Common stock (1,000 shares authorized, $0.01 par value; 100
shares issued) ............................................ -- --
Additional paid-in capital .................................. 37,730 37,730
Retained earnings ........................................... 7,607 11,333
-------- --------
Total shareholder's equity ................................ 45,337 49,063
-------- --------
Total liabilities and shareholder's equity ................ $156,925 $164,062
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-41
<PAGE>
TA OPERATING CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1995 1996
--------- --------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Revenues:
Fuel .......................................... $ 206,971 $ 214,250 $ 284,378
Food offerings ................................ 50,007 51,753 55,596
Merchandise ................................... 28,186 27,909 27,663
Service sales ................................. 53,718 53,598 58,280
Other ......................................... 35,919 38,941 40,949
--------- --------- ---------
Total revenues ................................ 374,801 386,451 466,866
Cost of revenues (excluding depreciation) ........ 243,447 255,999 323,636
--------- --------- ---------
Gross profit (excluding depreciation)............. 131,354 130,452 143,230
Operating expenses ............................... 93,279 92,099 100,085
Selling, general and administrative expenses ..... 13,039 12,313 15,839
Refinancing, transition and development costs .... 1,412 1,035 1,303
Depreciation and amortization .................... 9,950 11,232 12,663
Other (income) expense, net ...................... (77) 51 21
--------- --------- ---------
Income from operations ........................... 13,751 13,722 13,319
Interest (expense), net .......................... (7,294) (7,523) (7,381)
Income before provision for income taxes ......... 6,457 6,199 5,938
Provision for income taxes ....................... 2,468 2,445 2,212
--------- --------- ---------
Net income ....................................... 3,989 3,754 3,726
--------- --------- ---------
Retained earnings (deficit) at beginning of period (136) 3,853 7,607
--------- --------- ---------
Retained earnings at end of period ............... $ 3,853 $ 7,607 $ 11,333
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-42
<PAGE>
TA OPERATING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income ............................................. $ 3,989 $ 3,754 $ 3,726
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ...................... 9,950 11,232 12,663
Deferred income taxes .............................. (38) (107) (391)
(Gain) loss on sales of property and equipment ..... (77) 51 21
Changes in assets and liabilities:
Accounts receivable ............................. (1,954) (221) (2,910)
Inventories ..................................... (2,956) (1,085) (470)
Other current assets ............................ (473) 97 (3,190)
Accounts payable and accrued liabilities ........ (2,441) (5,895) 5,287
Other long-term liabilities ..................... -- -- 3,111
Other--net ...................................... (35) 145 (160)
-------- -------- --------
Net cash provided by operating activities ....... 5,965 7,971 17,687
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property and equipment .......... 1,277 366 325
Capital expenditures ................................... (9,848) (12,253) (11,600)
-------- -------- --------
Net cash used in investing activities ........... (8,571) (11,887) (11,275)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt ........................... (2,000) (4,000) (5,000)
-------- -------- --------
Net cash used in financing activities ........... (2,000) (4,000) (5,000)
-------- -------- --------
Net increase (decrease) in cash ............................ (4,606) (7,916) 1,412
Cash at beginning of year .................................. 24,948 20,342 12,426
-------- -------- --------
Cash at end of year ........................................ $ 20,342 $ 12,426 $ 13,838
======== ======== ========
Cash paid during the year for interest ..................... $ 7,971 $ 8,272 $ 8,030
Cash paid during the year for income taxes ................. $ 2,302 $ 2,789 $ 1,961
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-43
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
TA Operating Corporation (the Company) is a wholly-owned subsidiary of TA
Holdings Corporation ("TAHC"), itself a wholly-owned subsidiary of TravelCenters
of America, Inc., formerly National Auto/Truckstops Holdings Corporation
(TravelCenters), that was incorporated on December 10, 1993 to acquire ("the
Acquisition") the travel center network assets ("the Network") of BP Exploration
and Oil Company ("BP"). The Company is a nationwide marketer of truck and auto
fuels and related products and services through a network of 48 full-service
travel centers and two stand-alone repair shops operated under the "TA" and
"Truckstops of America" trademarks in 27 states, primarily concentrated in the
Midwest and Southeast. Of the 48 network locations at December 31, 1996, the
Company owns or leases and operates 40 locations. The remaining 8 locations are
owned and operated by independent franchisees of the Company. The Company
participates (50% interest) in a joint venture called TABB, which markets the
Company's products and services, as well as those of the Company's partner, to
trucking fleets as though the two networks were one. TABB provides the fleets
with expanded network coverage through the addition of 19 truckstops in 9 states
and centralized billing services. The Company also operates a centralized
distribution center (the "Packaged Products Services Center" or "PPSC"). The
Company includes in its consolidated statements the accounts of its wholly-owned
subsidiary, TA Franchise Systems Inc.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent and other liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenue from and related costs of sales of fuel, services and non-fuel
products are recognized at the time of sale to consumers.
Initial franchise fees are recognized as revenue when the Company has
substantially performed its obligations. Continuing franchise and royalty
revenues are recognized as the fees are earned and become receivable from the
franchisee.
The Company, through a strategic alliance, includes in both revenues and
cost of sales amounts resulting from consignment sales of the strategic alliance
partner's diesel fuel. The strategic alliance partner delivers diesel fuel to
the Company and it is re-sold pursuant to joint marketing arrangements with
fleets. The consignment sales accounted for less than 1 percent, 8 percent and
13 percent of fuel revenues for the years ended December 31, 1994, 1995 and
1996, respectively.
INVENTORIES
Inventories are stated at cost, which approximates market value, cost being
determined on the first in, first out basis for petroleum products and
principally as the weighted average costs for non-fuel merchandise.
F-44
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, initially determined in
accordance with purchase accounting principles and based largely on independent
professional appraisals.
Depreciation is computed on a straight-line basis over the following
estimated useful lives of the assets:
Buildings and site improvements................................ 15 years
Pumps and underground storage tanks............................ 5 years
Machinery and equipment........................................ 3-5 years
Furniture and fixtures......................................... 5-7 years
Repair and maintenance costs are charged to expense as incurred, while major
renewals and betterments are capitalized. The cost and related accumulated
depreciation of property and equipment sold, replaced or otherwise disposed of
are removed from the accounts. Any resulting gains or losses are recognized in
operations.
DEFERRED FINANCING COSTS AND INTANGIBLE ASSETS
Deferred financing costs were recorded in conjunction with the acquisition
and are being amortized on a basis approximating the interest method over the
lives of the related debt instruments, ranging from 7 years to 10 years. The
intangible assets are being amortized on a straight-line basis over the lives of
the contractual agreements giving rise to them (see Note 4).
ADVERTISING COSTS
Costs of advertising are expensed as incurred.
CLASSIFICATION OF COSTS AND EXPENSES
Costs of sales represent the costs of fuels and other products sold,
including freight. Operating expenses consist primarily of labor, maintenance,
supplies, utilities, warehousing, purchasing and occupancy costs. Development
expenses represent nonrecurring costs incurred to primarily acquire and
establish new Network locations. Transition expenses represent the nonrecurring
costs incurred by the Company in establishing itself as an entity separate from
BP, consisting primarily of costs to implement computerized information systems
for functions previously provided by BP.
INCOME TAXES
Deferred income tax assets and liabilities are established to reflect the
future tax consequences of carryforwards and differences between the tax bases
and financial bases of assets and liabilities.
All members of the TravelCenters affiliated group are included in the
consolidated U. S. income tax return filed by TravelCenters. The Company
determines its provision for federal and state income taxes, and its current and
deferred tax assets and liabilities, on a separate return basis with the benefit
of deductions and credits limited to amounts actually utilized by TravelCenters
in the consolidated tax
F-45
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
return filings. As a result, income taxes payable are not necessarily comparable
to those that would have resulted had the Company filed separate tax returns.
Current U.S. tax liabilities, as determined under the tax allocation agreement,
are payable to TravelCenters while state tax liabilities are generally payable
directly to the states.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an initial maturity of 3 months or less to be
cash equivalents.
DERIVATIVE INSTRUMENTS
On a limited basis, the Company engages in commodity risk management
activities within the normal course of its business as an end-user of derivative
instruments. These commodity-based instruments are used to manage exposure to
price fluctuations related to the anticipated purchase of diesel fuel.
Changes in market value of derivative instruments are deferred and are
subsequently recognized in income in the same period as the underlying
transaction. Recorded deferred gains or losses are reflected within other
current assets or other current liabilities.
At December 31, 1995 and 1996 the amount of open derivative contracts and
the related fair market value and deferred gains and losses were immaterial.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and short term investments, accounts receivable and accounts
payable: The fair value of financial instruments classified as current
assets or liabilities approximates carrying value due to the short-term
maturity of the instruments.
Long-term debt: The fair value of the Company's long-term debt is
estimated based on the current borrowing rates available to the Company for
financings with similar terms and maturities.
(See Note 6.)
EARNINGS PER SHARE
Because the Company is a wholly-owned subsidiary of TravelCenters, earnings
per share is meaningless and, accordingly, has not been presented.
F-46
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Nonfuel merchandise .......................... $22,638 $22,677
Petroleum products ........................... 1,511 1,942
------- -------
Total inventories ......................... $24,149 $24,619
======= =======
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land and land improvements ..................... $ 11,744 $ 11,449
Buildings and improvements ..................... 56,367 61,489
Machinery, equipment and furniture ............. 25,818 31,218
Construction in progress ....................... 6,561 7,317
Total cost .................................. 100,490 111,473
Less-accumulated depreciation ............... 16,340 26,458
Property and equipment, net ............... $ 84,150 $ 85,015
======== ========
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Noncompetition agreement ....................... $ 9,000 $ 9,000
Leasehold interest ............................. 1,724 1,724
Trademarks ..................................... 2,313 2,313
------- -------
Total cost ..................................... 13,037 13,037
Less: accumulated amortization ................. 3,314 4,904
------- -------
Intangible assets, net ......................... $ 9,723 $ 8,133
======= =======
</TABLE>
As part of the acquisition, the Company entered into a noncompetition
agreement with BP pursuant to which BP agreed to refrain from re-entering the
truckstop business for a period of seven years from the acquisition date. The
intangible asset related to the noncompetition agreement represents the present
value of the estimated operating cash flows the Company would lose due to
competition
F-47
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
4. INTANGIBLE ASSETS (CONTINUED)
resulting from BP's re-entry into the truckstop market were BP not constrained
from doing so. The noncompetition agreement has a term of seven years. The
intangible asset related to leaseholds represents the value, obtained through
the Acquisition, of favorable lease provisions at one Network location. The
intangible asset related to trademarks relates primarily to the Company's
purchase from BP of the "Truckstops of America" and "Country Pride" trademarks,
service marks, trade names and commercial symbols.
The intangible assets for the noncompetition agreement, leasehold interest
and trademarks are being amortized over seven, 11 1/2 and 15 years,
respectively.
5. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Taxes payable, other than income taxes ............. $ 2,814 $ 3,244
Accrued wages and benefits ......................... 3,431 4,742
Other accrued liabilities .......................... 7,143 11,143
Total other accrued liabilities .................... $13,388 $19,129
======= =======
</TABLE>
6. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
INTEREST
RATE MATURITY 1995 1996
-------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Senior secured term loans (a)......... variable 2000 $47,000 $42,000
Senior secured notes (b) ............. 8.63 2002 25,000 25,000
Subordinated notes (c) ............... 12.00 2003 15,000 15,000
------- -------
Total ............................. 87,000 82,000
Less--amounts due within one year 5,000 7,000
Less--unamortized discount ...... 640 559
------- -------
Total long-term debt .......... $81,360 $74,441
======= =======
</TABLE>
- ------------------
(a) On December 9, 1993, the Company entered into a $73,000,000 Credit Agreement
with a group of banks. This Credit Agreement consists of three components:
term loans of a maximum $53,000,000, swingline loans not to exceed
$3,000,000, and revolving loans not to exceed $20,000,000 (including
F-48
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
6. LONG-TERM DEBT (CONTINUED)
any swingline loans outstanding and letters of credit issued). There have
been no borrowings under the swingline loan or revolving loan commitments to
date. Payments of principal, interest and commitment fees related to the
Credit Agreement are scheduled at each quarter end in installments of
principal ranging from $500,000 to $4,000,000, with the first payment made
on March 31, 1994, and the last payment due on December 9, 2000; in
addition, annual prepayments of principal may be required based on excess
cash flows generated by the Company. Commitment fees are calculated as 1/2
of 1 percent on the average daily unused amount on the revolving loan
commitment. There were $1,529,000 of outstanding letters of credit under the
Credit Agreement at December 31, 1996.
Under the terms of the Credit Agreement, the Company is required to maintain
certain financial covenants, including minimum interest coverage, minimum
debt service coverage, minimum consolidated net worth, minimum current
ratio, maximum leverage ratio and maximum amounts of annual capital
expenditures.
Interest accrues at variable rates based on either an alternate base rate
(ABR) or an adjusted London Interbank Offered Rate (LIBOR). The rate at
which interest accrues is calculated as either the ABR rate plus 1 3/4
percent or the LIBOR rate plus 2 3/4 percent. Management has the option to
select which rate is to be applied at the beginning of each loan period, the
term of which varies from 1 day to 6 months. Upon meeting certain
conditions, the spread added to the baseline rates can be reduced to 1 1/2
percent and 2 1/2 percent, respectively. The average effective rates for the
years ended December 31, 1995 and 1996 were 9.1 percent and 8.9 percent,
respectively.
(b) On December 9, 1993, the Company issued $25,000,000 of Senior Secured Notes.
Interest payments on these notes are due semiannually on June 10 and
December 10. Optional prepayments are allowed under the note purchase
agreement and required payments are due on December 10, 2001 and 2002 in the
amount of $12,500,000 each, such amounts to be reduced by certain other
prepayments. In the event of prepayments, the Company may be subject to the
make-whole provision of the note agreement, which requires payment of a
prepayment premium to the noteholders.
(c) On December 10, 1993, the Company issued $15,000,000 of Subordinated Notes.
Interest payments on these notes are due semiannually on June 10 and
December 10. Optional prepayments are allowed, under certain circumstances,
under the note purchase agreement, any such payments reducing the required
payment due December 10, 2003. The holders of the Subordinated Notes also
received 80,520 shares of TravelCenters' common stock, resulting in a
discount of $805,000 to the principal balance of the Subordinated Notes.
The obligations described above are guaranteed by TAHC and TravelCenters.
The borrowings under the Credit Agreement and Senior Secured Notes are
secured by mortgages on all of the property and equipment acquired by the
Company as a result of the BP acquisition in the manner described in the Master
Collateral and Intercreditor Agreement negotiated between the lending banks
under the Credit Agreement and the Senior Secured Note purchasers. In the event
of a change in control of the Company, the total amount outstanding under the
three debt agreements described above may be declared immediately due and
payable.
F-49
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
6. LONG-TERM DEBT (CONTINUED)
No indebtedness of the Company imposes any financial covenants on the
Company that are more restrictive than those discussed above for the Credit
Agreement. All covenants for all indebtedness have been met as of and for the
period ended December 31, 1996.
Scheduled payments of long-term debt in the next five years are, $7,000,000
in 1997, $8,000,000 in 1998, $11,000,000 in 1999, $16,000,000 in 2000 and
$12,500,000 in 2001.
Based on the borrowing rates currently available to the Company for bank
loans and other indebtedness with similar terms and average maturities, the fair
value of long-term debt at December 31, 1995 and 1996, approximates the recorded
value.
7. LEASE COMMITMENTS
The Company has entered into lease agreements for certain of its travel
center locations, the PPSC and various office space, computer and office
equipment and vehicles. Most long-term leases include renewal options and, in
certain cases, purchase options. Future minimum rental payments required under
all operating leases that have remaining noncancelable lease terms in excess of
one year as of December 31, 1996, were as follows:
YEAR ENDING
DECEMBER 31,
- ------------ (IN THOUSANDS)
1997............................................................ $3,459
1998............................................................ 3,527
1999............................................................ 3,400
2000............................................................ 3,171
2001............................................................ 2,969
Thereafter...................................................... 30,842
-------
$47,368
Total rental expenses on all operating leases was $2,725,000 $2,424,000 and
$2,799,000 for the years ended December 31, 1994, 1995 and 1996, respectively.
8. INCOME TAXES
Income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal ........................ $ 2,231 $ 2,064 $ 2,189
State .......................... 275 488 414
------- ------- -------
$ 2,506 $ 2,552 $ 2,603
------- ------- -------
Deferred:
Federal ........................ $ (251) $ (179) $ (355)
State .......................... 213 72 (36)
------- ------- -------
(38) (107) (391)
------- ------- -------
Income tax expense ........... $ 2,468 $ 2,445 $ 2,212
======= ======= =======
</TABLE>
F-50
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
8. INCOME TAXES (CONTINUED)
The difference between taxes calculated at the U.S. federal statutory tax
rate of 35 percent and the Company's total income tax provision is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
U.S. federal statutory rate applied to income before tax $ 2,260 $ 2,170 $ 2,079
State income taxes, net of federal income tax effect ... 317 364 247
General business tax credits ........................... (263) (113) (98)
Other .................................................. 154 24 (16)
------- ------- -------
$ 2,468 $ 2,445 $ 2,212
======= ======= =======
</TABLE>
Deferred income tax assets and liabilities resulted from the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Receivables ........................................... $ 147 $ 169
Inventory ............................................. 317 254
Intangibles ........................................... 3,480 3,475
Deferred revenue ...................................... 105 0
Minimum tax credit .................................... 1,067 1,046
General business credits (expiring 2009-2011) ......... 538 769
Federal benefit of state deferred tax liabilities ..... 81 69
Other accruals ........................................ 534 694
Total tax deferred assets ......................... 6,269 6,476
------ ------
Deferred tax liabilities:
Property and equipment ................................ 5,835 5,651
------ ------
Total deferred tax liabilities .................... 5,835 5,651
------ ------
Net deferred tax assets ........................... $ 434 $ 825
====== ======
</TABLE>
Tax returns of TravelCenters for 1993 through 1996 are subject to
examination by the Internal Revenue Service and state tax authorities. The
Company believes it has made adequate provision for income taxes and interest
which may become payable for years not yet examined. TravelCenters expects to
generate sufficient future taxable income to realize the benefit of the
Company's net deferred tax assets.
F-51
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
9. RELATED PARTY TRANSACTIONS
At December 31, 1995 and 1996 certain affiliates of certain of
TravelCenters' convertible preferred and common shareholders hold all of the
Company's Subordinated Notes. Interest expense related to this debt was
$1,800,000 for 1994, 1995 and 1996.
Certain members of the Company's senior management participate in
TravelCenters' 1993 Stock Incentive Plan. TravelCenters' common stock obtained
as a result of the exercise of the options is subject to call and put rights at
formula prices upon termination of employment. The formula prices are based on
the consolidated operating results and consolidated indebtedness of
TravelCenters. Those members of the Company's senior management have been
granted options for 267,181 TravelCenters' shares at exercise prices ranging
from $10.00 per share to $28.56 per share. A portion of the options vest at the
end of each year in the five year period ending December 31, 1998, based on
attainment of certain specified Company financial objectives, no more quickly
than ratably from the date of grant through December 31, 1997. Based on the
Company's financial performance 126,939 and 197,061 options were vested at
December 31, 1995 and 1996, respectively. Options that fail to vest by
December 31, 1998 shall be forfeited and vested options must be exercised within
ten years of the date of grant. The purchase price at December 31, 1996 used to
determine compensation expense related to these options was $15.69 per share.
Compensation expense recognized by the Company in relation to these options for
the years ended December 31, 1994, 1995 and 1996 was $64,000, $35,000 and
$254,000, respectively.
Certain members of the Company's senior management have purchased common
stock of TravelCenters pursuant to management subscription agreements. As a
result of such purchases, the Company has notes receivable from the management
shareholders totaling $425,000 at December 31, 1995 and 1996. TravelCenters has
the right to repurchase, and the employees have the right to require
TravelCenters to repurchase at formula prices, the common stock, upon the
termination of employment. The formula prices are based on the consolidated
operating results and consolidated indebtedness of TravelCenters. The relevant
formula price at December 31, 1996 was $15.69 per Share. Based upon the terms of
the agreements, these management shares are non-compensatory.
10. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
At December 31, 1996, outstanding commitments for capital expenditures for
property and equipment totalled approximately $1,500,000.
ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to extensive federal,
state and local laws, regulations and ordinances relating to environmental
matters that (i) govern activities and operations that may have adverse
environmental effects, such as discharges to air, soil and water, as well as
handling, storage and disposal practices for petroleum products and solid and
hazardous substances or (ii) impose liability and damages for the costs of
cleaning up sites affected by, and damage resulting from, past spills and
disposal or other releases of petroleum products and hazardous substances.
F-52
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company owns and uses underground (USTs) and above ground (ASTs) storage
tanks to store petroleum products and waste oils. These tanks must comply with
statutory and regulatory requirements regarding tank construction, integrity
testing, leak detection and monitoring, overfilling and spill control, release
reporting, financial assurance and corrective action in case of a release from a
UST or AST into the environment. To meet minimum federal requirements, all
existing USTs owned by the Company must conform to certain construction
requirements, have installed tank leak detection systems, and have installed
corrosion protection and spill/overfill prevention equipment by December 22,
1998. The Company has in place a program of tank replacement and equipment
installation to meet these requirements. Capital expenditures of approximately
$2,000,000 through 1998 will be made to comply with the regulations.
While the costs of compliance for these matters have not had a material
adverse impact on the Company, it is impossible to predict accurately the
ultimate effect these changing laws and regulations may have on the Company in
the future. During the years ended December 31, 1994, 1995, and 1996, the
Company made environmental related expenditures of approximately $390,000,
$556,000 and $435,000, respectively. The Company estimates environmental related
expenditures, including capital items, remediation and compliance costs, will
total approximately $1,400,000 during 1997.
The Company arranges the transportation of petroleum fuels from supplier
terminals to all of its locations except two at which the Company provides its
own transportation. For all Company-arranged fuel deliveries, licensed common
carriers are contracted for that transportation.
As part of the Acquisition, the Company and BP negotiated an environmental
agreement, pursuant to which BP will provide remediation services to the Company
for a period of 11 years for any environmental contamination present at any of
the acquired locations as of the acquisition date. In connection with the
Acquisition, Phase I and Phase II investigations of 41 Company-owned locations,
including 3 locations not operating at the time of the Acquisition, were
conducted. The environmental agreement provides that BP is directly responsible
for all costs and expenses incurred for remediation of environmental
contamination (based on the standards in effect on the date the remedial action
is completed), for bringing the facilities into compliance with environmental
laws (based on requirements in effect as of December 11, 1993) and for any other
environmental liabilities that arise out of conditions at, or ownership or
operations of, the Network prior to December 11, 1993. In addition, BP is
continuing remedial actions regarding conditions it had identified at certain
locations prior to the Acquisition. BP does not have any responsibility for any
environmental liabilities arising out of the ownership and operations of the
Network after December 11, 1993, and the environmental agreement expires on
December 11, 2004. There can be no assurance that, if additional environmental
claims or liabilities arise under the environmental agreement, BP would not
dispute the Company's claims for indemnification thereunder.
The Company is conducting investigatory and/or remedial actions with respect
to fuel oil product releases and/or spills and wastewater discharges that have
occurred subsequent to the Acquisition at several locations. The Company expects
that some or all of any fines paid or costs incurred in connection with the
matters noted above will be paid by BP pursuant to the environmental agreement.
The Company has estimated the current ranges of remediation costs at
currently active sites and what it believes will be its ultimate share of such
costs after required indemnification and remediation is performed by BP under
the environmental agreement and a provision for environmental related costs has
been recorded. At December 31, 1996, the amount accrued for future environmental
related costs was $68,000.
F-53
<PAGE>
TA OPERATING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
11. OTHER INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating and Selling, general and administration expense
include the following:
Repairs and maintenance expenses ......................... $ 6,313 $ 5,987 $ 6,439
Advertising expenses ..................................... $ 2,779 $ 2,983 $ 2,870
Interest income (expense)--net is comprised of the following:
Interest expense ......................................... $(8,123) $(8,484) $(8,097)
Interest income .......................................... 829 961 716
------- ------- -------
$(7,294) $(7,523) $(7,381)
======= ======= =======
</TABLE>
12. SUBSEQUENT EVENT
On January 21, 1997 the Board of Directors of TravelCenters approved a plan
to combine the operations of the Company with those of National Auto/Truckstops,
Inc., TravelCenters other wholly-owned subsidiary. As part of the combination
plan, the Company's subsidiary will become a direct subsidiary of TravelCenters.
Related to the combination plan, TravelCenters is pursuing a recapitalization
that will, if consummated, extinguish the Company's indebtedness of $82,000,000
at December 31, 1996, which will result in the write-off of the unamortized
balance of deferred financing costs and unamortized debt discount of $3,084,000
and $559,000, respectively.
F-54
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholder of
NATIONAL Auto/Truckstops, Inc.
In our opinion, the accompanying balance sheet and the related statements of
income and retained earnings and of cash flows present fairly, in all material
respects, the financial position of NATIONAL Auto/Truckstops, Inc. at
December 31, 1995 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
March 6, 1997
F-55
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------------------
(IN THOUSANDS OF
DOLLARS)
ASSETS
Current assets:
<S> <C> <C>
Cash ............................................................... $ 3,191 $ 9,941
Accounts receivable (less allowance for doubtful accounts of
$2,920 for 1995 and $3,109 for 1996) .......................... 36,966 31,839
Inventories ..................................................... 2,116 4,463
Deferred income taxes ........................................... 2,792 3,277
Other current assets ............................................ 6,983 5,165
-------- --------
Total current assets ........................................ 52,048 54,685
Notes receivable, net .............................................. -- 1,835
Property and equipment, net ........................................ 183,079 188,204
Intangible assets .................................................. 12,542 11,524
Deferred financing costs ........................................... 6,904 5,295
Other assets ....................................................... 1,525 6,180
-------- --------
Total assets ................................................ $256,098 $267,723
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Revolving loan .................................................. $ -- $ 14,000
Current maturities of long-term debt ............................ 11,125 10,250
Accounts payable ................................................ 22,366 26,577
Other accrued liabilities ....................................... 8,691 9,925
-------- --------
Total current liabilities ................................... 42,182 60,752
Commitments and Contingencies (Note 12)
Note payable to parent ............................................. 2,500 2,500
Long-term debt (net of unamortized discount) ....................... 128,866 118,744
Deferred income taxes .............................................. 8,407 9,582
Other long-term liabilities ........................................ 3,133 2,791
-------- --------
Total liabilities ........................................... 185,088 194,369
-------- --------
Shareholder's equity:
Common stock, $0.01 par value, 1,000 shares authorized, 10 shares
issued and outstanding ........................................ -- --
Additional paid-in capital ...................................... 47,303 47,303
Retained earnings ............................................... 23,707 26,051
-------- --------
Total shareholder's equity .................................. 71,010 73,354
-------- --------
Total liabilities and shareholder's equity .................. $256,098 $267,723
======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-56
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1995 1996
-----------------------------------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Revenues:
Fuel .................................... $ 396,748 $ 376,148 $ 467,888
Nonfuel ................................. 19,882 29,332 56,961
Rent .................................... 48,424 47,840 41,762
--------- --------- ---------
Total revenues ............................. 465,054 453,320 566,611
Cost of revenues (excluding depreciation) .. 391,148 376,823 478,029
--------- --------- ---------
Gross profit (excluding depreciation)....... 73,906 76,497 88,582
Operating expenses ......................... 7,711 9,521 28,688
Selling, general and administrative expenses 21,796 30,717 25,774
Refinancing costs .......................... 4,117 831 1,384
Depreciation and amortization .............. 10,398 11,379 14,307
Other (income) expense ..................... (138) 196 1,303
--------- --------- ---------
Income from operations ..................... 30,022 23,853 17,126
Interest (expense), net .................... (13,243) (13,344) (13,446)
--------- --------- ---------
Income before provision for income taxes ... 16,779 10,509 3,680
Provision for income taxes ................. 6,766 4,236 1,336
--------- --------- ---------
Net income ................................. 10,013 6,273 2,344
Retained earnings-beginning of the year .... 7,421 17,434 23,707
--------- --------- ---------
Retained earnings-end of the year .......... $ 17,434 $ 23,707 $ 26,051
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-57
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................... $ 10,013 $ 6,273 $ 2,344
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .................................. 10,398 11,379 14,307
Deferred income taxes .......................................... 2,502 1,800 690
Provision for doubtful accounts ................................ 1,169 2,589 2,255
Loss on sale of property and equipment ......................... -- 351 1,438
Changes in assets and liabilities, adjusted for the effects of
acquisitions of network assets and the reconsolidation of a
subsidiary previously held for disposition:
Accounts receivable .......................................... 2,354 (3,756) (2,936)
Inventories .................................................. (332) 284 (132)
Other assets ................................................. 1,250 (4,848) 325
Accounts payable ............................................. 6,608 5,043 4,211
Other liabilities ............................................ (7,551) 255 (1,426)
-------- -------- --------
Net cash provided by operating activities ...................... 26,411 19,370 21,076
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of network assets ................................... -- (575) (2,352)
Proceeds from sales of property and equipment .................... -- 1,404 640
Capital expenditures ............................................. (10,993) (19,930) (15,489)
Refund of purchase price.......................................... -- 1,500 --
-------- -------- --------
Net cash used in investing activities .......................... (10,993) (17,601) (17,201)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving loan borrowings ........................................ 1,000 -- 14,000
Revolving loan payments .......................................... (1,000) -- --
Long-term debt repayments ........................................ (3,500) (14,075) (11,125)
-------- -------- --------
Net cash (used in) provided by financing activities ............ (3,500) (14,075) 2,875
-------- -------- --------
Net increase (decrease) in cash ................................ 11,918 (12,306) 6,750
Cash at the beginning of the period ................................. 3,579 15,497 3,191
-------- -------- --------
Cash at the end of the period ....................................... $ 15,497 $ 3,191 $ 9,941
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-58
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATIONAL Auto/Truckstops, Inc. (the Company), is a wholly-owned subsidiary
of TravelCenters of America Inc., formerly NATIONAL Auto/Truckstops Holdings
Corporation (TravelCenters), and was incorporated on October 29, 1992, to
acquire the travel center network assets (the Acquisition) of Union Oil Company
of California (Unocal). The Company is a nationwide marketer of truck and auto
fuels and related products and services through a network (the Network) of 122
full-service travel centers operated under the "Unocal 76" trademark in 36
states. Of the 122 network locations at December 31, 1996, the Company owns 95
locations, 77 of which are leased to independent operators. During 1996, the
Company took over the operation of 10 locations from independent operators. At
December 31, 1996 the Company operates 18 of the locations. The remaining 27
locations are owned by others and operated by independent franchisees with whom
the Company has contractual arrangements to supply motor fuels and related
products and services. The Company purchases and resells diesel fuel, gasoline
to consumers, commercial fleets, operators and independent franchisees; provides
fleet credit card and customer information services through its proprietary
ACCESS 76 system, conducts centralized purchasing programs; creates promotional
programs and otherwise assists the operators and franchisees in providing
service to commercial fleets and the motoring public.
The Company grants credit to its customers and may require letters of credit
or other collateral.
As of December 31, 1996, 71 of the operators and 20 of the franchisees had
entered into franchise agreements with the Company. The remaining operators and
franchisees continue to operate under fuel supply and lease agreements
transferred and assigned to the Company by Unocal as part of the Acquisition.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Fuel sales and related costs are recognized at the time of delivery of motor
fuel and other products to customers at either the terminal or the leased and
reseller locations and at the time of final sale to consumers at the owned and
operated locations and at those locations that operate under fuel consignment
agreements.
Franchise and royalty revenues are recognized at the point such revenues are
earned, typically when collectible and when the Company has fulfilled
substantially all of its obligations under the related agreements.
INVENTORIES
Inventories are stated at cost, which approximates market value, cost being
determined on the first in, first out basis for petroleum products and
principally as the weighted average costs for non-fuel merchandise.
F-59
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, initially determined in
accordance with purchase accounting principles and based largely on independent
professional appraisals. Depreciation is computed on a straight-line basis over
the following estimated useful lives of the assets:
Buildings and site improvements............................... 25 years
Pumps and underground storage tanks........................... 10 years
Machinery and equipment....................................... 5-10 years
Furniture and fixtures........................................ 10 years
Repair and maintenance costs are charged to expense as incurred, while major
renewals and betterments are capitalized. The cost and related accumulated
depreciation of property and equipment sold, replaced or otherwise disposed are
removed from the accounts. Any resulting gains or losses are recognized in
operations.
DEFERRED FINANCING COSTS AND INTANGIBLE ASSETS
Deferred financing costs were recorded in conjunction with the Network
acquisition and are being amortized on a basis approximating the interest method
over the lives of the related debt instruments, ranging from five to ten years.
The intangible assets are being amortized on a straight-line basis over their
estimated useful lives, principally the terms of the related contractual
agreements giving rise to them (See Note 5).
ADVERTISING COSTS
Costs of advertising are expensed as incurred.
CLASSIFICATION OF COSTS AND EXPENSES
Cost of revenues represents the costs of fuels and other products sold,
including freight. Operating expenses consist primarily of labor, maintenance,
supplies, utilities, purchasing and occupancy costs. Refinancing expenses
represent nonrecurring costs incurred in attempts to refinance the Company's
indebtedness.
ENVIRONMENTAL REMEDIATION
The Company provides for remediation costs and penalties when the
responsibility to remediate is probable and the amount of associated costs is
reasonably determinable. Generally, the timing of remediation accruals coincides
with completion of a feasibility study or the commitment to a formal plan of
action. If recoveries of remediation costs from third parties are probable, a
receivable is recorded. Accruals are not recorded for the costs of remediation
activities undertaken on behalf of the Company by Unocal, and at Unocal's sole
expense (See Note 12).
F-60
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
INCOME TAXES
Deferred income tax assets and liabilities are established to reflect the
future tax consequences of differences between the tax bases and financial
statement bases of assets and liabilities.
All members of the TravelCenters affiliated group are included in the
consolidated U. S. income tax return filed by TravelCenters. The Company
determines its provision for federal and state income taxes and its current and
deferred tax assets and liabilities on a separate return basis with the benefit
of deductions and credits limited to amounts actually utilized by TravelCenters
in the consolidated tax return filings. As a result, taxes payable are not
necessarily comparable to those that would have resulted had the Company filed
separate returns. Current U.S. tax liabilities, as determined under the Tax
Allocation Agreement, are payable to TravelCenters while state tax liabilities
are generally payable directly to the states.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with an initial maturity of three months or less to be
cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which estimation is practicable:
CASH AND SHORT-TERM INVESTMENTS, ACCOUNTS RECEIVABLE AND ACCOUNTS
PAYABLE: The fair values of financial instruments classified as current
assets or liabilities approximate the carrying values due to the short-term
maturity of the instruments.
LONG-TERM DEBT: The fair value of the Company's long-term debt is
estimated based on the current borrowing rates available to the Company for
financings with similar terms and maturities (see Note 8).
EARNINGS PER SHARE
Because the Company is a wholly-owned subsidiary of TravelCenters, earnings
per share data is not meaningful and, accordingly, has not been presented.
RECLASSIFICATIONS
Certain reclassifications of prior years' data have been made in order to
conform with the current year presentation.
F-61
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1996
------------------------
(IN THOUSANDS)
<S> <C> <C>
Non-fuel merchandise ....................... $1,628 $3,413
Petroleum products ......................... 488 1,050
------ ------
Total inventories .......................... $2,116 $4,463
====== ======
</TABLE>
3. NOTES RECEIVABLE
During 1996, the Company entered into notes receivable agreements with
certain operator and franchisee customers to finance on a long-term basis past
due accounts receivable owed by those customers. Certain of these customers are
related parties (See Note 11). The notes have terms ranging from six months to
six years and principally accrue interest at a variable rate of the prime
lending rate plus 2 percent. Notes receivable consists of the following:
DECEMBER 31, 1996
-----------------
(IN THOUSANDS)
Principal amount of notes outstanding ......................... $4,652
Less: amount due within one year .............................. 1,501
------
3,151
Less: allowance for doubtful accounts ......................... 1,316
Notes receivable, net ......................................... $1,835
------
The amount due within one year is included within other current assets on
the balance sheet.
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
DECEMBER 31,
------------------------
1995 1996
-------- --------
(IN THOUSANDS)
Land and land improvements ..................... $ 42,462 $ 41,003
Buildings and improvements ..................... 136,729 154,359
Machinery, equipment and furniture ............. 16,500 22,161
Construction in progress ....................... 7,538 1,330
-------- --------
Total cost ..................................... 203,229 218,853
Less: accumulated depreciation ................. 20,150 30,649
-------- --------
Property and equipment, net .................... $183,079 $188,204
======== ========
F-62
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
4. PROPERTY AND EQUIPMENT (CONTINUED)
During 1995, the Company received from Unocal a refund of $1,500,000 of the
purchase price paid in 1993 in consideration of property improvements required
by the asset purchase agreement but not yet completed by Unocal. This amount was
recorded as a reduction to property and equipment.
5. INTANGIBLE ASSETS
Intangible assets consist of the following:
DECEMBER 31,
-----------------------
1995 1996
------- -------
(IN THOUSANDS)
Noncompetition agreement ....................... $17,200 $17,200
Franchise goodwill ............................. -- 994
------- -------
Total cost ..................................... 17,200 18,194
Less: accumulated amortization ................. 4,658 6,670
Intangible assets, net ......................... $12,542 $11,524
======= =======
As part of the Acquisition, the Company entered into a noncompetition
agreement with Unocal pursuant to which Unocal agreed to refrain from
re-entering the truckstop business for a period of 10 years from the Acquisition
date. The intangible asset related to the noncompetition agreement represents
the present value of the estimated operating cash flows the Company would lose
due to competition resulting from Unocal's re-entry into the truckstop market
were Unocal not constrained from doing so. This intangible asset is being
amortized over 10 years.
Franchise goodwill results from the acquisitions during 1996 of the
businesses and operating assets related to seven travel centers previously
leased to independent operators, and represents the excess amounts paid to those
operators over the fair values of the tangible assets acquired. This goodwill is
being amortized on a straight-line basis over fifteen years.
6. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
DECEMBER 31,
---------------------
1995 1996
------- ------
(IN THOUSANDS)
Taxes payable, other than income taxes ............. $6,110 $5,061
Interest payable ................................... 2,191 2,169
Other accrued liabilities .......................... 390 2,695
------ ------
Total other accrued liabilities .................... $8,691 $9,925
====== ======
F-63
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
7. REVOLVING LOAN
The Company has available a revolving loan facility of $25,000,000 (See
Note 8 ). The interest rate for borrowings under this line of credit is based on
the bank's prime lending rate and LIBOR rates, and was 8.4 percent at
December 31, 1996. The average effective interest rate for the year ended
December 31, 1996 was 8.2 percent. There were no outstanding borrowings at
December 31, 1995. The borrowings outstanding under this line were $14,000,000
at December 31, 1996.
8. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
INTEREST
RATE MATURITY 1995 1996
------- ------ -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Senior secured term loans (a).... (b) 1999 $50,925 $39,800
Senior secured notes (c) ........ 8.76% 2002 65,000 65,000
Subordinated notes (d) .......... 12.5% 2003 25,000 25,000
-------- --------
Total ........................... 140,925 129,800
Less: amounts due within one year 11,125 10,250
Less: unamortized discount ...... 934 806
-------- --------
Total long-term debt ............ $128,866 $118,744
</TABLE>
- ----------------------
(a) On April 13, 1993, the Company entered into a $100,000,000 Credit Agreement
with a group of banks. This Credit Agreement consists of three components:
term loans of a maximum $70,000,000, swingline loans not to exceed
$3,000,000, and revolving loans (See Note 7) not to exceed $30,000,000
(including any swingline loans outstanding). On November 5, 1993, the
Company reduced the revolving portion of the Credit Agreement to
$25,000,000. No borrowings under the swingline loan were outstanding at
December 31, 1995 or 1996. Payments of principal, interest and commitment
fees related to the Credit Agreement are due quarterly on March 31, June 30,
September 30 and December 31 in installments of principal ranging from
$500,000 to $5,500,000, with the last payment due on December 31, 1999. In
addition, annual prepayments of principal may be required based on excess
cash flows generated by the Company. At December 31, 1996, no prepayment of
principal was required as a result of 1996 cash flows. Commitment fees are
calculated as 1/2 of 1 percent on the average daily unused amount of the
revolving loan commitment.
(b) Interest accrues at variable rates based on either an alternate base rate
(ABR) or an adjusted London Interbank Offered Rate (LIBOR). The rate at
which interest accrues is calculated as either the ABR rate (8.25% at
December 31, 1996) plus 1 3/4 percent or the LIBOR rate (5.625% at
December 31, 1996) plus 2 3/4 percent. Management has the option of
selecting which rate is to be applied at the beginning of each loan period,
the term of which varies from one day to six months. The average effective
interest rates for the years ended December 31, 1995 and 1996 were 9.4 and
9.5 percent, respectively.
F-64
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
8. LONG-TERM DEBT (CONTINUED)
(c) On April 13, 1993, the Company issued $65,000,000 of Senior Secured Notes.
Interest payments on these notes are due semiannually on April 14 and
October 14. Optional prepayments are allowed under the note purchase
agreement, and required payments are due on April 14, 2001 and 2002, in the
amount of $32,500,000 each, such amounts to be reduced by certain other
prepayments. In the event of prepayments, the Company may be subject to the
make-whole provision of the note agreement (see Note 11), which requires
payment of a prepayment premium to the noteholders.
(d) On April 13, 1993, the Company issued $25,000,000 of Subordinated Notes.
Interest payments on these notes are due semiannually on April 14 and
October 14. Optional prepayments are allowed under the note purchase
agreement, any such payments reducing the required repayment due April 14,
2003. The holders of the Subordinated Notes also received warrants to
purchase 128,206 shares of TravelCenters common stock.
The obligations described above are guaranteed by TravelCenters.
The borrowings under the Credit Agreement and Senior Secured Notes are
secured by mortgages on all of the property and equipment acquired by the
Company as a result of the Acquisition in the manner described in the Master
Collateral and Intercreditor Agreement negotiated between the lending banks
under the Credit Agreement and the Senior Secured Note purchasers. In the event
of a change in control of the Company, the total amount outstanding under the
three debt agreements described above may be declared immediately due and
payable.
Under the terms of the Credit Agreement and the Senior Note Purchase
Agreement, the Company is required to maintain certain financial covenants,
including minimum interest coverage, minimum debt service coverage, minimum net
worth, minimum current ratio, maximum leverage ratio and maximum amounts of
capital expenditures. On May 24, 1996, and December 31, 1996, the Credit
Agreement was amended to revise certain of these covenants and the Senior Note
Purchase Agreement was similarly amended. The Company was in compliance with the
amended covenants at December 31, 1996.
Under the terms of the Subordinated Note Purchase Agreement, the Company is
required to maintain financial covenants that provide for minimum net worth and
maximum amounts of capital expenditures. These covenants have been met as of and
for the year ended December 31, 1996.
Scheduled payments of long-term debt in the next five years are $10,250,000
in 1997; $11,625,000 in 1998; $17,925,000 in 1999; $0 in 2000 and $32,500,000 in
2001.
Based on the borrowing rates currently available to the Company for bank
loans and other indebtedness with similar terms and average maturities, the fair
values of long-term debt at December 31, 1995 and 1996 approximated the recorded
values.
F-65
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
9. LEASE COMMITMENTS
The Company has entered into lease agreements principally covering office
space, computer and office equipment and vehicles. Most long-term leases include
renewal options and, in certain cases, purchase options. Future minimum lease
payments required under operating leases that have remaining noncancelable lease
terms in excess of one year, as of December 31, 1996, were as follows:
YEAR ENDING (IN
DECEMBER 31, THOUSANDS)
- ----------- ----------
1997........................................................... $628
1998........................................................... 578
1999........................................................... 601
2000........................................................... 577
2001........................................................... 572
Thereafter..................................................... 948
------
$3,904
Total rental expenses on all operating leases were approximately $596,000,
$676,000 and $657,000 for 1994, 1995 and 1996, respectively.
10. INCOME TAXES
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal .................... $ 3,635 $ 2,097 $ 662
State ...................... 629 339 (16)
------- ------- -------
4,264 2,436 646
------- ------- -------
Deferred:
Federal .................... $ 2,108 $ 1,476 $ 335
State ...................... 394 324 355
------- ------- -------
2,502 1,800 690
------- ------- -------
Total .................. $ 6,766 $ 4,236 $ 1,336
======= ======= =======
</TABLE>
F-66
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
10. INCOME TAXES (CONTINUED)
The difference between taxes calculated at the U. S. federal statutory tax
rate of 35 percent and the Company's total income tax provision is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
U. S. Federal statutory rate applied to income before tax $ 5,873 $ 3,678 $ 1,288
State income taxes, net of federal income tax benefit ... 665 431 220
Adjustment of prior years' taxes ........................ -- -- (154)
Other-net ............................................... 228 127 (18)
------- ------- -------
Total ................................................... $ 6,766 $ 4,236 $ 1,336
======= ======= =======
</TABLE>
Deferred income tax assets and liabilities resulted from the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accounts receivable ................................... $ 1,665 $ 2,083
Organization and start-up costs ....................... 284 156
Federal benefit of state deferred tax liabilities ..... 335 447
Intangible assets ..................................... 7,643 7,107
Deferred revenues ..................................... 915 710
Minimum tax credit .................................... 362 1,694
Other accrued liabilities ............................. 191 413
------- -------
Total deferred tax assets ......................... 11,395 12,610
------- -------
Deferred tax liabilities:
Property and equipment ................................ 17,010 18,915
------- -------
Net deferred tax liabilities ...................... $ 5,615 $ 6,305
======= =======
</TABLE>
The tax returns of TravelCenters for 1993 through 1996 are subject to
examination by the Internal Revenue Service and state tax authorities. The
Company believes it has made adequate provision for income taxes and interest
that may become payable for years not yet examined.
11. RELATED PARTY TRANSACTIONS
The Company conducts a significant amount of its business with related
parties. Certain shareholders of TravelCenters have an ownership interest in one
or more of the franchisee customers to whom the Company sells fuel and other
products and from whom the Company receives rental and/or royalty income. The
transactions with affiliates are at prices and terms that are the same as for
similar transactions with unrelated entities.
F-67
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
11. RELATED PARTY TRANSACTIONS (CONTINUED)
The following table summarizes balances and transactions with related
parties at December 31, 1995 and 1996 and for each of the three years in the
period ended December 31, 1996:
<TABLE>
<CAPTION>
DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------
1995 1996 1994 1995 1996
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Accounts receivable........... $ 18,398 $ 15,052
Notes receivable ............. $ -- $ 2,307
Fuel revenue ................. $237,541 $238,343 $269,179
Rent revenue ................. $ 24,233 $ 35,543 $ 32,266
Other revenues ............... $ 9,948 $ 7,264 $ 5,534
Cost of revenues ............. $231,670 $239,651 $268,343
</TABLE>
The Company has outstanding a $2,500,000 note payable to TravelCenters which
is due on April 14, 2013. This note may not be prepaid prior to maturity.
TravelCenters has not charged the Company interest in regard to this note, but
any amounts so charged would be at a rate to be determined by TravelCenters and
would not exceed the prime lending rate.
During 1995 and 1996, the Company acquired the travel center businesses and
operating assets of four and five independent operators, who are related
parties, respectively. Total consideration of $1,890,000 in 1995 and $3,185,000
in 1996 was paid to these operators.
The Company was owed $357,000 and $1,804,000 from TravelCenters at
December 31, 1995 and 1996, respectively. These amounts result from cash
disbursements made by the Company on behalf of TravelCenters.
At December 31, 1995 and 1996, certain TravelCenters' convertible preferred
shareholders were owed all of the $25,000,000 of debt related to the Company's
issuance of Senior Subordinated Notes and certain TravelCenters mandatorily
redeemable preferred shareholders are owed $20,000,000 of debt relating to the
Company's issuance of Senior Secured Notes. Interest expense incurred related to
debt owed to these TravelCenters preferred shareholders was $4,877,000 in each
of 1994, 1995 and 1996.
Certain members of the Company's senior management participate in
TravelCenters 1993 Stock Incentive Plan (the Plan). TravelCenters, common stock
obtained as a result of the exercise of the options is subject to call and put
rights at formula prices upon termination of employment. The formula prices are
based on the consolidated operating results and indebtedness of TravelCenters.
Those members of the Company's senior management have been granted options for
253,000 TravelCenters shares at exercise prices ranging from $10.00 to $28.56
per share. A portion of the options vest at the end of each year in the five
year period ending December 31, 1997, based on the Company's attainment of
certain specified financial objectives at the end of each year, but no more
quickly than ratably from the date of grant through December 31, 1996. Options
that fail to vest by December 31, 1997 shall be forfeited and vested options
must be exercised within ten years of the date of grant. Based on the Company's
financial performance, 126,500 options were vested at December 31, 1995 and
1996. The purchase price at December 31, 1996 used to determine compensation
expense related to these options was $15.69 per share. Compensation expense
recognized by the company in relation to these options for the years ended
December 31, 1994 and 1996 was $149,000 and $78,000. No compensation expense was
recognized in 1995.
F-68
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
11. RELATED PARTY TRANSACTIONS (CONTINUED)
Certain members of the Company's senior management have purchased common
stock of TravelCenters pursuant to management subscription agreements. As a
result of such purchases, the Company has notes receivable from the management
shareholders totaling $421,000 at December 31, 1995 and 1996. TravelCenters has
the right to repurchase, and the employees have the right to require Holdings to
repurchase, at formula prices, the common stock upon termination of employment.
The formula prices are based on the consolidated operating results and
consolidated indebtedness of TravelCenters. The price used to determine
compensation expense related to certain of these shares that are considered to
be compensatory was $15.69 at December 31, 1996. Accordingly, the Company
recognized compensation expense related to these shares of $336,000 in 1996. The
Company did not recognize compensation expense for these agreements in 1994 or
1995 as the formula price did not exceed the purchase price of the common stock.
12. COMMITMENTS AND CONTINGENCIES
CAPITAL COMMITMENTS
At December 31, 1996, outstanding commitments for capital expenditures for
property and equipment totaled approximately $961,000.
ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to extensive federal,
state and local laws, regulations and ordinances relating to environmental
matters that (i) govern activities and operations that may have adverse
environmental effects, such as discharges to air, soil and water, as well as
handling, storage and disposal practices for petroleum products and solid and
hazardous substances or (ii) impose liability and damages for the cost of
remediating sites affected by, and damage resulting from, past spills and
disposal or other releases of petroleum products and hazardous substances.
The Company owns and uses underground storage tanks (USTs) and above-ground
storage tanks (ASTs) at Company-operated and operator locations to store
petroleum products and waste oils. These tanks must comply with statutory and
regulatory requirements regarding tank construction, integrity testing, leak
detection and monitoring, overfilling and spill control, release reporting,
financial assurance and corrective action in case of a release from a UST or AST
into the environment. To meet minimum federal requirements, all existing USTs
owned by the Company must conform to certain construction requirements, have
installed tank leak detection systems, and have installed corrosion protection
and spill-overfill prevention equipment by December 22, 1998. The Company has
established a program of tank replacement and equipment installation to meet the
requirements by that time.
While the costs of compliance for these matters have not had a material
adverse impact on the Company, it is impossible to predict accurately the
ultimate effect changing laws and regulations may have on the Company in the
future. The Company incurred capital expenditures, maintenance, remediation and
other environmental related costs of approximately $2,224,000, $3,968,000 and
$6,737,000 in 1994, 1995 and 1996, respectively.
As part of the Acquisition, the Company and Unocal negotiated an
environmental agreement, pursuant to which Unocal indemnified the Company for a
period of eleven years for the remediation of any environmental contamination
present at any of the acquired locations as of the acquisition date and which
require Unocal to directly pay any required remediation cost. The environmental
agreement expires on April 14, 2004.
F-69
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
In connection with the Acquisition, Phase I investigations of the 97
acquired travel centers were conducted. Pursuant to the environmental agreement,
Phase II investigations on all sites are required to be completed by the year
2000. As of December 31, 1996, 31 Phase II investigations were in progress and
46 had been completed. Unocal and the Company are now evaluating the results of
these investigations to establish what, if any, remedial actions will be
required and are notifying federal, state and local authorities regarding any
contamination that is discovered. The Company expects that the remaining 18
investigations will be completed by 1998. Unocal and the Company agreed to share
the costs of the Phase II environmental investigations, with the Company's share
of such costs limited to $500,000, which has been fully paid, for all of such
investigations. The environmental agreement further provides that Unocal is
directly responsible, for all such costs and expenses incurred for remediation
of environmental contamination (based on the standards in effect on the date the
remedial action is completed), for bringing the facilities into compliance with
environmental laws (based on requirements in effect as of April 14, 1993) and
for any other environmental liabilities that arise out of conditions at, or
ownership or operations of, the Network prior to April 14, 1993. In addition,
Unocal is continuing remedial actions regarding conditions it had identified at
certain travel centers prior to the acquisition of the Network by the Company.
Unocal does not have any responsibility for any environmental liabilities
arising out of the ownership and operations of the Network after April 14, 1993,
unless such liabilities are a result of conditions existing at the time of the
Acquisition. There can be no assurance that, if additional environmental claims
or liabilities arise under the environmental agreement, Unocal would not dispute
the Company's claims for indemnification thereunder.
The Company is in the process of resolving alleged violations of wastewater
discharge permits in Florida, Indiana, Michigan, New Jersey, Ohio, and West
Virginia relating to travel center operations, and is conducting investigatory
and/or remedial actions with respect to petroleum product releases that have
occurred subsequent to the acquisition at eleven travel centers. Remediation
activities have been completed at twenty other travel centers and the Company
anticipates no further action to be required by the respective state agencies in
regard to those matters at those locations. Most of the wastewater discharge
notices have been resolved by the Company without penalty. However, given the
status of the proceedings with respect to matters still pending, ultimate
investigative and remediation costs cannot accurately be predicted. The Company
expects that some or all of any fines paid or costs incurred in connection with
the wastewater discharge violations noted above will be paid by Unocal pursuant
to the environmental agreement.
The Company has estimated the current ranges of remediation costs at
currently active sites and what it believes will be its ultimate share of such
costs after required indemnification and remediation is performed by Unocal
under the environmental agreement and has recorded a reserve of $677,000 for
such matters. While it is not possible to quantify with certainty the
environmental exposure, in the opinion of management, the potential liability,
beyond that considered in the reserve, for all environmental proceedings, based
on information known to date, will not have a material adverse effect on the
financial condition, results of operations or liquidity of the Company.
PENDING LITIGATION
In connection with the acquisition of the Network, the Company acquired six
travel centers located in California that are currently members of the Network.
In January 1993, the operators of four of these travel centers (the "California
Plaintiffs") commenced litigation against Unocal and the Company in California
state court seeking, among other things, specific performance by Unocal of their
alleged rights, either under the California Business and Professions Code (the
"California Statute") or, in the alternative, pursuant to alleged statements
made by Unocal, to purchase their travel centers at a fair
F-70
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
market price and seeking compensatory and punitive damages against the Company
and others for both tortious interference with the California Plaintiffs'
alleged rights and civil conspiracy. The operator of a fifth California travel
center also asserted a purchase right, but never filed suit. This property,
together with the four properties operated by the California Plaintiffs, are
referred to herein as the "California Properties".
Under the asset purchase agreements pursuant to which the Company acquired
the California Properties from Unocal, and related agreements, (i) the Company
purchased the California Properties for $39 million and (ii) Unocal agreed to
indemnify the Company for, among other things, claims arising under the
California Statute arising out of or resulting from the sale of the California
Properties, including any amounts ("Excess Amounts") by which the original
purchase price paid by the Company for the California Properties exceeds the
price at which the Company might be ordered by a court to resell such
properties. Pursuant to such agreements, Unocal is not required to indemnify the
Company for awards of punitive damages. The Company cannot predict whether it
ultimately will be required to resell any or all of the California Properties to
the California operators. However, in such event, the Company would seek
indemnification from Unocal for any Excess Amounts. The Company believes that
the claims asserted by the operators of the California Properties against the
Company are without merit and has engaged in a vigorous defense.
During 1995, the trial commenced and two of the California Plaintiffs
elected to settle their portion of the litigation with Unocal and the Company.
In resolution, the Company entered into an agreement whereby the Company
acquired the assets and operations of one of the related travel centers and paid
approximately $900,000 for the operations and certain assets used in the
operations. The other operator's issues were resolved at no cost to the Company
and that operator continues to operate the travel center under the existing
lease agreement.
On May 1, 1995, the jury rendered a verdict in favor of the two remaining
California Plaintiffs and against Unocal and the Company. The jury determined
that the two remaining California Plaintiffs were entitled to total compensatory
damages of $4,012,000, all payable by Unocal. On May 3, 1995, the jury rendered
a verdict assessing punitive damages against Unocal and the Company in the
amounts of $7,000,000 and $3,100,000, respectively. Also on May 3, 1995, the
California State Court rendered a tentative decision in favor of Unocal and the
Company on the equitable claims asserted by the California Plaintiffs and
denying Plaintiffs' request for rescission of the asset purchase agreements for
the related California Properties. The Company then filed motions with the trial
court to enter judgment in its favor on plaintiffs' damages claims
notwithstanding the verdict, or in the alternative, to order a new trial. On
August 1, 1995, the California Court denied the motion for judgment
notwithstanding the verdict, but granted the Company's motion for a new trial on
all issues. Unocal and the Company have appealed the court's denial of their
motions for judgement notwithstanding the verdict and the California Plaintiffs
have appealed the court's granting of a new trial and its ruling on the
equitable claims. Decisions on the pending appeals are expected by late 1997.
The Company's ultimate liability in the disposition of this matter is difficult
to estimate. However, it is management's belief that the outcome, while
potentially material to the Company's results of operations, is not likely to
have a material adverse effect on the Company's financial position.
F-71
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company believes all compensatory damages ultimately awarded and legal
fees incurred in this matter are covered under the indemnification agreement
with Unocal. Legal costs incurred by the Company through December 31, 1996 total
$5,189,000, of which Unocal has paid $1,000,000 to the Company to date. Unocal
has stated, however, that it may contest portions of the Company's claims for
such indemnification. However, the Company believes that the effect on the
financial statements of any amounts not ultimately collected from Unocal will
not be material.
In April 1996, a group of 11 operators filed a complaint which was styled as
a class action lawsuit alleging that the Company or its representatives had
engaged in certain inappropriate practices or activities including breach of
contract and fraud in connection with acquiring and operating the Network. No
specific dollar damages are claimed in the complaint, but the plaintiffs
generally seek compensatory and punitive damages. In January 1997, the complaint
was amended to include an additional six operators as plaintiffs and to assert
the additional claims of tortious interference with contractual relations and of
civil conspiracy. In 1997, settlement agreements were reached with three of the
plaintiffs at an immaterial cost to the Company. The Company believes that the
claims made in the complaint are baseless and intends to defend this litigation
vigorously. It is management's belief that the outcome is not likely to have a
material adverse effect on the Company's results of operations, financial
position or liquidity.
In addition to the above matters, the Company is the subject of, or party
to, a number of pending or threatened legal actions, contingencies and
commitments involving a variety of matters, including laws and regulations
relating to the environment. The ultimate resolution of these contingencies
could, individually or in the aggregate, be material to the Company's results of
operations, but is not expected to be material to the Company's financial
position or liquidity.
13. OPERATING LEASE COMMITMENTS
Of the 95 travel centers owned by the Company as of December 31, 1996, 77
locations are leased to independent operators, several of whom are related
parties of the Company, under operating lease arrangements. These cancelable
lease arrangements generally are for terms of three to five years. Rent revenue
from such operating lease arrangements totaled $48,424,000, $47,840,000 and
$41,762,000 for 1994, 1995 and 1996, respectively.
14. OTHER INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1995 1996
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating and Selling, general and
administrative expenses include the following:
Repairs and Maintenance Expenses ............. $ 2,225 $ 1,264 $ 1,250
Advertising expenses (net of franchisee
payments) .................................. $ 561 $ 504 $ 240
Taxes other than payroll and income taxes .... $ 2,484 $ 3,271 $ 2,429
Interest expense is comprised of the following:
Interest expense ............................. $(13,918) $(14,190) $(13,975)
Interest income .............................. 675 846 529
-------- -------- --------
$(13,243) $(13,344) $(13,446)
======== ======== ========
</TABLE>
F-72
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
15. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash paid during the year for:
Interest ............................. $13,383 $14,055 $13,644
Income taxes ......................... $ 5,987 $ 482 $ 832
</TABLE>
During 1995 and 1996, the Company received $3,201,000 and $3,207,000,
respectively, of inventory and property and equipment in liquidation of trade
accounts receivable.
16. SUBSEQUENT EVENT
On January 21, 1997, the Board of Directors of TravelCenters approved a plan
to combine the operations of the Company with those of TravelCenters other
wholly-owned subsidiary, TA Holdings Corporation (TAHC) under the existing TAHC
management. This plan provides for the divesting of certain Company locations,
the transfer of operations of all Company-operated locations to TAHC and
rebranding of certain continuing Network locations to the "Truckstops of
America" trademarks owned by TAHC. Related to the combination plan,
TravelCenters is pursuing a recapitalization. The recapitalization will, if
consummated, refinance the Company's indebtedness of $143,800,000 at
December 31, 1996, which will require the write-off of the remaining unamortized
balance of the deferred financing costs and unamortized debt discount of
$5,295,000 and $806,000 at December 31, 1996, respectively. Certain elements of
the combination plan are dependent upon the successful recapitalization of the
Company.
F-73
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
Available Information........................................................ii
Summary.......................................................................1
Risk Factors.................................................................16
The Refinancing, the Combination Plan and
the Capital Program.......................................................23
Use of Proceeds..............................................................25
Capitalization...............................................................27
Unaudited Pro Forma Financial Information....................................28
Selected Consolidated Financial Data.........................................34
Management's Discussion and Analysis
of Financial Condition and Results
of Operations.............................................................37
The Exchange Offer...........................................................45
Business.....................................................................53
Management...................................................................84
Certain Transactions.........................................................91
Security Ownership...........................................................95
Description of Capital Stock.................................................99
Description of Senior Indebtedness..........................................103
Description of New Notes....................................................108
Book Entry; Delivery and Form...............................................135
Description of Existing Notes...............................................137
Certain United States Tax Considerations....................................138
ERISA Considerations........................................................139
Plan of Distribution........................................................140
Legal Matters...............................................................140
Experts.....................................................................140
Index to Financial Statements...............................................F-1
- -------------------------------------------------------------------------------
UNTIL (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
PROSPECTUS
$125,000,000
TRAVELCENTERS OF
AMERICA, INC.
OFFER TO EXCHANGE $125,000,000 OF ITS
10 1/4% SENIOR SUBORDINATED NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR $125,000,000 OF ITS
OUTSTANDING 10 1/4% SENIOR SUBORDINATED
NOTES DUE 2007.
, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is a Delaware corporation. Subsection (b)(7) of Section 102
of the Delaware General Corporation Law (the "DGCL"), enables a corporation in
its original certificate of incorporation or an amendment thereto to eliminate
or limit the personal liability of a director to the corporation or its
stockholders for monetary damages for violations of the director's fiduciary
duty, except (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions) or
(iv) for any transaction from which a director derived an improper personal
benefit. Article Seventh of the Company's Certificate of Incorporation has
eliminated the personal liability of directors to the fullest extent permitted
by Subsection (b)(7) of Section 102 of the DGCL.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided that such director or officer acted in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, provided
further that such director or officer had no reasonable cause to believe his
conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit provided that such director or officer
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such director or officer shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all of the
circumstances of the case, such director or officer is fairly and reasonably
entitled to indemnification for such expenses which the Court of Chancery or
such other court shall deem proper.
Section 145 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) of Section 145 or in the
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonable incurred by
such person in connection therewith; that indemnification and advancement of
expenses provided for, by, or granted pursuant to, Section 145 shall not be
deemed exclusive of any other rights to which the indemnified party may be
entitled; and empowers the corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of
II-1
<PAGE>
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liabilities under Section 145.
The Company maintains insurance covering its officers and directors
with respect to certain liabilities and expenses incurred by them in certain
proceedings and under certain conditions.
Section 8 of the Company's Certificate of Incorporation provides, in
relevant part, as follows:
To the extent not prohibited by law, the Corporation shall indemnify
any person who is or was made, or threatened to be made, a party to any
threatened, pending or completed action, suit or proceeding (a "Proceeding"),
whether civil, criminal, administrative or investigative, including, without
limitation, an action by or in the right of the Corporation to procure a
judgment in its favor, by reason of the fact that such person, or a person of
whom such person is the legal representative, is or was a Director or officer of
the Corporation, or is or was serving in any capacity at the request of the
Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), all such persons
being deemed to be "Eligible Persons" against judgments, fines, penalties,
excise taxes, amounts paid in settlement and costs, charges and expenses
(including attorneys' fees and disbursements). Persons who are not Directors or
officers of the Corporation may be similarly indemnified in respect of service
to the Corporation or to an Other Entity at the request of the Corporation to
the extent the Board at any time specifies that such persons are entitled to the
benefits of this Section 8.
The Corporation shall, from time to time, reimburse or advance to any
Director or officer or other Eligible Person, the funds necessary for payment of
expenses, including attorneys' fees and disbursements, incurred in connection
with any Proceeding, in advance of the final disposition of such Proceeding;
provided, however, that, if required by the DGCL, such expenses incurred by or
on behalf of any Director or officer or other person may be paid in advance of
the final disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such Director or officer (or other Eligible
Person), to repay any such amount so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right of
appeal that such Director, officer or other person is not entitled to be
indemnified for such expenses.
The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
reimbursement or advancement of expenses may have or hereafter be entitled under
any statute, this Certificate of Incorporation, the Amended and Restated By-laws
of the Corporation, any agreement, any vote of stockholders or disinterested
Directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office.
The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall continue as
to a person who has ceased to be a Director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of an Other Entity, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
provisions of this Section 8, the By-laws or under Section 145 of the DGCL or
any other provision of law.
The provisions of this Section 8 shall be a contract between the
Corporation, on the one hand, and each Director and officer who serves in such
capacity at any time while this Section 8 is in effect and any
II-2
<PAGE>
other person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer or other person intend to be legally
bound. No repeal or modification of this Section 8 shall affect any rights or
obligations with respect to any state of facts then or theretofore existing or
thereafter arising or any proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts.
The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in an action before any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) to have made a determination prior to the
commencement of such action that such indemnification or reimbursement or
advancement of expenses is proper in the circumstances nor an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel and its stockholders) that such person is not entitled
to such indemnification or reimbursement or advancement of expenses shall
constitute a defense to the action or create a presumption that such person is
not so entitled. Such a person shall also be indemnified for any expenses
incurred in connection with successfully establishing his or her right to such
indemnification or reimbursement or advancement of expenses, in whole or in
part, in any such proceeding.
Any Director or officer of the Corporation serving in any capacity for
(a) another corporation of which a majority of the shares entitled to vote in
the election of its Directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; provided, however, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
ITEM 21. EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------ -------
3.1 Restated Certificate of Incorporation of the Company
3.2 Certificate of Incorporation of National Auto/Truckstops, Inc.
3.3 Restated Certificate of Incorporation of TA Operating Corporation
3.4 Amended and Restated By-laws of the Company
3.5 By-laws of National Auto/Truckstops, Inc.
3.6 By-laws of TA Operating Corporation
4.1 Indenture, dated March 27, 1997, among the Company, the TA Subsidiary,
the National Subsidiary and Fleet National Bank as Trustee
4.2 Exchange and Registration Rights Agreement, dated March 27, 1997, among
the Company, the TA Subsidiary, the National Subsidiary and Chase
Securities, Inc.
4.3 Form of Face of Initial Security (included in Exhibit 4.1 as Exhibit A)
4.4 Form of Face of Exchange Security (included in Exhibit 4.1 as Exhibit B)
5 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
9.1 Voting Trust Agreement, dated April 14, 1993, among the Company, the
Voting Trustee and the Operator Stockholders named therein
II-3
<PAGE>
9.2 Amendment No. 1 to Voting Trust Agreement, dated November 29, 1993, among
the Company, the Voting Trustee and the Operator Stockholders
9.3 Amendment No. 2 to Voting Trust Agreement, dated March 6, 1997, among the
Company, the Voting Trustee and the Operator Stockholders
10.1 Asset Purchase Agreement, dated November 23, 1992, between the National
Subsidiary and Unocal
10.2 Amendment No. 1 to Asset Purchase Agreement, dated April 13, 1993,
between the National Subsidiary and Unocal
10.3 California Purchase Agreement, dated November 23, 1992, between the
National Subsidiary and Unocal, with respect to the TravelCenter
located at Blyth, California
10.4 Amendment No. 1 to California Purchase Agreement, dated April 13, 1993,
between the National Subsidiary and Unocal
10.5 Schedule of California Purchase Agreements omitted pursuant to
Instruction 2 to Item 601 of Regulation S-K
10.6 Asset Purchase Agreement, dated July 22, 1993, among the TA Subsidiary,
BP and Truckstops Corporation of America Inc.
10.7 Amendment No. 1 to Asset Purchase Agreement, dated December 10, 1993,
among the TA Subsidiary, BP and Truckstops Corporation of America Inc.
10.8 Environmental Agreement , dated November 23, 1992, between the National
Subsidiary and Unocal
10.9 Environmental Agreement, dated July 22, 1993, among the TA Subsidiary, BP
and Truckstops Corporation of America Inc.
10.10 Amendment No. 1 to Environmental Agreement, dated December 10, 1993,
among the TA Subsidiary, BP and Truckstops Corporation of America Inc.
10.11 Noncompetition Agreement, dated April 13, 1993, between the National
Subsidiary and Unocal
10.12 Noncompetition Agreement, dated December 10, 1993, between the TA
Subsidiary and BP
10.13 Software License Agreement, dated April 14, 1994, between the National
Subsidiary and Unocal
10.14 Trademark License Agreement, dated April 14, 1993, between the National
Subsidiary and Unocal
10.15 Financial Advisory Agreement, dated April 12, 1993, among the Company,
the National Subsidiary and the Clipper Entities
10.16 Amendment to Financial Advisory Agreement and Amended and Restated
Indemnification Agreement, dated December 10, 1993, among the Company,
the National Subsidiary and the Clipper Entities
10.17 Financial Advisory Agreement and Indemnification Agreement, dated
December 10, 1993, among TA Holdings, the TA Subsidiary and the Clipper
Entities
10.18 Amended and Restated Registration Agreement among the Company,
National I, National II, National III, Clipper Truckstops, L.P.,
Clipper/Merchant, Olympus, Barclays Bank, Barclays Mellon Bank, N.A. as
Trustee for First Plaza, UBS, Phoenix Insurance Company and Travelers
dated as of December 10, 1993
10.19 1993 Stock Incentive Plan of the Company
10.20 Form of the Company's 1993 Stock Incentive Plan--Nonqualified Stock
Option Agreement--National Awards
10.21 Form of the Company's 1993 Stock Incentive Plan--Nonqualified Stock
Option Agreement--TA Awards
10.22 Termination, Consulting and Release Agreement, dated as of January 17,
1997, among the Company, the National Subsidiary and C. William Osborne
10.23 Schedule of Termination, Consulting and Release Agreements omitted
pursuant to Instruction 2 to Item 601 of Regulation S-K
10.24 Purchase Agreement, dated March 24, 1997, among the Company, the TA
Subsidiary, the National Subsidiary and Chase Securities, Inc.
II-4
<PAGE>
10.25 Credit Agreement, dated as of March 21, 1997, among the Company, the
Chase Manhattan Bank as agent, fronting bank and swingline lender and
the Lenders party thereto.
10.26 Senior Note Exchange Agreement as of March 21, 1997, among the Company,
the TA Subsidiary, the National Subsidiary and Noteholders listed on
Schedule 1 thereto
10.27 Limited Liability Company Agreement of TABB, adopted as of November 15,
1995, between the TA Subsidiary and Burns Bros., Inc.
10.28 Stockholders' Agreement, dated as of March 6, 1996, among the Company,
the voting trust certificate holders named therein, the Voting Trustee,
the management stockholders of the Company named therein, the
additional stockholders named therein, Clipper, National I,
National II, National III and Clipper/Merchant
10.29 Form of Network Franchise Agreement
10.30 Form of Network Lease Agreement
10.31 Form of TA Franchise Agreement
10.32 Form of National Franchise Agreement
10.33 Form of National Lease Agreement
12 Statements regarding computation of ratios
21 List of Subsidiaries of the Company
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison regarding Exhibit 5
(included in Exhibit 5)
24 Powers of attorney (included on signature pages)
25 Statement of Eligibility of Trustee
27 Financial Data Schedule
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described under Item 20, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer nor controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Westlake, State of Ohio,
on April 29, 1997.
TRAVELCENTERS OF AMERICA, INC.
By: /s/ James W. George
--------------------------
Name: James W. George
Title: Senior Vice President and
Chief Financial Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Edwin P. Kuhn, James W. George, James F.
Blackstock, Louis J. Mischianti and Rolf H. Towe, and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he or she might or could do in person thereby ratifying and confirming all that
said attorney-in-fact and agents of any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dated indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Edwin P. Kuhn President, Chief Executive Officer and April 29, 1997
- --------------------------------------- Director (Principal Executive Officer)
Edwin P. Kuhn
/s/James W. George Senior Vice President and Chief Financial April 29, 1997
- --------------------------------------- Officer (Principal Financial Officer and
James W. George Principal Accounting Officer)
/s/ Walter E. Smith, Jr. Director April 29, 1997
- ---------------------------------------
Walter E. Smith, Jr.
/s/ Margaret M. Eisen
- --------------------------------------- Director April 29, 1997
Margaret M. Eisen
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert B. Calhoun, Jr. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------- Director
Robert B. Calhoun, Jr.
/s/ Eugene P. Lynch
- --------------------------------------- Director April 29, 1997
Eugene P. Lynch
/s/ Louis J. Mischianti
- --------------------------------------- Director April 29, 1997
Louis J. Mischianti
/s/ Rolf H. Towe
- --------------------------------------- Director April 29, 1997
Rolf H. Towe
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Westlake, State of Ohio,
on April 29, 1997.
TA OPERATING CORPORATION
By: /s/ James W. George
--------------------------
Name: James W. George
Title: Senior Vice President and
Chief Financial Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Edwin P. Kuhn, James W. George, James F.
Blackstock, Louis J. Mischianti and Rolf H. Towe, and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he or she might or could do in person thereby ratifying and confirming all that
said attorney-in-fact and agents of any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dated indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Edwin P. Kuhn President, Chief Executive Officer and April 29, 1997
- --------------------------------------- Director (Principal Executive Officer)
Edwin P. Kuhn
/s/ James W. George Senior Vice President and Chief Financial April 29, 1997
- --------------------------------------- Officer (Principal Financial Officer and
James W. George Principal Accounting Officer)
/s/ Walter E. Smith, Jr.
- --------------------------------------- Director April 29, 1997
Walter E. Smith, Jr.
/s/ Margaret M. Eisen
- --------------------------------------- Director April 29, 1997
Margaret M. Eisen
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert B. Calhoun, Jr. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------- Director
Robert B. Calhoun, Jr.
/s/ Eugene P. Lynch
- --------------------------------------- Director April 29, 1997
Eugene P. Lynch
/s/ Louis J. Mischianti
- --------------------------------------- Director April 29, 1997
Louis J. Mischianti
/s/ Rolf H. Towe
- --------------------------------------- Director April 29, 1997
Rolf H. Towe
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Westlake, State of Ohio,
on April 29, 1997.
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ James W. George
--------------------------
Name: James W. George
Title: Senior Vice President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Edwin P. Kuhn, James W. George, James F.
Blackstock, Louis J. Mischianti and Rolf H. Towe, and each of them, with full
power to act without the other, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he or she might or could do in person thereby ratifying and confirming all that
said attorney-in-fact and agents of any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dated indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Edwin P. Kuhn President, Chief Executive Officer and April 29, 1997
- --------------------------------------- Director (Principal Executive Officer)
Edwin P. Kuhn
/s/ James W. George Senior Vice President (Principal Financial April 29, 1997
- --------------------------------------- Officer and Principal Accounting
James W. George Officer)
/s/ Walter E. Smith, Jr.
- --------------------------------------- Director April 29, 1997
Walter E. Smith, Jr.
/s/ Margaret M. Eisen
- --------------------------------------- Director April 29, 1997
Margaret M. Eisen
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert B. Calhoun, Jr. Chairman of the Board of Directors and April 29, 1997
- --------------------------------------- Director
Robert B. Calhoun, Jr.
/s/ Eugene P. Lynch
- --------------------------------------- Director April 29, 1997
Eugene P. Lynch
/s/ Louis J. Mischianti
- --------------------------------------- Director April 29, 1997
Louis J. Mischianti
/s/ Rolf H. Towe
- --------------------------------------- Director April 29, 1997
Rolf H. Towe
</TABLE>
II-11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ------- ------------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the Company
3.2 Certificate of Incorporation of National Auto/Truckstops, Inc.
3.3 Restated Certificate of Incorporation of TA Operating Corporation
3.4 Amended and Restated By-laws of the Company
3.5 By-laws of National Auto/Truckstops, Inc.
3.6 By-laws of TA Operating Corporation
4.1 Indenture, dated March 27, 1997, among the Company, the TA Subsidiary,
the National Subsidiary and Fleet National Bank as Trustee
4.2 Exchange and Registration Rights Agreement, dated March 27, 1997, among
the Company, the TA Subsidiary, the National Subsidiary and Chase
Securities, Inc.
4.3 Form of Face of Initial Security (included in Exhibit 4.1 as Exhibit A)
4.4 Form of Face of Exchange Security (included in Exhibit 4.1 as Exhibit B)
5 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
9.1 Voting Trust Agreement, dated April 14, 1993, among the Company, the
Voting Trustee and the Operator Stockholders named therein
9.2 Amendment No. 1 to Voting Trust Agreement, dated November 29, 1993, among
the Company, the Voting Trustee and the Operator Stockholders
9.3 Amendment No. 2 to Voting Trust Agreement, dated March 6, 1997, among the
Company, the Voting Trustee and the Operator Stockholders
10.1 Asset Purchase Agreement, dated November 23, 1992, between the National
Subsidiary and Unocal
10.2 Amendment No. 1 to Asset Purchase Agreement, dated April 13, 1993,
between the National Subsidiary and Unocal
10.3 California Purchase Agreement, dated November 23, 1992, between the
National Subsidiary and Unocal, with respect to the TravelCenter
located at Blyth, California
10.4 Amendment No. 1 to California Purchase Agreement, dated April 13, 1993,
between the National Subsidiary and Unocal
10.5 Schedule of California Purchase Agreements omitted pursuant to
Instruction 2 to Item 601 of Regulation S-K
10.6 Asset Purchase Agreement, dated July 22, 1993, among the TA Subsidiary,
BP and Truckstops Corporation of America Inc.
10.7 Amendment No. 1 to Asset Purchase Agreement, dated December 10, 1993,
among the TA Subsidiary, BP and Truckstops Corporation of America Inc.
10.8 Environmental Agreement , dated November 23, 1992, between the National
Subsidiary and Unocal
10.9 Environmental Agreement, dated July 22, 1993, among the TA Subsidiary, BP
and Truckstops Corporation of America Inc.
10.10 Amendment No. 1 to Environmental Agreement, dated December 10, 1993,
among the TA Subsidiary, BP and Truckstops Corporation of America Inc.
10.11 Noncompetition Agreement, dated April 13, 1993, between the National
Subsidiary and Unocal
10.12 Noncompetition Agreement, dated December 10, 1993, between the TA
Subsidiary and BP
10.13 Software License Agreement, dated April 14, 1994, between the National
Subsidiary and Unocal
10.14 Trademark License Agreement, dated April 14, 1993, between the National
Subsidiary and Unocal
10.15 Financial Advisory Agreement, dated April 12, 1993, among the Company,
the National Subsidiary and the Clipper Entities
10.16 Amendment to Financial Advisory Agreement and Amended and Restated
Indemnification Agreement, dated December 10, 1993, among the Company,
the National Subsidiary and the Clipper Entities
10.17 Financial Advisory Agreement and Indemnification Agreement, dated
December 10, 1993, among TA Holdings, the TA Subsidiary and the Clipper
Entities
10.18 Amended and Restated Registration Agreement among the Company,
National I, National II, National III, Clipper Truckstops, L.P.,
Clipper/Merchant, Olympus, Barclays Bank, Barclays Mellon Bank, N.A. as
Trustee for First Plaza, UBS, Phoenix Insurance Company and Travelers
dated as of December 10, 1993
<PAGE>
10.19 1993 Stock Incentive Plan of the Company
10.20 Form of the Company's 1993 Stock Incentive Plan--Nonqualified Stock
Option Agreement--National Awards
10.21 Form of the Company's 1993 Stock Incentive Plan--Nonqualified Stock
Option Agreement--TA Awards
10.22 Termination, Consulting and Release Agreement, dated as of January 17,
1997, among the Company, the National Subsidiary and C. William Osborne
10.23 Schedule of Termination, Consulting and Release Agreements omitted
pursuant to Instruction 2 to Item 601 of Regulation S-K
10.24 Purchase Agreement, dated March 24, 1997, among the Company, the TA
Subsidiary, the National Subsidiary and Chase Securities, Inc.
10.25 Credit Agreement, dated as of March 21, 1997, among the Company, the
Chase Manhattan Bank as agent, fronting bank and swingline lender and
the Lenders party thereto.
10.26 Senior Note Exchange Agreement as of March 21, 1997, among the Company,
the TA Subsidiary, the National Subsidiary and Noteholders listed on
Schedule 1 thereto
10.27 Limited Liability Company Agreement of TABB, adopted as of November 15,
1995, between the TA Subsidiary and Burns Bros., Inc.
10.28 Stockholders' Agreement, dated as of March 6, 1996, among the Company,
the voting trust certificate holders named therein, the Voting Trustee,
the management stockholders of the Company named therein, the
additional stockholders named therein, Clipper, National I,
National II, National III and Clipper/Merchant
10.29 Form of Network Franchise Agreement
10.30 Form of Network Lease Agreement
10.31 Form of TA Franchise Agreement
10.32 Form of National Franchise Agreement
10.33 Form of National Lease Agreement
12 Statements regarding computation of ratios
21 List of Subsidiaries of the Company
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison regarding Exhibit 5
(included in Exhibit 5)
24 Powers of attorney (included on signature pages)
25 Statement of Eligibility of Trustee
27 Financial Data Schedule
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 23,779
<SECURITIES> 0
<RECEIVABLES> 57,873
<ALLOWANCES> 3,502
<INVENTORY> 29,082
<CURRENT-ASSETS> 121,639
<PP&E> 326,473
<DEPRECIATION> 57,107
<TOTAL-ASSETS> 425,889
<CURRENT-LIABILITIES> 97,873
<BONDS> 193,185
51,075
38
<COMMON> 14
<OTHER-SE> 68,397
<TOTAL-LIABILITY-AND-EQUITY> 425,889
<SALES> 651,490
<TOTAL-REVENUES> 693,252
<CGS> 568,226
<TOTAL-COSTS> 568,226
<OTHER-EXPENSES> 54,001
<LOSS-PROVISION> 2,545
<INTEREST-EXPENSE> 15,236
<INCOME-PRETAX> 8,882
<INCOME-TAX> 3,349
<INCOME-CONTINUING> 5,533
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,533
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
NATIONAL AUTO/TRUCKSTOPS HOLDINGS CORPORATION
IT IS HEREBY CERTIFIED THAT:
The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of Delaware on December 1, 1992, a Restated
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of Delaware on April 14, 1993, and an Amended and Restated Certificate of
Incorporation of the Corporation was filed with the Secretary of State of
Delaware on December 10, 1993, all under the name National Auto/Truckstops
Holdings Corporation.
This Restated Certificate of Incorporation was duly adopted by the
Board of Directors and shareholders of the Corporation in accordance with the
applicable provisions of Sections 242 and 245 of the General Corporation Law of
Delaware (the "DGCL").
The Restated Certificate of Incorporation of the Corporation is
hereby restated in its entirety as follows:
1. NAME. The name of the corporation is TravelCenters of America,
Inc. (the "CORPORATION").
2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office is 1209 Orange Street, City of Wilmington,
County of
<PAGE>
New Castle, State of Delaware 19801; and its registered agent at such address is
The Corporation Trust Company.
3. PURPOSES. The purpose of the Corporation is to engage in, carry
on and conduct any lawful act or activity for which corporations may be
organized under the DGCL.
4. CAPITAL STOCK. Upon the effectiveness of this restatement of the
Certificate of Incorporation, each outstanding share of Class A Common Stock and
Class B Common Stock shall, with no further action by the stockholders or the
Board, be reclassified and converted into one share of Common Stock.
4.1. NUMBER OF SHARES. The total number of shares of capital stock
that the Corporation shall have authority to issue is: fifty million
(50,000,000) shares, (i) thirty million (30,000,000) of which shall be shares of
Common Stock of the par value of one cent ($0.01) each (the "COMMON STOCK") and
(ii) twenty million (20,000,000) of which shall be shares of Preferred Stock of
the par value of one cent ($.01) each, divided into four series designated as
follows, each series having the number of shares indicated below, but also
issuable in any other series authorized for issuance by the Board of Directors
pursuant to its express authority set forth in Section 4.3.9 hereof
(collectively, the "PREFERRED STOCK"):
(A) Convertible Preferred Stock, Series I -- six million (6,000,000)
shares ("SERIES I PREFERRED STOCK").
2
<PAGE>
(B) Convertible Preferred Stock, Series II -- two million five
hundred thousand (2,500,000) shares ("SERIES II PREFERRED STOCK" and, together
with the Series I Preferred Stock, the "JUNIOR PREFERRED STOCK").
(C) Senior Convertible Participating Preferred Stock, Series I
- --three million (3,000,000) shares, ("SERIES I SENIOR PREFERRED STOCK").
(D) Senior Convertible Participating Preferred Stock, Series II --
one million (1,000,000) shares, ("SERIES II SENIOR PREFERRED STOCK" and,
together with the Series I Senior Preferred Stock, the "SENIOR PREFERRED
STOCK").
4.2. COMMON STOCK.
4.2.1(a) DIVIDENDS AND DISTRIBUTIONS. Each issued and outstanding
share of Common Stock shall entitle the holder thereof to receive, out of funds
legally available therefor, dividends and distributions (whether in the form of
cash, property or shares of the Corporation's capital stock, or otherwise),
when, as and if declared by the Board of Directors, subject to, however, and
after payment or provision for, payment of all amounts, if any, then required to
be paid to the holders of any shares of Preferred Stock then outstanding, and
also subject to the restrictions on the payment of dividends or making of
distributions on the capital stock of the Corporation as set forth in Section
4.3.7 hereof. Shares of Common Stock, Junior Preferred Stock and Senior
Preferred Stock shall have identical rights with respect to dividends and
distributions (except as provided in Section 4.3.3(b)(i) in the case of
3
<PAGE>
Series I Senior Preferred Stock and Section 4.3.4(b)(i) in the case of Series II
Senior Preferred Stock with respect to Accretion Dividends (as defined in
Section 4.3.3(b)(i)), and except as provided in Section 4.3.1(b)(iii) in the
case of Series I Preferred Stock, Section 4.3.2(b)(iii) in the case of Series II
Preferred Stock, Section 4.3.3(b)(iii) in the case of Series I Senior Preferred
Stock and Section 4.3.4(b)(iii) in the case of Series II Senior Preferred Stock
with respect to rights upon any liquidation, dissolution or winding-up of the
Corporation, in each case, subject to appropriate adjustment in the event of any
split, reclassification, subdivision or combination of the outstanding shares of
any such stock); PROVIDED that any dividend or other distribution payable in
shares of the capital stock of the Corporation shall be made to all holders of
Common Stock, Junior Preferred Stock and Senior Preferred Stock in an equal
number of shares of such capital stock for each outstanding share thereof
(subject to appropriate adjustment in the event of any split, reclassification,
subdivision or combination of the outstanding shares of any such stock) and may
be made only as follows: (i) in shares of Common Stock to the holders of Common
Stock; in shares of Series I Preferred Stock to the holders of Series I
Preferred Stock; in shares of Series II Preferred Stock to the holders of Series
II Preferred Stock; in shares of Series I Senior Preferred Stock to the holders
of Series I Senior Preferred Stock; and in shares of Series II Senior Preferred
Stock to the holders of Series II Senior Preferred Stock or (ii) in any
authorized class of capital stock of the
4
<PAGE>
Corporation other than Common Stock, Series I Preferred Stock, Series II
Preferred Stock, Series I Senior Preferred Stock and Series II Senior Preferred
Stock to the holders of Common Stock, Series I Preferred Stock, Series II
Preferred Stock, Series I Senior Preferred Stock and Series II Senior Preferred
Stock; PROVIDED FURTHER, that the holders of Series II Preferred Stock and
Series II Senior Preferred Stock, respectively, shall not be entitled to receive
voting securities or capital stock of any entity to the extent that doing so
would result in a violation of any applicable federal banking law or regulation,
and such holders shall instead receive, to the extent necessary to avoid a
violation of any applicable federal banking law or regulation, securities or
capital stock conferring rights that are as nearly identical to (but no more
favorable than) those received by the holders of other capital stock of the
Corporation as would not violate any applicable federal banking law or
regulation (which may, if permitted by law or regulation, be a convertible
security). The Corporation shall be entitled to rely conclusively upon the
written statement of any holder of Series II Preferred Stock or Series II Senior
Preferred Stock as to the status of any voting securities or capital stock to be
received as a dividend or distribution on such stock and the nature of any
limitation on the amount or the rights associated with such securities or
capital stock necessary to comply with any applicable federal banking law or
regulation.
5
<PAGE>
Whenever in this Amended and Restated Certificate of Incorporation
(the "CERTIFICATE OF INCORPORATION") a reference is made to an "appropriate
adjustment in the event of any split, reclassification, subdivision or
combination of the then outstanding shares" of any Common Stock, Junior
Preferred Stock or Senior Preferred Stock (or any series thereof), and the event
requiring such adjustment would also require an adjustment in the conversion
rate pursuant to Sections 4.3.1(f)(ii), 4.3.2(f)(ii), 4.3.3(f)(ii) or
4.3.4(f)(ii) hereof, the number of shares of Series I Preferred Stock, Series II
Preferred Stock, Series I Senior Preferred Stock and Series II Senior Preferred
Stock outstanding for purposes of the applicable provision hereof shall be
deemed to be equal to the number of shares of Common Stock into which such
shares of Series I Preferred Stock, Series II Preferred Stock, Series I Senior
Preferred Stock or Series II Senior Preferred Stock, as the case may be, would
be convertible (after giving effect to the adjustment in the conversion rates
referred to above, but without regard to any limitation on conversion applicable
to the Series II Preferred Stock and Series II Senior Preferred Stock pursuant
to the provisos to Sections 4.3.2(f)(i) and 4.3.4(f)(i) hereof, respectively).
4.2.1(b)(i) MERGERS AND CONSOLIDATIONS. The Corporation shall not
merge, consolidate or combine with another entity, (whether or not the
Corporation is the surviving entity), unless proper provision is made pursuant
to the terms of such merger, consolidation or combination so that, (i) if the
consideration to be received is
6
<PAGE>
capital stock of the surviving or resulting corporation, the holders of Common
Stock, Junior Preferred Stock and Senior Preferred Stock all will be entitled to
receive capital stock having the same, or as nearly equivalent as practicable,
powers, preferences, participating, optional or other special rights,
qualifications and restrictions as apply to such stock pursuant to the
provisions of this Certificate of Incorporation, or (ii) if the consideration to
be received is cash or property (other than capital stock of the surviving or
resulting corporation), or any combination thereof, the holders of Common Stock,
Junior Preferred Stock and Senior Preferred Stock all will be entitled to
receive cash or property in the same amount that such holders would otherwise be
entitled to receive if all such cash or property were distributed upon any
liquidation, dissolution or winding-up of the Corporation pursuant to the
applicable provisions of this Certificate of Incorporation; PROVIDED that
holders of Series II Preferred Stock and Series II Senior Preferred Stock shall
not be entitled to receive voting securities or capital stock of any entity to
the extent that doing so would result in a violation of any applicable federal
banking law or regulation, and such holders shall instead receive, to the extent
necessary to avoid a violation of any applicable federal banking law or
regulation, securities or capital stock conferring rights that are as nearly
identical to (but no more favorable than) those received by the holders of other
capital stock of the Corporation as would not violate any applicable federal
banking law or regulation (which may, if permitted by
7
<PAGE>
law or regulation, be a convertible security). The Corporation shall be entitled
to rely conclusively upon the written statement of any holder of the Series II
Preferred Stock or Series II Senior Preferred Stock as to the status of any
voting securities or capital stock to be received as a dividend or distribution
on such stock and the nature of any limitation on the amount or the rights
associated with such securities or capital stock necessary to comply with any
applicable federal banking law or regulation.
4.2.1(b)(ii) DISSOLUTION, ETC. In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and liabilities of the
Corporation and before any payment or provision for payment shall be made to the
holders of Series I Preferred Stock, Series II Preferred Stock, Common Stock,
the holders of Series I Senior Preferred Stock, together with the holders of
Series II Senior Preferred Stock, shall be entitled to receive out of the assets
of the Corporation available for distribution to stockholders an amount per
share in cash equal to the Senior Liquidation Preference plus all Accrued
Accretion Dividends, calculated to the date of liquidation, dissolution or
winding-up of the Corporation, subject to appropriate adjustment in the event of
any split, reclassification, subdivision or combination of the outstanding
shares of Series I Senior Preferred Stock or Series II Senior Preferred Stock or
the issuance of additional shares of Series I Senior Preferred Stock or Series
II Senior Preferred Stock as a dividend or distribution on the outstanding
shares of
8
<PAGE>
such stock. Notwithstanding anything herein to the contrary, the Senior
aggregate Liquidation Preference plus Accrued Accretion Dividends applicable to
the Series II Senior Preferred Stock shall not at any time exceed the greater of
(x) $10 per share, subject to appropriate adjustment in the event of any split,
reclassification, subdivision or combination of the outstanding shares of such
stock, and (y) 25% of the aggregate amount available for distribution to the
holders of all of the Corporation's capital stock. If, after payment of the
Senior Liquidation Preference (plus Accrued Accretion Dividends) per share due
to the holders of Senior Preferred Stock, any amount remains for distribution to
stockholders, such remaining amount shall be distributed to the holders of
Common Stock, Junior Preferred Stock and Senior Preferred Stock, as follows: (i)
first, to the holders of Series I Preferred Stock and Series II Preferred Stock
ratably in the amount of $10.00 per each outstanding share; (ii) second, to the
holders of Common Stock ratably in the amount of $10.00 per each outstanding
share; (iii) third, to the holders of Common Stock and Junior Preferred Stock
ratably in an amount per each outstanding share equal to the excess of the
Senior Liquidation Preference (plus Accrued Accretion Dividends) per share over
$10.00; and (iv) last, to the holders of Senior Preferred Stock, Junior
Preferred Stock, Common Stock such that the amount distributed per each
outstanding share of Senior Preferred Stock equals 50% of the amount distributed
per each outstanding share of Junior Preferred Stock, Common Stock, each holder
of Series I Senior Preferred Stock and Series II
9
<PAGE>
Senior Preferred Stock to receive the same amount per share, and each holder of
Series I Preferred Stock, Series II Preferred Stock, Common Stock to receive the
same amount per share, in each case subject to appropriate adjustment in the
event of any split, reclassification, subdivision or combination of the
outstanding shares of any such stock; PROVIDED that holders of Series II
Preferred Stock and Series II Senior Preferred Stock, respectively, shall not be
entitled to receive voting securities or capital stock of any entity to the
extent that doing so would result in a violation of any applicable federal
banking law or regulation, and such holders shall instead receive, to the extent
necessary to avoid a violation of any applicable federal banking law or
regulation, securities or capital stock conferring rights that are as nearly
identical to (but no more favorable than) those received by the holders of the
other capital stock of the Corporation as would not violate any applicable
federal banking law or regulation (which may, if permitted by law or regulation,
be a convertible security) (it being understood that the Corporation shall be
entitled to rely conclusively upon the written statement of any holder of the
Series II Preferred Stock or Series II Senior Preferred Stock as to the status
of any voting securities or capital stock to be received as a dividend or
distribution on such stock and the nature of any limitation on the amount or the
rights associated with such securities or capital stock necessary to comply with
any applicable federal banking law or regulation).
10
<PAGE>
4.2.1(b)(iii) The sale, conveyance, exchange or transfer of all or
substantially all of the property and assets of the Corporation or the merger or
consolidation of the Corporation into or with any other corporation, or the
merger of any other corporation into the Corporation, shall not be deemed to be
a liquidation, dissolution or winding-up of the Corporation for purposes of this
Section 4.2.1(b).
4.2.1(b)(iv) If the assets distributable upon any liquidation,
dissolution or winding-up of the Corporation to holders of Common Stock then
outstanding and any shares of capital stock of the Corporation ranking on a
parity (with respect to such distribution) with Common Stock shall be
insufficient to pay to the holders of all outstanding shares of such stock the
full amounts to which they are respectively entitled, then such assets shall be
distributed ratably among the holders of all outstanding shares of Common Stock
and any shares of capital stock of the Corporation ranking on a parity (with
respect to such distribution) with shares of Common Stock in proportion to the
full amounts to which they respectively are entitled.
4.2.2. VOTING RIGHTS. Each issued and outstanding share of Common
Stock shall entitle the holder thereof to one vote, subject to appropriate
adjustment in the event of any split, reclassification, subdivision or
combination of the then outstanding shares of any Common Stock, Junior Preferred
Stock or Senior Preferred Stock. Except as otherwise expressly provided in this
Certificate of Incorporation or
11
<PAGE>
as otherwise required by law, holders of shares of Common Stock, Series I
Preferred Stock and Series I Senior Preferred Stock shall vote together as a
single class on all matters whatsoever which shall be the subject of proper
action by stockholders of the Corporation, PROVIDED that holders of Series I
Senior Preferred Stock shall not be entitled to vote in any election for
Directors.
4.3. PREFERRED STOCK.
4.3.1. SERIES I PREFERRED STOCK.
4.3.1(a) RANK. Each share of Series I Preferred Stock shall rank
junior to the Senior Preferred Stock, on a parity with the Series II Preferred
Stock and prior to the Common Stock with respect to rights upon any liquidation,
dissolution or winding-up of the Corporation (as and to the extent set forth in
Section 4.3.1(b)(iii)). Each share of Series I Preferred Stock shall rank on a
parity with the Series II Preferred Stock, Common Stock and Senior Preferred
Stock with respect to dividend rights (except with respect to Accretion
Dividends in the case of the Senior Preferred Stock).
4.3.1(b)(i) DIVIDENDS AND DISTRIBUTIONS. Each issued and outstanding
share of Series I Preferred Stock shall entitle the holder thereof to receive,
out of funds legally available therefor, dividends and distributions (whether in
the form of cash, property or shares of the Corporation's capital stock, or
otherwise), when, as and if declared by the Board of Directors, subject to,
however, and after payment or
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provision for, payment of all amounts, if any, then required to be paid to the
holders of any shares of Senior Preferred Stock then outstanding, and also
subject to the restrictions on the payment of dividends or making of
distributions on the capital stock of the Corporation as set in Section 4.3.7
hereof. Shares of Common Stock, Junior Preferred Stock and Senior Preferred
Stock shall have identical rights with respect to dividends and distributions
(except as provided in Section 4.3.3(b)(i) in the case of Series I Senior
Preferred Stock and Section 4.3.4(b)(i) in the case of Series II Senior
Preferred Stock with respect to Accretion Dividends, and except as provided in
Section 4.3.1(b)(iii) in the case of Series I Preferred Stock, Section
4.3.2(b)(iii) in the case of Series II Preferred Stock, Section 4.3.3(b)(iii) in
the case of Series I Senior Preferred Stock and Section 4.3.4(b)(iii) in the
case of Series II Senior Preferred Stock with respect to rights upon any
liquidation, dissolution or winding-up of the Corporation, in each case, subject
to appropriate adjustment in the event of any split, reclassification,
subdivision or combination of the outstanding shares of any such stock);
PROVIDED that any dividend or other distribution payable in shares of the
capital stock of the Corporation shall be made to all holders of Common Stock,
Junior Preferred Stock and Senior Preferred Stock in an equal number of shares
of such capital stock for each outstanding share thereof (subject to appropriate
adjustment in the event of any split, reclassification, subdivision or
combination of the outstanding shares of any such stock) and may be made only as
follows: (i) in shares of Common
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Stock to the holders of Common Stock; in shares of Series I Preferred Stock to
the holders of Series I Preferred Stock; in shares of Series II Preferred Stock
to the holders of Series II Preferred Stock, in shares of Series I Senior
Preferred Stock to the holders of Series I Senior Preferred Stock; and in shares
of Series II Senior Preferred Stock to the holders of Series II Senior Preferred
Stock or (ii) in any authorized class of capital stock of the Corporation other
than Common Stock, Series I Preferred Stock, Series II Preferred Stock, Series I
Senior Preferred Stock and Series II Senior Preferred Stock to the holders of
Common Stock, Series I Preferred Stock, Series II Preferred Stock, Series I
Senior Preferred Stock and Series II Senior Preferred Stock; PROVIDED FURTHER,
that the holders of Series II Preferred Stock and Series II Senior Preferred
Stock, respectively, shall not be entitled to receive voting securities or
capital stock of any entity to the extent that doing so would result in a
violation of any applicable federal banking law or regulation, and such holders
shall instead receive, to the extent necessary to avoid a violation of any
applicable federal banking law or regulation, securities or capital stock
conferring rights that are as nearly identical to (but no more favorable than)
those received by the holders of other capital stock of the Corporation as would
not violate any applicable federal banking law or regulation (which may, if
permitted by law or regulation, be a convertible security). The Corporation
shall be entitled to rely conclusively upon the written statement of any holder
of Series II Preferred Stock or
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Series II Senior Preferred Stock as to the status of any voting securities or
capital stock to be received as a dividend or distribution on such stock and the
nature of any limitation on the amount or the rights associated with such
securities or capital stock necessary to comply with any applicable federal
banking law or regulation.
4.3.1(b)(ii) MERGERS AND CONSOLIDATIONS. The Corporation shall not
merge, consolidate or combine with another entity (whether or not the
Corporation is the surviving entity), unless proper provision is made pursuant
to the terms of such merger, consolidation or combination so that, (i) if the
consideration to be received is capital stock of the surviving or resulting
Corporation, the holders of Common Stock, Junior Preferred Stock and Senior
Preferred Stock all will be entitled to receive capital stock having the same,
or as nearly equivalent as practicable, powers, preferences, participating,
optional or other special rights, qualifications and restrictions as apply to
such stock pursuant to the provisions of this Certificate of Incorporation, or
(ii) if the consideration to be received is cash or property (other than capital
stock of the surviving or resulting corporation), or any combination thereof,
the holders of Common Stock, Junior Preferred Stock and Senior Preferred Stock
all will be entitled to receive cash or property in the same amount that such
holders would otherwise be entitled to receive if all such cash or property were
distributed upon any liquidation, dissolution or winding-up of the Corporation
pursuant to the applicable provisions of this Certificate of Incorporation;
PROVIDED that
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holders of Series II Preferred Stock and Series II Senior Preferred Stock shall
not be entitled to receive voting securities or capital stock of any entity to
the extent that doing so would result in a violation of any applicable federal
banking law or regulation, and such holders shall instead receive, to the extent
necessary to avoid a violation of any applicable federal banking law or
regulation, securities or capital stock conferring rights that are as nearly
identical to (but no more favorable than) those received by the holders of other
capital stock of the Corporation as would not violate any applicable federal
banking law or regulation (which may, if permitted by law or regulation, be a
convertible security). The Corporation shall be entitled to rely conclusively
upon the written statement of any holder of the Series II Preferred Stock or
Series II Senior Preferred Stock as to the status of any voting securities or
capital stock to be received as a dividend or distribution on such stock and the
nature of any limitation on the amount or the rights associated with such
securities or capital stock necessary to comply with any applicable federal
banking law or regulation.
4.3.1(b)(iii) DISSOLUTION, ETC. In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and liabilities of the
Corporation and before any payment or provision for payment shall be made to the
holders of Series I Preferred Stock, Series II Preferred Stock, Common Stock,
the holders of Series I Senior Preferred Stock, together with the holders of
Series II Senior Preferred Stock,
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<PAGE>
shall be entitled to receive out of the assets of the Corporation available for
distribution to stockholders an amount per share in cash equal to the Senior
Liquidation Preference plus all Accrued Accretion Dividends (calculated to the
date of liquidation, dissolution or winding-up of the Corporation), subject to
appropriate adjustment in the event of any split, reclassification, subdivision
or combination of the outstanding shares of Series I Senior Preferred Stock or
Series II Senior Preferred Stock or the issuance of additional shares of Series
I Senior Preferred Stock or Series II Senior Preferred Stock as a dividend or
distribution on the outstanding shares of such stock. Notwithstanding anything
herein to the contrary, the aggregate Senior Liquidation Preference plus Accrued
Accretion Dividends applicable to the Series II Senior Preferred Stock shall not
at any time exceed the greater of (x) $10 per share, subject to appropriate
adjustment in the event of any split, reclassification, subdivision or
combination of the outstanding shares of such stock, and (y) 25% of the
aggregate amount available for distribution to the holders of all of the
Corporation's capital stock. If, after payment of the Senior Liquidation
Preference (plus Accrued Accretion Dividends) per share due to the holders of
Senior Preferred Stock, any amount remains for distribution to stockholders,
such remaining amount shall be distributed to the holders of Common Stock,
Junior Preferred Stock and Senior Preferred Stock, as follows: (i) first, to the
holders of Series I Preferred Stock and Series II Preferred Stock ratably in the
amount of $10.00 per each outstanding share; (ii) second, to the
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holders of Common Stock ratably in the amount of $10.00 per each outstanding
share; (iii) third, to the holders of Common Stock and Junior Preferred Stock
ratably in an amount per each outstanding share equal to the excess of the
Senior Liquidation Preference (plus Accrued Accretion Dividends) per share over
$10.00; and (iv) last, to the holders of Senior Preferred Stock, Junior
Preferred Stock, Common Stock such that the amount distributed per each
outstanding share of Senior Preferred Stock equals 50% of the amount distributed
per each outstanding share of Junior Preferred Stock, Common Stock, each holder
of Series I Senior Preferred Stock and Series II Senior Preferred Stock to
receive the same amount per share, and each holder of Series I Preferred Stock,
Series II Preferred Stock, Common Stock to receive the same amount per share, in
each case subject to appropriate adjustment in the event of any split,
reclassification, subdivision or combination of the outstanding shares of any
such stock; PROVIDED that holders of Series II Preferred Stock and Series II
Senior Preferred Stock shall not be entitled to receive voting securities or
capital stock of any entity to the extent that doing so would result in a
violation of any applicable federal banking law or regulation, and such holders
shall instead receive, to the extent necessary to avoid a violation of any
applicable federal banking law or regulation, securities or capital stock
conferring rights that are as nearly identical to (but no more favorable than)
those received by the holders of other capital stock of the Corporation as would
not violate any applicable federal banking law or regulation (which may, if
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permitted by law or regulation, be a convertible security) (it being understood
that the Corporation shall be entitled to rely conclusively upon the written
statement of any holder of Series II Preferred Stock or Series II Senior
Preferred Stock as to the status of any voting securities or capital stock to be
received as a dividend or distribution on such stock and the nature of any
limitation on the amount or the rights associated with such securities or
capital stock necessary to comply with any applicable federal banking law or
regulation).
4.3.1(b)(iv) The sale, conveyance, exchange or transfer of all or
substantially all of the property and assets of the Corporation or the merger or
consolidation of the Corporation into any other corporation, or the merger of
any other corporation into the Corporation, shall not be deemed to be a
liquidation, dissolution or winding-up of the Corporation for purposes of this
Section 4.3.1(b).
4.3.1(b)(v) If the assets distributable upon any liquidation,
dissolution or winding-up of the Corporation to holders of Series I Preferred
Stock then outstanding and any shares of capital stock of the Corporation
ranking on a parity (with respect to such distribution) with Series I Preferred
Stock, including, without limitation, the Series II Preferred Stock, shall be
insufficient to pay to the holders of all outstanding shares of such stock the
full amounts to which they are respectively entitled, then such assets shall be
distributed ratably among the holders of all outstanding shares of Series I
Preferred Stock and any shares of capital stock of the
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Corporation ranking on parity (with respect to such distribution) with the
Series I Preferred Stock in proportion to the full amounts to which they
respectively are entitled.
4.3.1(c) SUBORDINATE STOCK. Subject to the prior rights of the
holders of Senior Preferred Stock upon any liquidation, distribution or
winding-up of the Corporation and subject to the restrictions on the payment of
dividends or making of distributions on the capital stock of the Corporation as
set forth in Section 4.3.7 hereof, so long as any Series I Preferred Stock shall
remain outstanding, no dividend shall be declared or paid upon, nor shall any
distribution be made upon, (A) any shares of Series II Preferred Stock, Common
Stock, other than dividends or distributions on the Series I Preferred Stock,
Series II Preferred Stock, Common Stock in equal amounts as provided in Section
4.3.1(b) above or (B) any shares of Subordinate Stock (as defined below), other
than dividends or distributions payable in shares of Subordinate Stock; nor
(except as provided in any Management Subscription Agreement (as hereinafter
defined) and except as contemplated by the Repurchase Agreement (as hereinafter
defined)) shall any shares of Common Stock or Subordinate Stock be purchased or
redeemed by the Corporation; nor shall any moneys be paid to or made available
for a sinking fund for the purchase or redemption of any Common Stock or
Subordinate Stock, except for purchases or redemptions of Common Stock pursuant
to any Management Subscription Agreement or the Repurchase Agreement.
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"SUBORDINATE STOCK" means any class of shares which shall rank junior in right
of payment to the Senior Preferred Stock and Junior Preferred Stock in respect
of either dividends or distributions upon the liquidation, dissolution or
winding-up of the Corporation, other than the Common Stock.
4.3.1(d) REDEMPTION. The shares of Series I Preferred Stock shall
not be redeemable at the option of the Corporation (except as provided in the
Repurchase Agreement) or the holders thereof. This Section 4.3.1(d) shall not be
deemed to prohibit the Corporation from repurchasing shares of Series I
Preferred Stock from any holder thereof; PROVIDED that (except as provided in
the Repurchase Agreement) the Corporation may not repurchase any shares of
Series I Preferred Stock unless it shall also purchase a pro rata portion of the
outstanding shares of Series II Preferred Stock; PROVIDED FURTHER, that the
Corporation may not repurchase such shares of Junior Preferred Stock (other than
pursuant to the Repurchase Agreement) unless it shall first offer to repurchase
all then outstanding shares of Series I Senior Preferred Stock and Series II
Senior Preferred Stock at a purchase price equal to the Senior Liquidation
Preference plus Accrued Accretion Dividends per share (calculated to the date of
purchase).
4.3.1(e) VOTING; CONSENT. Except as otherwise expressly provided in
this Section 4.3.1(e), and except as otherwise may be required by law, holders
of shares of Series I Preferred Stock shall be entitled to vote on all matters
whatsoever
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<PAGE>
which may be the subject of proper action by stockholders of the Corporation,
voting together as a single class with the holders of Common Stock and Series I
Senior Preferred Stock; PROVIDED that holders of Series I Senior Preferred Stock
shall not be entitled to vote in any election for Directors. Each outstanding
share of Series I Preferred Stock shall entitle the holder thereof to one vote,
subject to appropriate adjustment in the event of any split, reclassification,
subdivision or combination of the then outstanding shares of any Common Stock,
Junior Preferred Stock or Senior Preferred Stock.
None of the following actions shall be taken except with the
affirmative vote of holders of at least 80% of the outstanding shares of Series
I Preferred Stock, given either by written consent in lieu of a meeting of
stockholders or at a meeting of stockholders duly called for that purpose: (i)
an authorization of, or increase in the then authorized amount of, any class or
series of any class of capital stock of the Corporation (other than Junior
Preferred Stock or Senior Preferred Stock) ranking prior to or on a parity with
(either as to dividends or distributions upon liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary) the shares of
Series I Preferred Stock or Series II Preferred Stock or (ii) any amendment of
this Certificate of Incorporation that would alter any of the provisions of the
shares of either the Series I Preferred Stock or Series II Preferred Stock so as
to adversely affect any or all of the rights, powers or preferences thereof or
any or all of the
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<PAGE>
holders thereof; PROVIDED that if any of the actions referred to in clauses (i)
and (ii) above affects both the holders of Series I Preferred Stock and the
holders of Series II Preferred Stock equally, such action shall instead require
the affirmative vote of the holders of at least 75% of the outstanding shares of
Series I Preferred Stock and Series II Preferred Stock, voting together as a
single class, given either by written consent in lieu of a meeting or at a
meeting of stockholders duly called for that purpose. In addition, none of the
following actions shall be taken except with the affirmative vote, given either
by written consent in lieu of a meeting of stockholders or at a meeting of
stockholders duly held for that purpose, of BOTH (x) the holders of at least 80%
of the outstanding shares of Series I Preferred Stock and (y) the holders of at
least a majority of the outstanding shares of Junior Preferred Stock, voting
together as a single class: (A) an increase in the authorized amount of Series I
Preferred Stock or (B) the issuance by the Corporation, after the Closing Date,
of any additional shares of Series I Preferred Stock (including, without
limitation, the issuance by the Corporation of any shares of Series I Preferred
Stock theretofore redeemed or otherwise repurchased by the Corporation).
4.3.1(f)(i) CONVERSION. Each share of Series I Preferred Stock shall
be convertible into one share of Common Stock, subject to adjustment as provided
in Section 4.3.1(f)(ii) hereof, at any time at the option of the holder thereof.
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4.3.1(f)(ii) The conversion rate set forth in Section 4.3.1(f)(i)
above shall be subject to adjustment as provided in this Section 4.3.1(f)
(unless, simultaneously with the occurrence of any of the following events,
there shall have been a proportionate adjustment in the number of shares of
Series I Preferred Stock):
(A) In case the shares of Common Stock at any time outstanding
shall be combined into a lesser number of shares, whether by
reclassification, reduction of capital stock or otherwise, the conversion
rate shall be proportionately decreased.
(B) In case the shares of Common Stock at any time outstanding
shall be subdivided, by reclassification, recapitalization or otherwise
(excluding the issuance of shares of Common Stock as a dividend or
distribution on Common Stock in accordance with Section 4.2.1(a) hereof)
into a greater number of shares without the actual receipt by the
Corporation of any consideration for the additional number of shares so
issued, the conversion rate shall be proportionately increased.
4.3.1(f)(iii) Any conversion rate determined or adjusted as provided
in this Section 4.3.1(f) shall remain in effect until further adjustment as
required herein. Upon each adjustment of the conversion rate a written
instrument signed by an officer of the Corporation, setting forth such
adjustment, the computation thereof and a summary of the facts upon which it is
based, shall forthwith be filed with the transfer
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<PAGE>
agent for the Series I Preferred Stock and made available for inspection by the
holders of such stock, and any adjustment so evidenced, made in good faith,
shall be binding upon all such holders and upon the Corporation.
4.3.1(f)(iv) In case of any reclassification or change in the
outstanding shares of Common Stock issuable upon conversion of the shares of
Series I Preferred Stock, the holder of each share of Series I Preferred Stock
then outstanding shall have the right thereafter to receive upon the conversion
of such shares such kind and amount of shares of stock and other securities and
property receivable upon such reclassification or change by a holder of the
number of shares of Common Stock (whole or fractional) of the Corporation into
which such share of Series I Preferred Stock might have been converted had such
conversion occurred immediately prior to such reclassification or change;
PROVIDED that effective provision shall be made, in the certificate of
incorporation of the Corporation or otherwise, so that, in the opinion of the
Board of Directors of the Corporation, the provisions set forth in this Section
4.3.1(f) for the protection of the conversion rights of the holders of Series I
Preferred Stock shall thereafter be applicable, as nearly as reasonably may be,
to any such other shares of stock and other securities and property deliverable
upon conversion of the Series I Preferred Stock remaining outstanding.
4.3.1(f)(v) A number of shares of the authorized Common Stock
sufficient to provide for the conversion of the Series I Preferred Stock
outstanding
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<PAGE>
upon the basis hereinbefore provided shall at all times be reserved for such
conversion. If the Corporation shall propose to make any change in its capital
structure which would change the number of shares of Common Stock into which
each share of Series I Preferred Stock shall be convertible as provided in this
Sec tion 4.3.1(f), the Corporation shall at the same time also make proper
provision so that thereafter there shall be a sufficient number of shares of
Common Stock authorized and reserved for conversion of the outstanding Series I
Preferred Stock on the new basis.
4.3.1(f)(vi) Each holder of shares of Series I Preferred Stock may
exercise such conversion privilege by surrendering to the Corporation the
certificate for the shares to be converted, together with a written notice of
conversion executed to indicate the number of shares to be converted. Except as
provided in the next sentence, no fractional shares of Common Stock or scrip
representing fractions of shares of Common Stock will be issued. If any fraction
of a share of Common Stock would, except for this subsection, be issuable upon
the conversion of any share or shares of Series I Preferred Stock the
Corporation shall make payment in lieu thereof of cash in an amount equal to
such fraction multiplied by the fair market value per share of Common Stock, as
determined by the Board of Directors in the exercise of reasonable discretion,
as of the close of business on the date of such conversion,
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<PAGE>
unless the Corporation is contractually prohibited from making such cash
payment, in which case fractional shares shall be issued.
4.3.1(f)(vii) All shares of Series I Preferred Stock which have been
converted shall no longer be deemed to be outstanding and shall be retired and
all rights with respect to such shares, including the rights, if any, to receive
notices and to vote, shall forthwith cease, except for the right of the holders
thereof to receive Common Stock in exchange therefor. Such retired shares of
Series I Preferred Stock shall become authorized but unissued Preferred Stock.
4.3.2. SERIES II PREFERRED STOCK.
4.3.2(a) RANK. Each share of Series II Preferred Stock shall rank
junior to the Senior Preferred Stock, on a parity with the Series I Preferred
Stock and prior to the Common Stock with respect to rights upon any liquidation,
dissolution or winding-up of the Corporation (as and to the extent set forth in
Section 4.3.2(b)(iii)). Each share of Series II Preferred Stock shall rank on a
parity with the Series I Preferred Stock, Common Stock and Senior Preferred
Stock with respect to dividend rights (except with respect to Accretion
Dividends in the case of Senior Preferred Stock).
4.3.2(b)(i) DIVIDENDS AND DISTRIBUTIONS. Each issued and outstanding
share of Series II Preferred Stock shall entitle the holder thereof to receive,
out of funds legally available therefor, dividends and distributions (whether in
the form of
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cash, property or shares of the Corporation's capital stock, or otherwise),
when, as and if declared by the Board of Directors, subject to, however, and
after payment or provision for, payment of all amounts, if any, then required to
be paid to the holders of any shares of Senior Preferred Stock then outstanding,
and also subject to the restrictions on the payment of dividends or making of
distributions on the capital stock of the Corporation as set forth in Section
4.3.7 hereof. Shares of Common Stock, Junior Preferred Stock and Senior
Preferred Stock shall have identical rights with respect to dividends and
distributions (except as provided in Section 4.3.3(b)(i) in the case of Series I
Senior Preferred Stock and Section 4.3.4(b)(i) in case of Series II Senior
Preferred Stock with respect to Accretion Dividends, and except as provided in
Section 4.3.1(b)(iii) in the case of Series I Preferred Stock, Section
4.3.2(b)(iii) in the case of Series II Preferred Stock, Section 4.3.3(b)(iii) in
the case of Series I Senior Preferred Stock and Section 4.3.4(b)(iii) in the
case of Series II Senior Preferred Stock with respect to rights upon any
liquidation, dissolution or winding-up of the Corporation, in each case, subject
to appropriate adjustment in the event of any split, reclassification,
subdivision or combination of the outstanding shares of any such stock);
PROVIDED that any dividend or other distribution payable in shares of the
capital stock of the Corporation shall be made to all holders of Common Stock,
Junior Preferred Stock and Senior Preferred Stock in an equal number of shares
of such capital stock for each outstanding share thereof (subject to appropriate
adjustment in
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the event of any split, reclassification, subdivision or combination of the
outstanding shares of any such stock) and may be made only as follows: (i) in
shares of Common Stock to the holders of Common Stock; in shares of Series I
Preferred Stock to the holders of Series I Preferred Stock; in shares of Series
II Preferred Stock to the holders of Series II Preferred Stock; in shares of
Series I Senior Preferred Stock to the holders of Series I Senior Preferred
Stock; and in shares of Series II Senior Preferred Stock to the holders of
Series II Senior Preferred Stock or (ii) in any authorized class of capital
stock of the Corporation other than Common Stock, Series I Preferred Stock,
Series II Preferred Stock, Series I Senior Preferred Stock and Series II Senior
Preferred Stock to the holders of Common Stock, Series I Preferred Stock, Series
II Preferred Stock, Series I Senior Preferred Stock and Series II Senior
Preferred Stock; PROVIDED FURTHER, that the holders of Series II Preferred Stock
and Series II Senior Preferred Stock shall not be entitled to receive voting
securities or capital stock of any entity to the extent that doing so would
result in a violation of any applicable federal banking law or regulation, and
such holders shall instead receive, to the extent necessary to avoid a violation
of any applicable federal banking law or regulation, securities or capital stock
conferring rights that are as nearly identical to (but no more favorable than)
those received by the holders of other capital stock of the Corporation as would
not violate any applicable federal banking law or regulation (which may, if
permitted by law or regulation, be a
29
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convertible security). The Corporation shall be entitled to rely conclusively
upon the written statement of any holder of Series II Preferred Stock and Series
II Senior Preferred Stock as to the status of any voting securities or capital
stock to be received as a dividend or distribution on such stock and the nature
of any limitation on the amount or the rights associated with such securities or
capital stock necessary to comply with any applicable federal banking law or
regulation.
4.3.2(b)(ii) MERGERS AND CONSOLIDATIONS. The Corporation shall not
merge, consolidate or combine with another entity (whether or not the
Corporation is the surviving entity), unless proper provision is made pursuant
to the terms of such merger, consolidation or combination so that, (i) if the
consideration to be received is capital stock of the surviving or resulting
corporation, the holders of Common Stock, Junior Preferred Stock and Senior
Preferred Stock all will be entitled to receive capital stock having the same,
or as nearly equivalent as practicable, powers, preferences, participating,
optional or other special rights, qualifications and restrictions as apply to
such stock pursuant to the provisions of this Certificate of Incorporation, or
(ii) if the consideration to be received is cash or property (other than capital
stock of the surviving or resulting corporation), or any combination thereof,
the holders of Common Stock, Junior Preferred Stock and Senior Preferred Stock
all will be entitled to receive cash or property in the same amount that such
holders would otherwise be entitled to receive if all such cash or property were
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distributed upon any liquidation, dissolution or winding-up of the Corporation
pursuant to the applicable provisions of this Certificate of Incorporation;
PROVIDED that holders of Series II Preferred Stock and Series II Senior
Preferred Stock shall not be entitled to receive voting securities or capital
stock of any entity to the extent that doing so would result in a violation of
any applicable federal banking law or regulation, and such holders shall instead
receive, to the extent necessary to avoid a violation of any applicable federal
banking law or regulation, securities or capital stock conferring rights that
are as nearly identical to (but no more favorable than) those received by the
holders of other capital stock of the Corporation as would not violate any
applicable federal banking law or regulation (which may, if permitted by law or
regulation, be a convertible security). The Corporation shall be entitled to
rely conclusively upon the written statement of any holder of the Series II
Preferred Stock or Series II Senior Preferred Stock as to the status of any
voting securities or capital stock to be received as a dividend or distribution
on such stock and the nature of any limitation on the amount or the rights
associated with such securities or capital stock necessary to comply with any
applicable federal banking law or regulation.
4.3.2(b)(iii) DISSOLUTION, ETC. In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and liabilities of the
Corporation and before any payment or provision for payment shall be made to the
holders of Series I
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Preferred Stock, Series II Preferred Stock or Common Stock, the holders of
Series I Senior Preferred Stock, together with the holders of Series II Senior
Preferred Stock, shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders an amount per share in
cash equal to the Senior Liquidation Preference plus all Accrued Accretion
Dividend (calculated to the date of liquidation, dissolution or winding-up of
the Corporation), subject to appropriate adjustment in the event of any split,
reclassification, subdivision or combination of the outstanding shares of Series
I Senior Preferred Stock or Series II Senior Preferred Stock or the issuance of
additional shares of Series I Senior Preferred Stock or Series II Senior
Preferred Stock as a dividend or distribution on the outstanding shares of such
stock. Notwithstanding anything herein to the contrary, the aggregate Senior
Liquidation Preference plus Accrued Accretion Dividends applicable to the Series
II Senior Preferred Stock shall not at any time exceed the greater of (x) $10
per share, subject to appropriate adjustment in the event of any split,
reclassification, subdivision or combination of the outstanding shares of such
stock, and (y) 25% of the aggregate amount available for distribution to the
holders of all of the Corporation's capital stock. If, after payment of the
Senior Liquidation Preference (plus Accrued Accretion Dividends) per share due
to the holders of Senior Preferred Stock, any amount remains for distribution to
stockholders, such remaining amount shall be distributed to the holders of
Common Stock, Junior Preferred Stock and Senior Preferred Stock, as
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follows: (i) first, to the holders of Series I Preferred Stock and Series II
Preferred Stock ratably in the amount of $10.00 per each outstanding share; (ii)
second, to the holders of Common Stock ratably in the amount of $10.00 per each
outstanding share; (iii) third, to the holders of Common Stock and Junior
Preferred Stock ratably in an amount per each outstanding share equal to the
excess of the Senior Liquidation Preference (plus Accrued Accretion Dividends)
per share over $10.00; and (iv) last, to the holders of Senior Preferred Stock,
Junior Preferred Stock and Common Stock such that the amount distributed per
each outstanding share of Senior Preferred Stock equals 50% of the amount
distributed per each outstanding share of Junior Preferred Stock and Common
Stock, each holder of Series I Senior Preferred Stock and Series II Senior
Preferred Stock to receive the same amount per share, and each holder of Series
I Preferred Stock, Series II Preferred Stock and Common Stock to receive the
same amount per share, in each case subject to appropriate adjustment in the
event of any split, reclassification, subdivision or combination of the
outstanding shares of any such stock; PROVIDED that holders of Series II
Preferred Stock and Series II Senior Preferred Stock shall not be entitled to
receive voting securities or capital stock of any entity to the extent that
doing so would result in a violation of any applicable federal banking law or
regulation, and such holders shall instead receive, to the extent necessary to
avoid a violation of any applicable federal banking law or regulation,
securities or capital stock conferring rights that are as nearly identical to
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(but no more favorable than) those received by the holders of other capital
stock of the Corporation as would not violate any applicable federal banking law
or regulation (which may, if permitted by law or regulation, be a convertible
security) (it being understood that the Corporation shall be entitled to rely
conclusively upon the written statement of any holder of Series II Preferred
Stock or Series II Senior Preferred Stock as to the status of any voting
securities or capital stock to be received as a dividend or distribution on such
stock and the nature of any limitation on the amount or the rights associated
with such securities or capital stock necessary to comply with any applicable
federal banking law or regulation).
4.3.2(b)(iv) The sale, conveyance, exchange or transfer of all or
substantially all of the property and assets of the Corporation or the merger or
consolidation of the Corporation into any other corporation, or the merger of
any other corporation into the Corporation, shall not be deemed a liquidation,
dissolution or winding-up of the Corporation for purposes of this Section
4.3.2(b).
4.3.2(b)(v) If the assets distributable upon any liquidation,
dissolution or winding-up of the Corporation to holders of Series II Preferred
Stock then outstanding and any shares of capital stock of the Corporation
ranking on a parity (with respect to such distribution) with Series II Preferred
Stock, including, without limitation, the Series I Preferred Stock, shall be
insufficient to pay to the holders of all outstanding shares of such stock the
full amounts to which they are respectively
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entitled, then such assets shall be distributed ratably among the holders of all
outstanding shares of Series II Preferred Stock and any shares of capital of the
Corporation ranking on a parity (with respect to such distribution) with the
Series II Preferred Stock in proportion to the full amounts to which they
respectively are entitled.
4.3.2(c) SUBORDINATE STOCK. Subject to the prior rights of the
holders of Senior Preferred Stock upon any liquidation, dissolution or
winding-up of the Corporation and subject to the restrictions on the payment of
dividends or making of distributions on the capital stock of the Corporation as
set forth in Section 4.3.7 hereof, so long as any Series II Preferred Stock
shall remain outstanding, no dividend shall be declared or paid upon, nor shall
any distribution be made upon, (A) any shares of Series I Preferred Stock or
Common Stock, other than dividends or distributions on the Series I Preferred
Stock, Series II Preferred Stock and Common Stock in equal amounts as provided
in Section 4.3.2(b) above or (B) any shares of Subordinate Stock, other than
dividends or distributions payable in shares of Subordinate Stock; nor (except
as provided in any Management Subscription Agreement and except as contemplated
by the Repurchase Agreement) shall any shares of Common Stock or Subordinate
Stock be purchased or redeemed by the Corporation; nor shall any moneys be paid
to or made available for a sinking fund for the purchase or redemption of any
Common Stock or Subordinate Stock, except for
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purchases or redemptions of Common Stock pursuant to any Management Subscription
Agreement or the Repurchase Agreement.
4.3.2(d) REDEMPTION. Except as provided in the Registration
Agreement, the shares of Series II Preferred Stock shall not be redeemable at
the option of the Corporation (except as provided in the Repurchase Agreement)
or the holders thereof. This Section 4.3.2(d) shall not be deemed to prohibit
the Corporation from repurchasing shares of Series II Preferred Stock from any
holder thereof; PROVIDED that (except as provided in the Repurchase Agreement)
the Corporation shall not repurchase any shares of Series II Preferred Stock
(other than pursuant to Section 2(g) of the Registration Agreement), unless it
shall also purchase a pro rata portion of the outstanding shares of Series I
Preferred Stock; PROVIDED FURTHER, that the Corporation may not repurchase such
shares of Junior Preferred Stock (other than pursuant to the Repurchase
Agreement) unless it shall first offer to repurchase all then outstanding shares
of Series I Senior Preferred Stock and Series II Senior Preferred Stock at a
purchase price equal to the Senior Liquidation Preference plus Accrued Accretion
Dividends per share (calculated to the date of purchase).
4.3.2(e) VOTING; CONSENT. Except as otherwise expressly provided in
this Section 4.3.2(e) or in Section 4.3.8 hereof, and except as otherwise may be
required by law, the holders of shares of Series II Preferred Stock shall not be
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entitled to vote on any matters whatsoever which may be the subject of action by
stockholders of the Corporation.
None of the following actions shall be taken except with the
affirmative vote of holders of at least 80% of the outstanding shares of Series
II Preferred Stock, given either by written consent in lieu of a meeting of
stockholders or at a meeting of stockholders duly called for that purpose: (i)
an authorization of, or increase in the then authorized amount of, any class or
series of any class of capital stock of the Corporation (other than Junior
Preferred Stock or Senior Preferred Stock) ranking prior to or on a parity with
(either as to dividends or distributions upon liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary) the shares of
Series I Preferred Stock or Series II Preferred Stock or (ii) any amendment of
this Certificate of Incorporation that would alter any of the provisions of the
shares of either the Series I Preferred Stock or Series II Preferred Stock so as
to adversely affect any or all of the rights, powers or preferences thereof or
any or all of the holders thereof; PROVIDED that if any of the actions referred
to in clauses (i) and (ii) above affects both the holders of Series I Preferred
Stock and the holders of Series II Preferred Stock equally, such action shall
instead require the affirmative vote of the holders of at least 75% of the
outstanding shares of Series I Preferred Stock and Series II Preferred Stock,
voting together as a single class, given either by written consent in lieu of a
meeting or at a meeting of stockholders duly called for that
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purpose. In addition, none of the following actions shall be taken except with
the affirmative vote, given either by written consent in lieu of a meeting of
stockholders or at a meeting of stockholders duly held for that purpose, of BOTH
(x) the holders of at least 80% of the outstanding shares of Series II Preferred
Stock and (y) the holders of at least a majority of the outstanding shares of
Junior Preferred Stock, voting together as a single class: (A) an increase in
the authorized amount of Series II Preferred Stock or (B) the issuance by the
Corporation, after the Closing Date, of any additional shares of Series II
Preferred Stock (including, without limitation, the issuance by the Corporation
of any shares of Series II Preferred Stock theretofore redeemed or otherwise
repurchased by the Corporation).
On any matter as to which the shares of Series II Preferred Stock
are entitled to a vote, each outstanding share of Series II Preferred Stock
shall entitle the holder thereof to one vote per share, subject to appropriate
adjustment in the event of any split, reclassification, subdivision or
combination of the then outstanding shares of any of the Common Stock, Junior
Preferred Stock or Senior Preferred Stock.
4.3.2(f)(i) CONVERSION. Each share of Series II Preferred Stock
shall be convertible into one share of Common Stock, subject to adjustment as
provided in Section 4.3.2(f)(ii) hereof, at any time at the option of the holder
thereof; PROVIDED, HOWEVER, that shares of Series II Preferred Stock may only be
converted into shares of Common Stock pursuant to this Section 4.3.2(f) to the
extent that the number of
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shares of Common Stock to be issued upon such conversion, when added to the
aggregate number of shares of Common Stock then outstanding as a result of prior
conversions of Series II Preferred Stock and Series II Senior Preferred Stock
would in the aggregate be less than 25% of the number of shares of Common Stock
outstanding after giving effect to such conversion.
4.3.2(f)(ii) The conversion rate set forth in Section 4.3.2(f)(i)
above shall be subject to adjustment as provided in this Section 4.3.2(f)
(unless, simultaneously with the occurrence of any of the following events,
there shall have been a proportionate adjustment in the number of shares of
Series II Preferred Stock:
(A) In case the shares of Common Stock at any time outstanding
shall be combined into a lesser number of shares, whether by
reclassification, reduction of capital stock or otherwise, the conversion
rate shall be proportionately decreased.
(B) In case the shares of Common Stock at any time outstanding
shall be subdivided, by reclassification, recapitalization or otherwise
(excluding the issuance of shares of Common Stock as a dividend or
distribution on Common Stock in accordance with Section 4.2.1(a) hereof)
into a greater number of shares without the actual receipt by the
Corporation of any consideration for the additional number of shares so
issued, the conversion rate shall be proportionately increased.
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4.3.2(f)(iii) Any conversion rate determined or adjusted as provided
in this Section 4.3.2(f) shall remain in effect until further adjustment as
required herein. Upon each adjustment of the conversion rate a written
instrument signed by an officer of the Corporation, setting forth such
adjustment, the computation thereof and a summary of the facts upon which it is
based, shall forthwith be filed with the transfer agent for the Series II
Preferred Stock and made available for inspection by the holders of such stock,
and any adjustment so evidenced, made in good faith, shall be binding upon all
such holders and upon the Corporation.
4.3.2(f)(iv) In case of any reclassification or change in the
outstanding shares of Common Stock issuable upon conversion of the shares of
Series II Preferred Stock the holder of each share of Series II Preferred Stock
then outstanding shall have the right thereafter to receive upon the conversion
of such shares such kind and amount of shares of stock and other securities and
property receivable upon such reclassification or change by a holder of the
number of shares of Common Stock (whole or fractional) of the Corporation into
which such share of Series II Preferred Stock might have been converted had such
conversion occurred immediately prior to such reclassification or change;
PROVIDED that effective provision shall be made, in the certificate of
incorporation of the Corporation or otherwise, so that, in the opinion of the
Board of Directors of the Corporation, the provisions set forth in this Section
4.3.2(f) for the protection of the conversion rights of the holders of Series II
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Preferred Stock shall thereafter be applicable, as nearly as reasonably may be,
to any such other shares of stock and other securities and property deliverable
upon conversion of the Series II Preferred Stock remaining outstanding.
4.3.2(f)(v) A number of shares of the authorized Common Stock
sufficient to provide for the conversion of the Series II Preferred Stock
outstanding upon the basis hereinbefore provided shall at all times be reserved
for such conversion. If the Corporation shall propose to make any change in its
capital structure which would change the number of shares of Common Stock into
which each share of Series II Preferred Stock shall be convertible as provided
in this Sec tion 4.3.2(f), the Corporation shall at the same time also make
proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved for conversion of the outstanding Series
II Preferred Stock on the new basis.
4.3.2(f)(vi) Each holder of shares of Series II Preferred Stock may
exercise such conversion privilege by surrendering to the Corporation the
certificate for the shares to be converted, together with a written notice of
conversion executed to indicate the number of shares to be converted. Except as
provided in the next sentence, no fractional shares of Common Stock or scrip
representing fractions of shares of Common Stock will be issued. If any fraction
of a share of Common Stock would, except for this subsection, be issuable upon
the conversion of any share or
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shares of Series II Preferred Stock the Corporation shall make payment in lieu
thereof of cash in an amount equal to such fraction multiplied by the fair
market value per share of Common Stock, as determined by the Board of Directors
in the exercise of reasonable discretion, as of the close of business on the
date of such conversion, unless the Corporation is contractually prohibited from
making such cash payment, in which case fractional shares shall be issued.
4.3.2(f)(vii) All shares of Series II Preferred Stock which have
been converted shall no longer be deemed to be outstanding and shall be retired
and all rights with respect to such shares, including the rights, if any, to
receive notices and to vote, shall forthwith cease, except for the right of the
holders thereof to receive Common Stock in exchange therefor. Such retired
shares of Series II Preferred Stock shall become authorized but unissued
Preferred Stock.
4.3.3 SERIES I SENIOR PREFERRED STOCK.
4.3.3(a) RANK. Each share of Series I Senior Preferred Stock shall
rank on a parity with the Series II Senior Preferred Stock and prior to the
Common Stock and Junior Preferred Stock with respect to Accretion Dividends (as
set forth in Section 4.3.3(b)(i)), rights upon any liquidation, dissolution or
winding-up of the Corporation (as and to the extent set forth in Section
4.3.3(b)(iii)) and rights upon merger and consolidation (as and to the extent
set forth in Section 4.3.3(b)(ii)).
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4.3.3(b)(i) DIVIDENDS AND DISTRIBUTIONS. Each issued and outstanding
share of Series I Senior Preferred Stock shall entitle the holder thereof to
receive, out of funds legally available therefor, dividends and distributions
(whether in the form of cash, property or shares of the Corporation's capital
stock, or otherwise), when, as and if declared by the Board of Directors. Shares
of Common Stock, Junior Preferred Stock and Senior Preferred Stock shall have
identical rights with respect to dividends and distributions (except as provided
below in this Section 4.3.3(b)(i) in the case of Series I Senior Preferred Stock
and Section 4.3.4(b)(i) in the case of Series II Senior Preferred Stock with
respect to Accretion Dividends, and except as provided in Section 4.3.1(b)(iii)
in the case of Series I Preferred Stock, Section 4.3.2(b)(iii) in the case of
Series II Preferred Stock, Section 4.3.3(b)(iii) in the case of Series I Senior
Preferred Stock and Section 4.3.4(b)(iii) in the case of Series II Senior
Preferred Stock with respect to rights upon any liquidation, dissolution or
winding-up of the Corporation, in each case, subject to appropriate adjustment
in the event of any split, reclassification, subdivision or combination of the
outstanding shares of any such stock); PROVIDED that any dividend or other
distribution payable in shares of the capital stock of the Corporation shall be
made to all holders of Common Stock, Junior Preferred Stock and Senior Preferred
Stock in an equal number of shares of such capital stock for each outstanding
share thereof (subject to appropriate adjustment in the event of any split,
reclassification, subdivision or combination of the outstanding
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shares of any such stock) and may be made only as follows: (i) in shares of
Common Stock to the holders of Common Stock; in shares of Series I Preferred
Stock to the holders of Series I Preferred Stock; in shares of Series II
Preferred Stock to the holders of Series II Preferred Stock; in shares of Series
I Senior Preferred Stock to the holders of Series I Senior Preferred Stock; and
in shares of Series II Senior Preferred Stock to the holders of Series II Senior
Preferred Stock or (ii) in any authorized class of capital stock of the
Corporation other than Common Stock, Series I Preferred Stock, Series II
Preferred Stock, Series I Senior Preferred Stock and Series II Senior Preferred
Stock to the holders of Common Stock, Series I Preferred Stock, Series II
Preferred Stock, Series I Senior Preferred Stock and Series II Senior Preferred
Stock; PROVIDED FURTHER, that the holders of Series II Preferred Stock and
Series II Senior Preferred Stock shall not be entitled to receive voting
securities or capital stock of any entity to the extent that doing so would
result in a violation of any applicable federal banking law or regulation, and
such holders shall instead receive, to the extent necessary to avoid a violation
of any applicable federal banking law or regulation, securities or capital stock
conferring rights that are as nearly identical to (but no more favorable than)
those received by the holders of other capital stock of the Corporation as would
not violate any applicable federal banking law or regulation (which may, if
permitted by law or regulation, be a convertible security). The Corporation
shall be entitled to rely conclusively upon the written
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statement of any holder of Series II Preferred Stock or Series II Senior
Preferred Stock as to the status of any voting securities or capital stock to be
received as a dividend or distribution on such stock and the nature of any
limitation on the amount or the rights associated with such securities or
capital stock necessary to comply with any applicable federal banking law or
regulation. Notwithstanding the foregoing and whether or not declared by the
Board of Directors, dividends will accumulate on each share of Series I Senior
Preferred Stock at the rate of 13.5% per annum on the Senior Liquidation
Preference from time to time (such dividends, as well as the dividends that
accumulate on the Series II Senior Preferred Stock as described in the last
sentence of Section 4.3.4(b)(i), are each herein referred to as the "ACCRETION
DIVIDENDS"). Such Accretion Dividends will not be paid currently but will
instead increase, on each Dividend Compounding Date, the Senior Liquidation
Preference per share.
4.3.3(b)(ii) MERGERS AND CONSOLIDATIONS. The Corporation shall not
merge, consolidate or combine with another entity (whether or not the
Corporation is the surviving entity), unless proper provision is made pursuant
to the terms of such merger, consolidation or combination so that, (i) if the
consideration to be received is capital stock of the surviving or resulting
corporation, the holders of Common Stock, Junior Preferred Stock and Senior
Preferred Stock all will be entitled to receive capital stock having the same,
or as nearly equivalent as practicable, powers,
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preferences, participating, optional or other special rights, qualifications and
restrictions as apply to such stock pursuant to the provisions of this
Certificate of Incorporation, or (ii) if the consideration to be received is
cash or property (other than capital stock of the surviving or resulting
corporation), or any combination thereof, the holders of Common Stock, Junior
Preferred Stock and Senior Preferred Stock all will be entitled to receive cash
or property in the same amount that such holders would otherwise be entitled to
receive if all such cash or property were distributed upon any liquidation,
dissolution or winding-up of the Corporation pursuant to the applicable
provisions of this Certificate of Incorporation; PROVIDED that holders of Series
II Preferred Stock and Series II Senior Preferred Stock shall not be entitled to
receive voting securities or capital stock of any entity to the extent that
doing so would result in a violation of any applicable federal banking law or
regulation, and such holders shall instead receive, to the extent necessary to
avoid a violation of any applicable federal banking law or regulation,
securities or capital stock conferring rights that are as nearly identical to
(but no more favorable than) those received by the holders of other capital
stock of the Corporation as would not violate any applicable federal banking law
or regulation (which may, if permitted by law or regulation, be a convertible
security). The Corporation shall be entitled to rely conclusively upon the
written statement of any holder of Series II Preferred Stock or Series II Senior
Preferred Stock as to the status of any voting securities or capital
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stock to be received as a dividend or distribution on such stock and the nature
of any limitation on the amount or the rights associated with such securities or
capital stock necessary to comply with any applicable federal banking law or
regulation.
4.3.3(b)(iii) DISSOLUTION, ETC. In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and liabilities of the
Corporation and before any payment or provision for payment shall be made to the
holders of Series I Preferred Stock, Series II Preferred Stock or Common Stock,
the holders of Series I Senior Preferred Stock, together with the holders of
Series II Senior Preferred Stock, shall be entitled to receive out of the assets
of the Corporation available for distribution to stockholders an amount per
share in cash equal to the Senior Liquidation Preference plus all Accrued
Accretion Dividends (calculated to the date of liquidation, dissolution or
winding-up of the Corporation), subject to appropriate adjustment in the event
of any split, reclassification, subdivision or combination of the outstanding
shares of Series I Senior Preferred Stock or the issuance of additional shares
of Series I Senior Preferred Stock as a dividend or distribution on the
outstanding shares of Series I Senior Preferred Stock. Notwithstanding anything
herein to the contrary, the aggregate Senior Liquidation Preference plus Accrued
Accretion Dividends applicable to the Series II Senior Preferred Stock shall not
at any time exceed the greater of (x) $10 per share, subject to appropriate
adjustment in the
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event of any split, reclassification, subdivision or combination of the
outstanding shares of such stock, and (y) 25% of the aggregate amount available
for distribution to the holders of all of the Corporation's capital stock. If,
after payment of the Senior Liquidation Preference (plus Accrued Accretion
Dividends) per share due to the holders of Senior Preferred Stock any amount
remains for distribution to stockholders, such remaining amount shall be
distributed, as follows: (i) first, to the holders of Series I Preferred Stock
and Series II Preferred Stock ratably in the amount of $10.00 per each
outstanding share; (ii) second, to the holders of Common Stock ratably in the
amount of $10.00 per each outstanding share; (iii) third, to the holders of
Common Stock and Junior Preferred Stock ratably in an amount per each
outstanding share equal to the excess of the Senior Liquidation Preference (plus
Accrued Accretion Dividends) per share over $10.00; and (iv) last, to the
holders of Senior Preferred Stock, Junior Preferred Stock and Common Stock such
that the amount distributed per each outstanding share of Senior Preferred Stock
equals 50% of the amount distributed per each outstanding share of Junior
Preferred Stock and Common Stock, each holder of Series I Senior Preferred Stock
and Series II Senior Preferred Stock to receive the same amount per share, and
each holder of Series I Preferred Stock, Series II Preferred Stock and Common
Stock to receive the same amount per share, in each case subject to appropriate
adjustment in the event of any split, reclassification, subdivision or
combination of the outstanding shares of any
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such stock; PROVIDED that holders of Series II Preferred Stock and Series II
Senior Preferred Stock shall not be entitled to receive voting securities or
capital stock of any entity to the extent that doing so would result in a
violation of any applicable federal banking law or regulation, and such holders
shall instead receive, to the extent necessary to avoid a violation of any
applicable federal banking law or regulation, securities or capital stock
conferring rights that are as nearly identical to (but no more favorable than)
those received by the holders of the other capital stock of the Corporation as
would not violate any applicable federal banking law or regulation (which may,
if permitted by law or regulation, be a convertible security) (it being
understood that the Corporation shall be entitled to rely conclusively upon the
written statement of any holder of the Series II Preferred Stock or Series II
Senior Preferred Stock as to the status of any voting securities or capital
stock to be received as a dividend or distribution on such stock and the nature
of any limitation on the amount or the rights associated with such securities or
capital stock necessary to comply with any applicable federal banking law or
regulation).
4.3.3(b)(iv) The sale, conveyance, exchange or transfer of all or
substantially all of the property and assets of the Corporation or the merger or
consolidation of the Corporation into any other corporation, or the merger of
any other corporation into the Corporation, shall not be deemed to be a
liquidation, dissolution or winding-up of the Corporation for purposes of this
Section 4.3.3(b).
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4.3.3(b)(v) If the assets distributable upon any liquidation,
dissolution or winding-up of the Corporation to holders of Series I Senior
Preferred Stock then outstanding and any shares of capital stock of the
Corporation ranking on a parity (with respect to such distribution) with Series
I Senior Preferred Stock, including, without limitation, the Series II Senior
Preferred Stock, shall be insufficient to pay to the holders of all outstanding
shares of such stock the full amounts to which they are respectively entitled,
then such assets shall be distributed ratably among the holders of all
outstanding shares of Series I Senior Preferred Stock and any shares of capital
stock of the Corporation ranking on parity (with respect to such distribution)
with the Series I Senior Preferred Stock in proportion to the full amounts to
which they respectively are entitled.
4.3.3(c) SUBORDINATE STOCK. Subject to the restrictions on the
payment of dividends or making of distributions on the capital stock of the
Corporation as provided in Section 4.3.7 hereof, so long as any Series I Senior
Preferred Stock shall remain outstanding, no dividend shall be declared or paid
upon, nor shall any distribution be made upon, (A) any shares of Junior
Preferred Stock or Common Stock, other than dividends or distributions on the
Junior Preferred Stock and Common Stock in equal amounts as provided in Section
4.3.3(b)(i) above or (B) any shares of Subordinate Stock, other than dividends
or distributions payable in shares of Subordinate Stock; nor (except as provided
in any Management Subscription
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Agreement and except as contemplated by the Repurchase Agreement) shall any
shares of Common Stock, Junior Preferred Stock or Subordinate Stock be purchased
or redeemed by the Corporation; nor shall any moneys be paid to or made
available for a sinking fund for the purchase or redemption of any Common Stock,
Junior Preferred Stock or Subordinate Stock, except for purchases or redemptions
of Common Stock pursuant to any Management Subscription Agreement or the
Repurchase Agreement.
4.3.3(d)(i) OFFER TO REPURCHASE. In the event that the Board of
Directors of the Corporation determines to declare any dividend or distribution
on any of the outstanding shares of Senior Preferred Stock, Junior Preferred
Stock or Common Stock (other than Accretion Dividends with respect to Senior
Preferred Stock and other than dividends or distributions in capital stock of
the Corporation or distributions upon any liquidation, dissolution or winding-up
of the Corporation), before any payment thereof by the Corporation to the
holders of such stock, the Corporation shall first offer to repurchase (the
"REPURCHASE OFFER"), for a purchase price per share equal to the Senior
Liquidation Preference plus Accrued Accretion Dividends (calculated to the
Repurchase Date (as defined below)), that number of shares of Senior Preferred
Stock that may be purchased for such purchase price with the aggregate amount of
such proposed dividend or distribution (the "REPURCHASE OFFER AMOUNT"). Such
offer shall be made available to all holders of Senior
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Preferred Stock. If the Repurchase Offer Amount is insufficient to repurchase
all the shares of Senior Preferred Stock tendered for repurchase in the
Repurchase Offer, the Corporation shall repurchase only the aggregate amount of
Senior Preferred Stock that may be so purchased for the Repurchase Offer Amount,
such shares to be allocated PRO RATA among all such stock validly tendered for
repurchase. Any portion of the Repurchase Offer Amount not required to be
applied to repurchase shares of Senior Preferred Stock by reason of any holder's
failure to validly tender shares or otherwise, may thereafter be paid as a
dividend on the Senior Preferred Stock (other than with respect to the shares so
repurchased), Junior Preferred Stock and Common Stock in accordance with the
provisions for such payment set forth in Sections 4.3.3(b)(i), 4.3.4(b)(i),
4.3.1(b)(i), 4.3.2(b)(i) and 4.2.1(a) (and, in the case of the Senior Preferred
Stock, without regard to any Accretion Dividends); PROVIDED that no such payment
shall be deemed to be a payment on account of (and such payment shall not
reduce) the Senior Liquidation Preference or any Accrued Accretion Dividends.
4.3.3(d)(ii) The Corporation shall offer to repurchase shares of
Senior Preferred Stock pursuant to Section 4.3.3(d)(i) by giving notice (the
"REPURCHASE NOTICE") to each holder thereof at such holder's registered address
by first-class mail, postage prepaid, offering to purchase in the aggregate from
all such holders up to the total number of shares that may be purchased based on
the Repurchase Offer Amount. Each such notice shall state: (i) the total number
of shares being offered to be
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purchased; (ii) the expiration date of the offer (the "EXPIRATION DATE"); (iii)
that the shares of Senior Preferred Stock are being offered to be purchased
pursuant to this provision; (iv) the purchase price per share; and (v) the
instructions for tendering shares, including that certificates for such shares
may be tendered for purchase at the Company's principal office.
4.3.3(d)(iii) Holders of shares of Senior Preferred Stock electing
to tender their shares in the Repurchase Offer shall surrender their
certificates representing such shares to the Corporation at its principal office
(or as otherwise notified) on or before the Expiration Date (which shall be at
least 20 business days, but not later than 30 business days, after the giving of
the Repurchase Notice), and promptly thereafter the purchase price for such
shares accepted for purchase in accordance with Section 4.3.3(d)(i) shall be
payable to the order of the person whose name appears on such certificate as the
owner thereof and each surrendered certificate shall be cancelled. The failure
by any holder of Senior Preferred Stock receiving the Repurchase Offer to
validly tender shares to the Corporation by the Expiration Date shall be deemed
to be a rejection of such offer, and such holder's shares of Senior Preferred
Stock shall not be repurchased pursuant thereto. From and after the Expiration
Date, unless there shall have been a default in payment of the purchase price
therefor, all rights of the holders of such surrendered shares of Senior
Preferred Stock to be purchased by the Corporation, except the right to receive
the purchase
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price therefor, shall cease with respect to such shares upon surrender of their
certificates, and such shares thereafter shall not be transferred or
transferable on the records of the Company or be deemed to be outstanding for
any purpose whatsoever.
4.3.3(e) VOTING; CONSENT. Except as otherwise expressly provided in
this Section 4.3.3(e), and except as otherwise may be required by law, holders
of the shares of Series I Senior Preferred Stock shall be entitled to vote on
all matters whatsoever which may be the subject of proper action by stockholders
of the Corporation, voting together as a single class with the holders of Common
Stock and Series I Preferred Stock; PROVIDED that holders of Series I Senior
Preferred Stock shall not be entitled to vote in any election for Directors.
Each outstanding share of Series I Senior Preferred Stock shall entitle the
holder thereof to one vote, subject to appropriate adjustment in the event of
any split, reclassification, subdivision or combination of the then outstanding
shares of any Common Stock, Junior Preferred Stock or Senior Preferred Stock.
None of the following actions shall be taken except with the
affirmative vote of holders of at least 80% of the outstanding shares of Series
I Senior Preferred Stock, given either by written consent in lieu of a meeting
of stockholders or at a meeting of stockholders duly called for that purpose:
(i) an authorization of, or increase in the then authorized amount of, any class
or series of any class of capital stock of the Corporation (other than Senior
Preferred Stock) ranking prior to or on a
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parity with (either as to dividends or distributions upon liquidation,
dissolution, or winding-up of the Corporation, whether voluntary or involuntary)
the shares of Series I Senior Preferred Stock or Series II Senior Preferred
Stock or (ii) any amendment of this Certificate of Incorporation that would
alter any of the provisions of the shares of either the Series I Senior
Preferred Stock or Series II Senior Preferred Stock so as to adversely affect
any or all of the rights, powers or preferences thereof or any or all of the
holders thereof; PROVIDED that if any of the actions referred to in clauses (i)
and (ii) above affects both the holders of Series I Senior Preferred Stock and
the holders of Series II Senior Preferred Stock equally, such action shall
instead require the affirmative vote of the holders of at least 80% of the
Series I Senior Preferred Stock and Series II Senior Preferred Stock, voting
together as a single class, given either by written consent in lieu of a meeting
or at a meeting of stockholders duly called for that purpose. In addition, none
of the following actions shall be taken except with the affirmative vote, given
either by written consent in lieu of a meeting of stockholders or at a meeting
of stockholders duly held for that purpose, of BOTH (x) the holders of at least
80% of the outstanding shares of Series I Senior Preferred Stock and (y) the
holders of at least a majority of the outstanding shares of Senior Preferred
Stock, voting together as a single class: (A) an increase in the authorized
amount of Series I Senior Preferred Stock or any Junior Preferred Stock or (B)
the issuance by the Corporation, after the date of original issuance, of any
additional shares of Series I
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Senior Preferred Stock or Junior Preferred Stock (including, without limitation,
the issuance by the Corporation of any shares of Series I Senior Preferred Stock
or Junior Preferred Stock theretofore redeemed or otherwise repurchased by the
Corporation).
4.3.3(f)(i) CONVERSION. Each share of Series I Senior Preferred
Stock shall be convertible into one share of Common Stock, subject to adjustment
as provided in Section 4.3.3(f)(ii) hereof, (a) at any time at the option of the
holder thereof, in whole or in part; and (b) at any time at the option of the
Corporation, in whole but not in part, after the conversion of at least 75% of
the shares of Senior Preferred Stock outstanding on the original date of
issuance into Common Stock by the holders thereof (whether such shares of Senior
Preferred Stock were converted directly into Common Stock, or indirectly into
such stock after first being converted into Junior Preferred Stock as provided
in the next sentence or as provided in Sec tion 4.3.4(f)(i) or Section
4.3.8(a)(iii). In addition, each share of Series I Senior Preferred Stock shall
be convertible into one share of Series I Preferred Stock, subject to adjustment
as provided in Section 4.3.3(f)(ii) hereof, at any time at the option of the
Corporation in the event the Corporation consummates an underwritten public
offering of the Common Stock in which the aggregate net proceeds to the
Corporation raised in the offering are at least $50 million and the net offering
price per share equals or is greater than an amount equal to $10 plus interest
thereon at a rate of 13.50% per annum, compounded semiannually on January 1 and
July 1 of each year
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from the date of original issuance of Senior Preferred Stock to the date of
consummation of such public offering.
4.3.3(f)(ii) The conversion rates set forth in Section 4.3.3(f)(i)
above and Section 4.3.8(a)(iii) below shall be subject to adjustment as provided
in this Section 4.3.3(f) (unless, simultaneously with the occurrence of any of
the following events, there shall have been a proportionate adjustment in the
number of shares of Series I Senior Preferred Stock):
(A) In case the shares of Common Stock or Series I Preferred
Stock at any time outstanding shall be combined into a lesser number of
shares, whether by reclassification, reduction of capital stock or
otherwise, the applicable conversion rate with respect to such Common
Stock or such Series I Preferred Stock, as the case may be, shall be
proportionately decreased.
(B) In case the shares of Common Stock or Series I Preferred
Stock at any time outstanding shall be subdivided, by reclassification,
recapitalization or otherwise (excluding the issuance of shares of Common
Stock or Series I Preferred Stock as a dividend or distribution on Common
Stock or Series I Preferred Stock, respectively, in accordance with
Section 4.2.1(a) hereof) into a greater number of shares without the
actual receipt by the Corporation of any consideration for the additional
number of
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shares so issued, the applicable conversion rate with respect to such
Common Stock or such Series I Preferred Stock, as the case may be, shall
be proportionately increased.
4.3.3(f)(iii) Any conversion rate determined or adjusted as provided
in this Section 4.3.3(f) shall remain in effect until further adjustment as
required herein. Upon each adjustment of the conversion rate a written
instrument signed by an officer of the Corporation, setting forth such
adjustment, the computation thereof and a summary of the facts upon which it is
based, shall forthwith be filed with the transfer agent for the Series I Senior
Preferred Stock and made available for inspection by the holders of such stock,
and any adjustment so evidenced, made in good faith, shall be binding upon all
such holders and upon the Corporation.
4.3.3(f)(iv) In case of any reclassification or change in the
outstanding shares of Common Stock or Series I Preferred Stock, as the case may
be, issuable upon conversion of the shares of Series I Senior Preferred Stock,
the holder of each share of Series I Senior Preferred Stock then outstanding
shall have the right thereafter to receive upon the conversion of such shares
into what would otherwise have been Common Stock or Series I Preferred Stock,
respectively, such kind and amount of shares of stock and other securities and
property receivable upon such reclassification or change by a holder of the
number of shares of Common Stock or Series I Preferred Stock (in each case,
whole or fractional), respectively, of the
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Corporation into which such share of Series I Senior Preferred Stock might have
been converted had such conversion occurred immediately prior to such
reclassification or change; PROVIDED that effective provision shall be made, in
the certificate of incorporation of the Corporation or otherwise, so that, in
the opinion of the Board of Directors of the Corporation, the provisions set
forth in this Section 4.3.3(f) for the protection of the conversion rights of
the holders of Series I Senior Preferred Stock shall thereafter be applicable,
as nearly as reasonably may be, to any such other shares of stock and other
securities and property deliverable upon conversion of the Series I Senior
Preferred Stock remaining outstanding.
4.3.3(f)(v) A number of shares of the authorized Common Stock and
Series I Preferred Stock sufficient to provide for the conversion of the Series
I Senior Preferred Stock outstanding upon the basis hereinbefore provided shall
at all times be reserved for such conversion. If the Corporation shall propose
to make any change in its capital structure which would change the number of
shares of Common Stock or Series I Preferred Stock into which each share of
Series I Senior Preferred Stock shall be convertible as provided in this Section
4.3.3(f), the Corporation shall at the same time also make proper provision so
that thereafter there shall be a sufficient number of shares of Common Stock and
Series I Preferred Stock authorized and reserved for conversion of the
outstanding Series I Senior Preferred Stock on the new basis.
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4.3.3(f)(vi) Each holder of shares of Series I Senior Preferred
Stock may exercise any such conversion privilege by surrendering to the
Corporation the certificate for the shares to be converted, together with a
written notice of conversion executed to indicate the number of shares to be
converted. Except as set forth in the next sentence, no fractional shares of
Common Stock or Series I Preferred Stock or scrip representing fractions of
shares of such stock will be issued. If any fraction of a share of such stock
would, except for this subsection, be issuable upon the conversion of any share
or shares of Series I Senior Preferred Stock, the Corporation shall make payment
in lieu thereof of cash in an amount equal to such fraction multiplied by the
fair market value per share of such stock, as determined by the Board of
Directors in the exercise of reasonable discretion, as of the close of business
on the date of such conversion, unless the Corporation is contractually
prohibited from making such cash payment, in which case fractional shares shall
be issued.
4.3.3(f)(vii) The Corporation may exercise any such conversion
privilege by giving notice by first-class mail, postage prepaid, mailed not less
than thirty (30) nor more than sixty (60) days prior to the conversion date, to
each record holder of shares of Series I Senior Preferred Stock at such holder's
registered address. Each such notice shall state: (i) the conversion date; (ii)
the conversion rate; and (iii) the total number of shares of Series I Senior
Preferred Stock to be converted. Each holder of shares of Series I Senior
Preferred Stock to be converted pursuant to this
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Section 4.3.3(f)(vi) shall tender the certificate or certificates representing
the shares subject to conversion to the Corporation at its principal office or
to the transfer agent of the Series I Senior Preferred Stock, if any.
4.3.3(f)(viii) All shares of Series I Senior Preferred Stock which
have been converted shall no longer be deemed to be outstanding and shall be
retired and all rights with respect to such shares, including the rights, if
any, to receive notices and to vote, shall forthwith cease, except for the right
of the holders thereof to receive Common Stock or Series I Preferred Stock, as
the case may be, in exchange therefor. Such retired shares of Series I Senior
Preferred Stock shall become authorized but unissued Preferred Stock.
4.3.4. SERIES II SENIOR PREFERRED STOCK.
4.3.4(a) RANK. Each share of Series II Senior Preferred Stock shall
rank on a parity with the Series I Senior Preferred Stock and prior to the
Common Stock and Junior Preferred Stock with respect to Accretion Dividends (as
set forth in Section 4.3.4(b)(i)), rights upon any liquidation, dissolution or
winding-up of the Corporation (as and to the extent set forth in Section
4.3.4(b)(iii)) and rights upon merger and consolidation (as and to the extent
set forth in Section 4.3.4(b)(ii)).
4.3.4(b)(i) DIVIDENDS AND DISTRIBUTIONS. Each issued and outstanding
share of Series II Senior Preferred Stock shall entitle the holder thereof to
receive, out of funds legally available therefor, dividends and distributions
(whether in the form of
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cash, property or shares of the Corporation's capital stock, or otherwise),
when, as and if declared by the Board of Directors. Shares of Common Stock,
Junior Preferred Stock and Senior Preferred Stock shall have identical rights
with respect to dividends and distributions (except as provided below in this
Section 4.3.4(b)(i) in the case of Series II Senior Preferred Stock and Section
4.3.3(b)(i) in the case of Series I Senior Preferred Stock with respect to
Accretion Dividends, and except as provided in Section 4.3.1(b)(iii) in the case
of Series I Preferred Stock, Section 4.3.2(b)(iii) in the case of Series II
Preferred Stock, Section 4.3.3(b)(iii) in the case of Series I Senior Preferred
Stock and Section 4.3.4(b)(iii) in the case of Series II Senior Preferred Stock
with respect to rights upon any liquidation, dissolution or winding-up of the
Corporation, in each case, subject to appropriate adjustment in the event of any
split, reclassification, subdivision or combination of the outstanding shares of
any such stock); PROVIDED that any dividend or other distribution payable in
shares of the capital stock of the Corporation shall be made to all holders of
Common Stock, Junior Preferred Stock and Senior Preferred Stock in an equal
number of shares of such capital stock for each outstanding share thereof
(subject to appropriate adjustment in the event of any split, reclassification,
subdivision or combination of the outstanding shares of any such stock) and may
be made only as follows: (i) in shares of Common Stock to the holders of Common
Stock; in shares of Series I Preferred Stock to the holders of Series I
Preferred Stock; in shares of Series II Preferred Stock to the
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holders of Series II Preferred Stock; in shares of Series I Senior Preferred
Stock to the holders of Series I Senior Preferred Stock; and in shares of Series
II Senior Preferred Stock to the holders of Series II Senior Preferred Stock or
(ii) in any authorized class of capital stock of the Corporation other than
Common Stock, Series I Preferred Stock, Series II Preferred Stock, Series I
Senior Preferred Stock and Series II Senior Preferred Stock to the holders of
Common Stock, Series I Preferred Stock, Series II Preferred Stock, Series I
Senior Preferred Stock and Series II Senior Preferred Stock; PROVIDED FURTHER,
that the holders of Series II Preferred Stock and Series II Senior Preferred
Stock shall not be entitled to receive voting securities or capital stock of any
entity to the extent that doing so would result in a violation of any applicable
federal banking law or regulation, and such holders shall instead receive, to
the extent necessary to avoid a violation of any applicable federal banking law
or regulation, securities or capital stock conferring rights that are as nearly
identical to (but no more favorable than) those received by the holders of other
capital stock of the Corporation as would not violate any applicable federal
banking law or regulation (which may, if permitted by law or regulation, be a
convertible security). The Corporation shall be entitled to rely conclusively
upon the written statement of any holder of Series II Preferred Stock or Series
II Senior Preferred Stock as to the status of any voting securities or capital
stock to be received as a dividend or distribution on such stock and the nature
of any limitation on the amount or the rights
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associated with such securities or capital stock necessary to comply with any
applicable federal banking law or regulation. Notwithstanding the foregoing and
whether or not declared by the Board of Directors, Accretion Dividends will
accumulate on each share of Series II Senior Preferred Stock on at the rate of
13.5% per annum on the Senior Liquidation Preference from time to time. Such
Accretion Dividends will not be paid currently but will instead increase, on
each Dividend Compounding Date, the Senior Liquidation Preference per share.
4.3.4(b)(ii) MERGERS AND CONSOLIDATIONS. The Corporation shall not
merge, consolidate or combine with another entity (whether or not the
Corporation is the surviving entity), unless proper provision is made pursuant
to the terms of such merger, consolidation or combination so that, (i) if the
consideration to be received is capital stock of the surviving or resulting
corporation, the holders of Common Stock, Junior Preferred Stock and Senior
Preferred Stock all will be entitled to receive capital stock having the same,
or as nearly equivalent as practicable, powers, preferences, participating,
optional or other special rights, qualifications and restrictions as apply to
such stock pursuant to the provisions of this Certificate of Incorporation, or
(ii) if the consideration to be received is cash or property (other than capital
stock of the surviving or resulting corporation), or any combination thereof,
the holders of Common Stock, Junior Preferred Stock and Senior Preferred Stock
all will be entitled to receive cash or property in the same amount that such
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holders would otherwise be entitled to receive if all such cash or property were
distributed upon any liquidation, dissolution or winding-up of the Corporation
pursuant to the applicable provisions of this Certificate of Incorporation;
PROVIDED that holders of Series II Preferred Stock and Series II Senior
Preferred Stock shall not be entitled to receive voting securities or capital
stock of any entity to the extent that doing so would result in a violation of
any applicable federal banking law or regulation, and such holders shall instead
receive, to the extent necessary to avoid a violation of any applicable federal
banking law or regulation, securities or capital stock conferring rights that
are as nearly identical to (but no more favorable than) those received by the
holders of other capital stock of the Corporation as would not violate any
applicable federal banking law or regulation (which may, if permitted by law or
regulation, be a convertible security). The Corporation shall be entitled to
rely conclusively upon the written statement of any holder of Series II
Preferred Stock or Series II Senior Preferred Stock as to the status of any
voting securities or capital stock to be received as a dividend or distribution
on such stock and the nature of any limitation on the amount or the rights
associated with such securities or capital stock necessary to comply with any
applicable federal banking law or regulation.
4.3.4(b)(iii) DISSOLUTION, ETC. In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and liabilities of the
Corporation and
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before any payment or provision for payment shall be made to the holders of
Series I Preferred Stock, Series II Preferred Stock or Common Stock, the holders
of Series I Senior Preferred Stock, together with the holders of Series II
Senior Preferred Stock, shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders an amount per share in
cash equal to the Senior Liquidation Preference plus all Accrued Accretion
Dividends (calculated to the date of liquidation, dissolution or winding-up of
the Corporation), subject to appropriate adjustment in the event of any split,
reclassification, subdivision or combination of the outstanding shares of Series
II Senior Preferred Stock or the issuance of additional shares of Series II
Senior Preferred Stock as a dividend or distribution on the outstanding shares
of Series II Senior Preferred Stock. Notwithstanding anything herein to the
contrary, the aggregate Senior Liquidation Preference plus Accrued Accretion
Dividends applicable to the Series II Senior Preferred Stock shall not at any
time exceed the greater of (x) $10 per share, subject to appropriate adjustment
in the event of any split, reclassification, subdivision or combination of the
outstanding shares of such stock, and (y) 25% of the aggregate amount available
for distribution to the holders of all of the Corporation's capital stock. If,
after payment of the Senior Liquidation Preference (plus Accrued Accretion
Dividends) per share due to the holders of Senior Preferred Stock, any amount
remains for distribution to stockholders, such remaining amount shall be
distributed, as follows (i) first, to the
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holders of Series I Preferred Stock and Series II Preferred Stock ratably in the
amount of $10.00 per each outstanding share; (ii) second, to the holders of
Common Stock ratably in the amount of $10.00 per each outstanding share; (iii)
third, to the holders of Common Stock and Junior Preferred Stock ratably in an
amount per each outstanding share equal to the excess of the Senior Liquidation
Preference (plus Accrued Accretion Dividends) per share over $10.00; and (iv)
last, to the holders of Senior Preferred Stock, Junior Preferred Stock and
Common Stock such that the amount distributed per each outstanding share of
Senior Preferred Stock equals 50% of the amount distributed per each outstanding
share of Junior Preferred Stock and Common Stock, each holder of Series I Senior
Preferred Stock and Series II Senior Preferred Stock to receive the same amount
per share, and each holder of Series I Preferred Stock, Series II Preferred
Stock and Common Stock to receive the same amount per share, in each case
subject to appropriate adjustment in the event of any split, reclassification,
subdivision or combination of the outstanding shares of any such stock; PROVIDED
that holders of Series II Preferred Stock and Series II Senior Preferred Stock
shall not be entitled to receive voting securities or capital stock of any
entity to the extent that doing so would result in a violation of any applicable
federal banking law or regulation, and such holders shall instead receive, to
the extent necessary to avoid a violation of any applicable federal banking law
or regulation, securities or capital stock conferring rights that are as nearly
identical to (but no more
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favorable than) those received by the holders of the other capital stock of the
Corporation as would not violate any applicable federal banking law or
regulation (which may, if permitted by law or regulation, be a convertible
security) (it being understood that the Corporation shall be entitled to rely
conclusively upon the written statement of any holder of the Series II Preferred
Stock or Series II Senior Preferred Stock as to the status of any voting
securities or capital stock to be received as a dividend or distribution on such
stock and the nature of any limitation on the amount or the rights associated
with such securities or capital stock necessary to comply with any applicable
federal banking law or regulation).
4.3.4(b)(iv) The sale, conveyance, exchange or transfer of all or
substantially all of the property and assets of the Corporation or the merger or
consolidation of the Corporation into any other corporation, or the merger of
any other corporation into the Corporation, shall not be deemed to be a
liquidation, dissolution or winding-up of the Corporation for purposes of this
Section 4.3.4(b).
4.3.4(b)(v) If the assets distributable upon any liquidation,
dissolution or winding-up of the Corporation to holders of Series II Senior
Preferred Stock then outstanding and any shares of capital stock of the
Corporation ranking on a parity (with respect to such distribution) with Series
II Senior Preferred Stock, including, without limitation, the Series I Senior
Preferred Stock, shall be insufficient to pay to the holders of all outstanding
shares of such stock the full amounts to which they are
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respectively entitled, then such assets shall be distributed ratably among the
holders of all outstanding shares of Series II Senior Preferred Stock and any
shares of capital stock of the Corporation ranking on parity (with respect to
such distribution) with Series II Senior Preferred Stock in proportion to the
full amounts to which they respectively are entitled.
4.3.4(c) SUBORDINATE STOCK. Subject to the restrictions on the
payment of dividends or making of distributions on the capital stock of the
Corporation as provided in Section 4.3.7 hereof, so long as any Series II Senior
Preferred Stock shall remain outstanding, no dividend shall be declared or paid
upon, nor shall any distribution be made upon, (A) any shares of Junior
Preferred Stock or Common Stock, other than dividends or distributions on the
Junior Preferred Stock and Common Stock in equal amounts as provided in Section
4.3.4(b)(i) above or (B) any shares of Subordinate Stock, other than dividends
or distributions payable in shares of Subordinate Stock; nor (except as provided
in any Management Subscription Agreement and except as provided in the
Repurchase Agreement) shall any shares of Common Stock, Junior Preferred Stock
or Subordinate Stock be purchased or redeemed by the Corporation; nor shall any
moneys be paid to or made available for a sinking fund for the purchase or
redemption of any Common Stock, Junior Preferred Stock or Subordinate Stock,
except for purchases or redemptions of
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Common Stock pursuant to any Management Subscription Agreement or the
Repurchase Agreement.
4.3.4(d)(i) OFFER TO REPURCHASE. In the event that the Board of
Directors of the Corporation determines to declare any dividend or distribution
on any of the outstanding shares of Senior Preferred Stock, Junior Preferred
Stock or Common Stock (other than Accretion Dividends with respect to Senior
Preferred Stock and other than dividends or distributions in capital stock of
the Corporation or distributions upon any liquidation, dissolution or winding-up
of the Corporation), before any payment thereof by the Corporation to the
holders of such stock, the Corporation shall first make a Repurchase Offer to
repurchase, for a purchase price per share equal to the Senior Liquidation
Preference plus Accrued Accretion Dividends (calculated to the Repurchase Date),
that number of shares of Senior Preferred Stock that may be purchased for such
purchase price with the Repurchase Offer Amount. Such offer shall be made
available to all holders of Senior Preferred Stock. If the Repurchase Offer
Amount is insufficient to repurchase all the shares of Senior Preferred Stock
tendered for purchase in the Repurchase Offer, the Corporation shall repurchase
only the aggregate amount of Senior Preferred Stock that may be so purchased for
the Repurchase Offer Amount, such shares to be allocated PRO RATA among all such
stock validly tendered for repurchase. Any portion of the Repurchase Offer
Amount not required to be applied to repurchase shares of Senior
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Preferred Stock by reason of any holder's failure to validly tender shares or
otherwise, may thereafter be paid as a dividend on the Senior Preferred Stock
(other than with respect to the shares so repurchased), Junior Preferred Stock
and Common Stock in accordance with the provisions for such payment set forth in
Sections 4.3.3(b)(i), 4.3.4(b)(i), 4.3.1(b)(i), 4.3.2(b)(i) and 4.2.1(a) (and,
in the case of the Senior Preferred Stock, without regard to any Accretion
Dividends); PROVIDED that no such payment shall be deemed to be a payment on
account of (and such payment shall not reduce) the Senior Liquidation Preference
or any Accrued Accretion Dividends.
4.3.4(d)(ii) The Corporation shall offer to repurchase shares of
Senior Preferred Stock pursuant to Section 4.3.4(d)(i) by giving the Repurchase
Notice to each holder thereof at such holder's registered address by first-class
mail, postage prepaid, offering to purchase in the aggregate from all such
holders up to the total number of shares that may be purchased based on the
Repurchase Offer Amount. Each such notice shall state: (i) the total number of
shares being offered to be purchased; (ii) the Expiration Date of the offer;
(iii) that the shares of Senior Preferred Stock are being offered to be
purchased pursuant to this provision; (iv) the purchase price per share; and (v)
the instructions for tendering shares, including that certificates for such
shares may be tendered for purchase at the Company's principal office.
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4.3.4(d)(iii) Holders of shares of Senior Preferred Stock electing
to tender their shares in the Repurchase Offer shall surrender their
certificates representing such shares to the Corporation at its principal office
(or as otherwise notified) on or before the Expiration Date (which shall be at
least 20 business days, but not more than 30 business days, after the giving of
the Repurchase Notice), and promptly thereafter the purchase price for such
shares accepted for payment in accordance with Section 4.3.4(d)(i) shall be
payable to the order of the person whose name appears on such certificate as the
owner thereof and each surrendered certificate shall be cancelled. The failure
by any holder of Senior Preferred Stock receiving the Repurchase Offer to
validly tender shares to the Corporation by the Expiration Date shall be deemed
to be a rejection of such offer, and such holder's shares of Senior Preferred
Stock shall not be repurchased pursuant thereto. From and after the Expiration
Date, unless there shall have been a default in payment of the purchase price
therefor, all rights of the holders of such surrendered shares of Senior
Preferred Stock to be purchased by the Corporation, except the right to receive
the purchase price therefor, shall cease with respect to such shares upon
surrender of their certificates, and such shares thereafter shall not be
transferred or transferable on the records of the Company or be deemed to be
outstanding for any purpose whatsoever.
4.3.4(e) VOTING; CONSENT. Except as otherwise expressly provided in
this Section 4.3.4(e) or in Section 4.3.7 hereof, and except as otherwise may be
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required by law, the holders of the shares of Series II Senior Preferred Stock
shall not be entitled to vote on any matters whatsoever which may be the subject
of action by stockholders of the Corporation.
None of the following actions shall be taken except with the
affirmative vote of holders of at least 80% of the outstanding shares of Series
II Senior Preferred Stock, given either by written consent in lieu of a meeting
of stockholders or at a meeting of stockholders duly called for that purpose:
(i) an authorization of, or increase in the then authorized amount of, any class
or series of any class of capital stock of the Corporation (other than Junior
Preferred Stock or Senior Preferred Stock) ranking prior to or on a parity with
(either as to dividends or distributions upon any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary) the shares of
Series I Senior Preferred Stock or Series II Senior Preferred Stock or (ii) any
amendment of this Certificate of Incorporation that would alter any of the
provisions of the shares of either the Series I Senior Preferred Stock or Series
II Senior Preferred Stock so as to adversely affect any or all of the rights,
powers or preferences thereof or any or all of the holders thereof; PROVIDED
that if any of the actions referred to in clauses (i) and (ii) above affects
both the holders of Series I Senior Preferred Stock and the holders of Series II
Senior Preferred Stock equally, such action shall instead require the
affirmative vote of the holders of at least 80% of the Series I Senior Preferred
Stock and Series II Senior Preferred Stock, voting
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together as a single class, given either by written consent in lieu of a meeting
or at a meeting of stockholders duly called for that purpose. In addition, none
of the following actions shall be taken except with the affirmative vote, given
either by written consent in lieu of a meeting of stockholders or at a meeting
of stockholders duly held for that purpose, of BOTH (x) the holders of at least
80% of the outstanding shares of Series II Senior Preferred Stock and (y) the
holders of at least a majority of the outstanding shares of Senior Preferred
Stock, voting together as a single class: (A) an increase in the authorized
amount of Series II Senior Preferred Stock or any Junior Preferred Stock or (B)
the issuance by the Corporation, after the date of original issuance, of any
additional shares of Series II Senior Preferred Stock or any Junior Preferred
Stock (including, without limitation, the issuance by the Corporation of any
shares of Series II Senior Preferred Stock or Junior Preferred Stock theretofore
redeemed or otherwise repurchased by the Corporation).
On any matter as to which the shares of Series II Senior Preferred
Stock are entitled to a vote, each outstanding share of Series II Senior
Preferred Stock shall entitle the holder thereof to one vote per share, subject
to appropriate adjustment in the event of any split, reclassification,
subdivision or combination of the then outstanding shares of any of the Common
Stock, Junior Preferred Stock or Senior Preferred Stock.
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4.3.4(f)(i) CONVERSION. Each share of Series II Senior Preferred
Stock shall be convertible into one share of Common Stock, subject to adjustment
as provided in Section 4.3.4(f)(ii) hereof, (a) at any time at the option of the
holder thereof, in whole or in part; and (b) at any time at the option of the
Corporation, in whole but not in part, after the conversion of at least 75% of
the shares of Senior Preferred Stock outstanding on the date of original
issuance into Common Stock by the holders thereof (whether such shares of Senior
Preferred Stock were converted directly into Common Stock, or indirectly into
such stock after first being converted into Junior Preferred Stock as provided
in the next sentence as provided in Section 4.3.3(f)(i) or Section
4.3.8(a)(iii). In addition, each share of Series II Senior Preferred Stock shall
be convertible into one share of Series II Preferred Stock, subject to
adjustment as provided in Section 4.3.4(f)(ii) hereof, at any time at the option
of the Corporation in the event the Corporation consummates an underwritten
public offering of the Common Stock in which the aggregate net proceeds to the
Corporation raised in the offering are at least $50 million and the net offering
price per share equals or is greater than an amount equal to $10 plus interest
thereon at a rate of 13.50% per annum, compounded semiannually on January 1 and
July 1 of each year from the date of original issuance of Senior Preferred Stock
to the date of consummation of such public offering; PROVIDED that shares of
Series II Senior Preferred Stock may only be converted into shares of Common
Stock pursuant to this
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Section 4.3.4(f) to the extent that the number of shares of Common Stock to be
issued upon such conversion, when added to the aggregate number of shares of
Common Stock then outstanding as a result of prior conversions of Series II
Preferred Stock and Series II Senior Preferred Stock would in the aggregate be
less than 25% of the number of shares of Common Stock outstanding after giving
effect to such conversion.
4.3.4(f)(ii) The conversion rates set forth in Section 4.3.4(f)(i)
above and Section 4.3.8(a)(iii) below shall be subject to adjustment as
hereinafter provided in this Section 4.3.4(f) (unless, simultaneously with the
occurrence of any of the following events, there shall have been a proportionate
adjustment in the number of shares of Series II Senior Preferred Stock):
(A) In case the shares of Common Stock or Series II Preferred
Stock at any time outstanding shall be combined into a lesser number of
shares, whether by reclassification, reduction of capital stock or
otherwise, the conversion rate with respect to such Common Stock or such
Series II Preferred Stock, as the case may be, shall be proportionately
decreased.
(B) In case the shares of Common Stock or Series II Preferred
Stock at any time outstanding shall be subdivided, by reclassification,
recapitalization or otherwise (excluding the issuance of shares of Common
Stock or Series II Preferred Stock as a dividend or distribution on
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Common Stock or Series II Preferred Stock, respectively, in accordance
with Section 4.2.1(a) hereof) into a greater number of shares without the
actual receipt by the Corporation of any consideration for the additional
number of shares so issued, the applicable conversion rate with respect to
such Common Stock of such Series II Preferred Stock, as the case may be,
shall be proportionately increased.
4.3.4(f)(iii) Any conversion rate determined or adjusted as herein
provided in this Section 4.3.4(f) shall remain in effect until further
adjustment as required herein. Upon each adjustment of the conversion rate a
written instrument signed by an officer of the Corporation, setting forth such
adjustment, the computation thereof and a summary of the facts upon which it is
based, shall forthwith be filed with the transfer agent for the Series II Senior
Preferred Stock and made available for inspection by the holders of such stock,
and any adjustment so evidenced, made in good faith, shall be binding upon all
such holders and upon the Corporation.
4.3.4(f)(iv) In case of any reclassification or change in the
outstanding shares of Common Stock or Series II Preferred Stock, as the case may
be, issuable upon conversion of the shares of Series II Senior Preferred Stock
the holder of each share of Series II Senior Preferred Stock then outstanding
shall have the right thereafter to receive upon the conversion of such shares
into what would otherwise
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have been Common Stock or Series II Preferred Stock, respectively, such kind and
amount of shares of stock and other securities and property receivable upon such
reclassification or change by a holder of the number of shares of Common Stock
or Series II Preferred Stock (in each case, whole or fractional), respectively,
of the Corporation into which such share of Series II Senior Preferred Stock
might have been converted had such conversion occurred immediately prior to such
reclassification or change; PROVIDED that effective provision shall be made, in
the certificate of incorporation of the Corporation or otherwise, so that, in
the opinion of the Board of Directors of the Corporation, the provisions set
forth in this Section 4.3.4(f) for the protection of the conversion rights of
the holders of Series II Senior Preferred Stock shall thereafter be applicable,
as nearly as reasonably may be, to any such other shares of stock and other
securities and property deliverable upon conversion of the Series II Senior
Preferred Stock remaining outstanding.
4.3.4(f)(v) A number of shares of the authorized Common Stock and
Series II Preferred Stock sufficient to provide for the conversion of the Series
II Senior Preferred Stock outstanding upon the basis hereinbefore provided shall
at all times be reserved for such conversion. If the Corporation shall propose
to make any change in its capital structure which would change the number of
shares of Common Stock or Series II Preferred Stock into which each share of the
Series II Senior Preferred Stock shall be convertible as provided in this
Section 4.3.4(f), the
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Corporation shall at the same time also make proper provision so that thereafter
there shall be a sufficient number of shares of Common Stock and Series II
Preferred Stock authorized and reserved for conversion of the outstanding Series
II Senior Preferred Stock on the new basis.
4.3.4(f)(vi) Each holder of shares of Series II Senior Preferred
Stock may exercise any such conversion privilege by surrendering to the
Corporation the certificate for the shares to be converted, together with a
written notice of conversion executed to indicate the number of shares to be
converted. Except as provided in the next sentence, no fractional shares of
Common Stock or Series II Preferred Stock or scrip representing fractions of
shares of such stock will be issued. If any fraction of a share of such stock
would, except for this subsection, be issuable upon the conversion of any share
or shares of Series II Senior Preferred Stock, the Corporation shall make
payment in lieu thereof of cash in an amount equal to such fraction multiplied
by the fair market value per share of such stock, as determined by the Board of
Directors in the exercise of reasonable discretion, as of the close of business
on the date of such conversion, unless the Corporation is contractually
prohibited from making such cash payment, in which case fractional shares shall
be issued.
4.3.4(f)(vii) The Corporation may exercise any such conversion
privilege by giving notice by first-class mail, postage prepaid, mailed not less
than thirty (30) nor more than sixty (60) days prior to the conversion date, to
each record
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holder of shares of Series II Senior Preferred Stock at such holder's registered
address. Each such notice shall state: (i) the conversion date; (ii) the
conversion rate; and (iii) the total number of shares of Series II Senior
Preferred Stock to be converted. Each holder of shares of Series II Senior
Preferred Stock to be converted pursuant to this Section 4.3.4(f)(vi) shall
tender the certificate or certificates representing the shares subject to
conversion to the Corporation at its principal office or to the transfer agent
of the Series II Senior Preferred Stock, if any.
4.3.4(f)(viii) All shares of Series II Senior Preferred Stock which
have been converted shall no longer be deemed to be outstanding and shall be
retired and all rights with respect to such shares, including the rights, if
any, to receive notices and to vote, shall forthwith cease, except only the
right of the holders thereof to receive Common Stock or Series II Preferred
Stock, as the case may be, in exchange therefor. Such retired shares of Series
II Senior Preferred Stock shall become authorized but unissued Preferred Stock.
4.3.5 ADDITIONAL NOTICES. In addition to any other obligation to
provide notices contained herein, the Corporation shall notify each holder of
record of shares of Junior Preferred Stock and Senior Preferred Stock not less
than thirty (30) days prior to (a) the setting of a record date for the payment
of any dividends payable in capital stock of the Corporation upon the
outstanding shares of Common Stock or the making of any other distribution
(other than cash dividends) to holders of shares
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of any such stock and (b) the setting of a record date for the distribution to
the holders of shares of Common Stock of rights or warrants to purchase any
shares of the capital stock of the Corporation or cash or any other property.
Such notice shall set forth the proposed record date, the amount of the proposed
dividend or distribution and, if such dividend or distribution is to be made
other than in cash, a description of the capital stock or property to be so
dividended or distributed; PROVIDED that the failure of the Corporation to
provide prior notice of any of the foregoing actions or events shall not void or
invalidate any such actions or events. All such notices shall be given by first
class mail, postage prepaid, addressed to such holder at his post office address
as the same shall appear upon the records of the Corporation.
4.3.6 ADDITIONAL RIGHTS. Notwithstanding any other provision of this
Certificate of Incorporation, in the event any holder of shares of Series II
Preferred Stock or Series II Senior Preferred Stock, respectively, delivers to
the Corporation a written request that such shares be granted additional rights
not then attributable to Series II Preferred Stock or Series II Senior Preferred
Stock, respectively, but which are then attributable (or would be attributable
if any such shares were outstanding) to Series I Preferred Stock or Series I
Senior Preferred Stock, respectively (such additional rights specified in such
written request being hereinafter referred to as "ADDITIONAL RIGHTS"),
accompanied by an opinion of counsel to such holder, rendered
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by a law firm of national standing having expertise in federal banking laws
reasonably acceptable to the Corporation, stating that the possession by such
holder (or, if such holder did not acquire such shares upon original issuance
from the Corporation, that the possession by such holder or any prior direct or
indirect transferor to such holder) of shares having such Additional Rights is
not prohibited by any federal banking law or regulation, the shares of Series II
Preferred Stock or Series II Senior Preferred Stock, as the case may be, then
held by such holder shall thereafter have such Additional Rights attributable to
them (PROVIDED that such shares have been tendered to the Corporation for
legending to reflect the fact that such shares have such Additional Rights
attributable to them). Such Additional Rights may include, without limitation,
the right to convert into shares of Common Stock without regard to the
limitation imposed by the proviso to Section 4.3.2(f)(i) in the case of the
Series II Preferred Stock, and Section 4.3.4(f)(i) in the case of the Series II
Senior Preferred Stock, and the right to vote, together as a single class with
the Series I Preferred Stock and the Series I Senior Preferred Stock, on any
matter on which such stock may vote. Promptly following such time as any shares
of Series II Preferred Stock or Series II Senior Preferred Stock, respectively,
shall have any Additional Rights attributed to them as provided in this Section
4.3.6, the Corporation shall mail to its stockholders, at their addresses set
forth on the records of the Corporation, a notice setting forth the number of
such additional shares of Series II Preferred Stock or
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Series II Senior Preferred Stock, as the case may be, having such Additional
Rights and the record holder(s) thereof, and describing the nature of such
Additional Rights.
4.3.7 RESTRICTIONS ON DIVIDENDS ON JUNIOR PREFERRED STOCK, COMMON
STOCK AND SUBORDINATE STOCK. So long as any shares of Senior Preferred Stock are
outstanding, the Corporation shall not declare or pay any dividends or make any
distributions on Common Stock, Junior Preferred Stock or Subordinate Stock other
than any dividends or distributions (A) in capital stock of the Corporation or,
(B) during any fiscal year of the Corporation, which, in the aggregate, do not
exceed 50% of the Corporation's Net Income for the immediately preceding fiscal
year of the Corporation; PROVIDED that in the case of clause (B) above, no such
dividends or distributions may be made unless immediately thereafter, the
Corporation's stockholder's equity (as set forth in the audited annual financial
statements of the Corporation most recently predating the date of payment of any
such dividends or distributions, but adjusted on a pro forma basis to give
effect to such dividends or distributions) would exceed the sum of (x) the
aggregate Senior Liquidation Preference (plus Accrued Accretion Dividends) on
the Senior Preferred Stock and (y) the aggregate amount payable to the holders
of Junior Preferred Stock upon any liquidation, dissolution or winding-up of the
Corporation other than pursuant to clause (iv) of Section 4.3.1(b)(iii) or
clause (iv) of Section 4.3.2(b)(iii) (in each case calculated to the date of
payment of such dividends or distributions) with respect to all
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then outstanding shares of Senior Preferred Stock and Junior Preferred Stock,
respectively, by at least $1.00.
4.3.8 REDEMPTION.
4.3.8(a)(i) OPTIONAL REDEMPTION. Subject to the terms and conditions
of this Section 4.3.8(a), the Corporation shall have the right, exercisable at
its option at any time after the earlier to occur of the termination of the
Repurchase Agreement in accordance with Section 8 thereof and the consummation
of the Closing under (and as defined in) the Repurchase Agreement, to redeem all
(but not less than all) of the outstanding shares of Senior Preferred Stock at a
price per share (the "REDEMPTION PRICE") equal to the Senior Liquidation
Preference plus Accrued Accretion Dividends (calculated to the date of
redemption); PROVIDED that the holders of shares of Senior Preferred Stock
called for redemption pursuant to this Section 4.3.8(a) shall have the right,
exercisable in their sole discretion at any time after the giving of the
Optional Redemption Notice and prior to the date of redemption specified
therein, to convert any portion of their shares of Senior Preferred Stock into
Common Stock as set forth in Section 4.3.8(a)(iii) below, subject to, however,
in the case of Series II Preferred Stock, the proviso of Section 4.3.4(f)(i).
The exercise by any holder of Senior Preferred Stock of such holder's conversion
right set forth in Section 4.3.8(a)(iii) below shall cause the Corporation's
exercise of its redemption right pursuant to this
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Section 4.3.8(a)(i) with respect to the Senior Preferred Stock so converted to
terminate.
4.3.8(a)(ii) Notice of any proposed redemption (the "OPTIONAL
REDEMPTION NOTICE") of any shares of Senior Preferred Stock pursuant to Section
4.3.8(a)(i) shall be given by the Corporation by hand delivery or by mailing a
copy of such notice, postage prepaid, to the holders of record of shares of
Senior Preferred Stock to be redeemed at their respective addresses then
appearing on the books of the Corporation not less than 30 days nor more than 60
days prior to the date fixed for redemption. The Optional Redemption Notice
shall state (i) that the Corporation has elected to redeem the shares of Senior
Preferred Stock; (ii) the date of redemption therefor; (iii) the Redemption
Price; (iv) the number of shares of Senior Preferred Stock being called for
redemption; (v) that the shares called for redemption are convertible until the
close of business on the day immediately preceding the date of redemption
specified therein; and (vi) that the holders shall surrender to the Corporation
on or after the date of redemption at its principal office, a certificate or
certificates representing the number of shares of Senior Preferred Stock to be
redeemed in accordance with such notice. On or after the date specified for
redemption in the Optional Redemption Notice, each holder of shares of Senior
Preferred Stock to be redeemed shall, unless such shares shall have been
previously converted into Common Stock, present and surrender the certificate or
certificates for
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such shares to the Corporation at its principal office and, as promptly as
practicable thereafter, the Corporation shall pay the Redemption Price of such
shares to, or to the order of, the person whose name appears on such certificate
or certificates. From and after the date specified for redemption in the
Optional Redemption Notice, unless the Corporation shall have defaulted in the
payment of the Redemption Price pursuant to such notice, all rights of the
holders of the shares of Senior Preferred Stock called for redemption shall
cease and terminate. Not later than the date fixed for redemption of any shares
of Senior Preferred Stock the Corporation shall deposit the aggregate Redemption
Price for the shares of Senior Preferred Stock to be redeemed with a bank or
trust company having an office in New York, New York and having combined
capital, surplus and undivided profits aggregating at least $50,000,000 (the
"Depositary"), in trust for payment to the holders of the shares to be redeemed,
and deliver irrevocable written instructions authorizing the Depositary to apply
such deposit solely to the redemption of the shares to be redeemed. Such written
instructions may provide that any of such deposit remaining unclaimed by the
holder of any such shares at the expiration of two years after the date fixed
for redemption shall be returned to the Corporation, after which any such holder
shall have no claim against the Depositary, but shall (subject to applicable
escheat laws) have a claim only as an unsecured creditor against the Corporation
for the Redemption Price (but without interest). From and after the date fixed
for redemption, the shares called for
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redemption shall no longer be deemed to be outstanding for any purpose and shall
have no right to receive dividends payable to holders of record of shares of
Senior Preferred Stock on any record date falling after the date fixed for
redemption, and all rights with respect to such shares shall thereupon cease and
terminate, except for (x) the right of the holders of such shares to convert
such shares into Common Stock prior to the date of redemption as set forth in
Section 4.3.8(a)(iii), (y) the right of the holders of such shares to receive
the Redemption Price on the redemption date and (z) rights of registration under
the Registration Agreement (which rights shall be exercisable only up until the
close of business on the day immediately preceding the date of redemption.
4.3.8(a)(iii) At any time after the giving of the Optional
Redemption Notice and prior to the date of redemption specified therein, the
holders of shares of Senior Preferred Stock called for redemption shall have the
right, exercisable by written notice to the Company during such period but
received by the Company prior to the date specified for redemption, to convert
any or all of their shares of Senior Preferred Stock into Common Stock at the
rate of one share of Common Stock for each share of Senior Preferred Stock
converted, subject to adjustment as provided in Section 4.3.3(f)(ii) in the case
of Series I Senior Preferred Stock and Section 4.3.4(f)(ii) in the case of
Series II Senior Preferred Stock. In the event that any shares of Series II
Senior Preferred Stock may not be converted into shares of
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Common Stock because doing so would result in a violation of any applicable
federal banking law or regulation, such holders shall instead be entitled to
receive, upon conversion of shares of Series II Senior Preferred Stock, FIRST,
Common Stock as provided above until the holder thereof shall have received the
maximum amount permitted to be so received without resulting in a violation of
any applicable federal banking law or regulation, and THEREAFTER shares of
Series II Preferred Stock at the rate of one share of Series II Preferred Stock
for each share of Series II Senior Preferred Stock converted (subject to
adjustment as provided in Section 4.3.4(f)(iii) above). Such shares of Series II
Preferred Stock shall automatically be converted into shares of Common Stock at
the earliest possible date at which the ownership thereof would not result in a
violation of any applicable banking law or regulation.
4.3.8(a)(iv) Any holder of shares of Senior Preferred Stock desiring
to convert such shares into Common Stock may do so by complying with the
procedures set forth in Section 4.3.3(f)(vi) in the case of Series I Senior
Preferred Stock and Section 4.3.4(f)(vi) in the case of Series II Senior
Preferred Stock.
4.3.8(b) MANDATORY REDEMPTION. On December 10, 2008, to the extent
the Corporation shall have legally available funds therefor, the Corporation
shall redeem for cash all remaining outstanding shares of Senior Preferred Stock
at a redemption price equal to the Senior Liquidation Preference (plus Accrued
Accretion Dividends) per share (calculated to the date of redemption).
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If for any reason the Corporation shall fail to redeem all of the
outstanding shares of Senior Preferred Stock on December 10, 2008 due to
insufficient legally available funds therefor, the Company's mandatory
redemption obligations pursuant to this Section 4.3.8(b) shall be discharged as
soon as the Corporation is legally able to discharge such obligations and such
discharge shall be effected PRO RATA among holders of shares of Senior Preferred
Stock. If and so long as any mandatory redemption obligations with respect to
the shares of Senior Preferred Stock shall have arisen, but shall not have been
fully discharged, the Corporation shall not, directly or indirectly:
(i) declare or pay any dividend on any other capital stock of
the Corporation or make any payment on account of, or set aside money for,
a sinking or other similar fund for the purchase, redemption or other
retirement of, or purchase, redeem or retire, any other capital stock of
the Corporation, or make any distribution in respect of any other capital
stock of the Corporation, either directly or indirectly and whether in
cash or property or in obligations or shares of the Corporation,
(ii) purchase or redeem fewer than all of the shares of Senior
Preferred Stock then outstanding, unless such purchase or redemption is
effected on a PRO RATA basis as to all holders of shares of Senior
Preferred Stock, or
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(iii) permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase any shares of Senior
Preferred Stock, unless such purchase is effected on a PRO RATA basis as
to all holders of shares of Senior Preferred Stock.
Accretion Dividends shall continue to accumulate on any shares of Senior
Preferred Stock that shall not have been redeemed by the Corporation pursuant to
this Section 4.3.8(b).
4.3.9 OTHER SERIES OF PREFERRED STOCK. Subject to Sections 4.3.1(e),
4.3.2(e), 4.3.3(e) and 4.3.4(e) of this Article 4, the Board of Directors is
hereby expressly vested with authority to fix by resolution or resolutions the
voting powers, designations, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
(including, without limitation, the dividend rate, conversion rights, redemption
price or liquidation preference) of any series of Preferred Stock, and to fix
the number of shares constituting any such series and to increase or decrease
the number of shares of such series (but not below the number of shares thereof
then outstanding).
5. DIRECTORS. The Board of Directors of the Corporation shall
consist of such number of Directors as shall be determined by the Board of
Directors.
6. DEFINITIONS. For all purposes of this Restated Certificate of
Incorporation, the following terms shall have the following meanings:
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"ACCRUED ACCRETION DIVIDENDS" at any date shall mean all Accretion
Dividends that shall have accrued on a share of Series I Senior Preferred Stock
from the last Dividend Compounding Date through such date.
"CLOSING DATE" means April 14, 1993.
"DIVIDEND COMPOUNDING DATE" shall mean January 1 and July 1 of each
year, commencing January 1, 1994.
"GAAP" means generally accepted accounting principles in the United
States.
"MANAGEMENT SUBSCRIPTION AGREEMENT" shall mean a management
subscription agreement between the Corporation and an employee of the
Corporation or any of its subsidiaries providing, among other things, for the
sale by the Corporation to such employee of shares of Common Stock and the right
and/or obligation of the Corporation to redeem or otherwise repurchase such
stock.
"NET INCOME" means, for any period, the aggregate net income (or net
deficit) of the Subsidiary and the Subsidiary's consolidated subsidiaries
determined on a consolidated basis for such period, which shall be equal to
gross revenues for the Subsidiary determined on a consolidated basis during such
period less the aggregate for the Subsidiary determined on a consolidated basis
during such period of, without duplication, (a) cost of goods sold, (b) interest
expense, (c) operating expenses, (d) selling, general and administrative
expenses, (e) taxes, (f) depreciation, depletion and
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amortization of properties and (g) any other items that are treated as expenses
under GAAP, all computed in accordance with GAAP; PROVIDED, HOWEVER, that the
term "NET INCOME" shall exclude (i) extraordinary gains and losses from the sale
of assets other than in the ordinary course of business, (ii) any write-up in
the value of any asset and (iii) the effect of any potential recharacterization
of any amounts paid by any purchasers of Class A Common Stock as franchise fees
paid by such purchasers in respect of the acquisition of a franchise.
"REGISTRATION AGREEMENT" means that certain Amended and Restated
Registration Agreement dated as of December 10, 1993 among the Corporation,
certain holders of Common Stock, the holders of Junior Preferred Stock and
Senior Preferred Stock.
"REPURCHASE AGREEMENT" means that certain Repurchase Agreement dated
as of December 10, 1993 among the Corporation and the other parties named
therein.
"SENIOR LIQUIDATION PREFERENCE" shall mean an amount per share equal
to $10.00, as increased from time to time pursuant to Section 4.3.3(b)(i) or
4.3.4(b)(i) above.
The "SUBSIDIARY" means National Auto/Truckstops, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Corporation.
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7. LIMITATION OF LIABILITY. No Director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director, except for liability (a) for any
breach of the Director's duty of loyalty to the Corporation or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under Section 174 of the Delaware
General Corporation Law or (d) for any transaction from which the Director
derived any improper personal benefits.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a Director of the Corporation in respect of any act or omission
occurring prior to the time of such repeal or modification.
8. INDEMNIFICATION.
8.1. To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
"PROCEEDING"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation, or is or was serving
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in any capacity at the request of the Corporation for any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise (an
"OTHER ENTITY"), all such persons being deemed to be "Eligible Persons" against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements). Persons who
are not Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to the extent the Board at any time specifies that such persons
are entitled to the benefits of this Section 8.
8.2. The Corporation shall, from time to time, reimburse or advance
to any Director or officer or other Eligible Person, the funds necessary for
payment of expenses, including attorneys' fees and disbursements, incurred in
connection with any Proceeding, in advance of the final disposition of such
Proceeding; PROVIDED, HOWEVER, that, if required by the DGCL, such expenses
incurred by or on behalf of any Director or officer or other person may be paid
in advance of the final disposition of a Proceeding only upon receipt by the
Corporation of an undertaking, by or on behalf of such Director or officer (or
other Eligible Person), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
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8.3. The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 8 shall not be
deemed exclusive of any other rights to which a person seeking indemnification
or reimbursement or advancement of expenses may have or hereafter be entitled
under any statute, this Certificate of Incorporation, the Amended and Restated
By-laws of the Corporation, any agreement, any vote of stockholders or
disinterested Directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office.
8.4. The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 8 shall continue
as to a person who has ceased to be a Director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person.
8.5. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a Director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power
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to indemnify such person against such liability under the provisions of this
Section 8, the By-laws or under Section 145 of the DGCL or any other provision
of law.
8.6. The provisions of this Section 8 shall be a contract between
the Corporation, on the one hand, and each Director and officer who serves in
such capacity at any time while this Section 8 is in effect and any other person
indemnified hereunder, on the other hand, pursuant to which the Corporation and
each such Director, officer or other person intend to be legally bound. No
repeal or modification of this Section 8 shall affect any rights or obligations
with respect to any state of facts then or theretofore existing or thereafter
arising or any proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts.
8.7. The rights to indemnification and reimbursement or advancement
of expenses provided by, or granted pursuant to, this Section 8 shall be
enforceable by any person entitled to such indemnification or reimbursement or
advancement of expenses in an action before any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) to have made a determination prior to the
commencement of such action that such indemnification or reimbursement or
advancement of expenses is proper in the
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circumstances nor an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
8.8. Any Director or officer of the Corporation serving in any
capacity for (a) another corporation of which a majority of the shares entitled
to vote in the election of its Directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
8.9. Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made,
97
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by a notice in writing to the Corporation, at the time indemnification or
reimbursement or advancement of expenses is sought; PROVIDED, HOWEVER, that if
no such notice is given, the right to indemnification or reimbursement or
advancement of expenses shall be determined by the law in effect at the time
indemnification or reimbursement or advancement of expenses is sought.
98
<PAGE>
WITNESS the execution of this Amended and Restated Certificate of
Incorporation this 6th day of March, 1997.
--- ------
/s/ James W. George
--------------------------------------
James W. George
Senior Vice President, Chief Financial
Officer and Assistant Secretary
Exhibit 3.2
CERTIFICATE OF INCORPORATION
of
NATIONAL AUTO/TRUCKSTOPS, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of the State of Delaware, certifies as follows:
1. NAME. The name of the corporation is National Auto/Truckstops,
Inc. (the "Corporation").
2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office is 1209 Orange Street, City of Willmington,
County of New Castle, State of Delaware; and its registered agent at such
address is The Corporation Trust Company.
3. PURPOSES. The purpose of the Corporation is to engage in, carry
on and conduct any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law.
4. NUMBER OF SHARES. The total number of shares of stock that the
Corporation shall have authority to issue is: one thousand (1,000), all of which
shall be shares of Common Stock of the par value of one cent ($.01) each.
5. NAME AND ADDRESS OF INCORPORATOR. The name and mailing address of
the incorporator are: James T. Janover, 1285 Avenue of the Americas, New York,
New York 10019-6064.
<PAGE>
2
6. ELECTION OF DIRECTORS. Members of the Board of Directors may be
elected either by written ballot or by voice vote.
7. LIMITATION OF LIABILITY. No Director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director, except for liability (a) for any
breach of the Director's duty of loyalty to the Corporation or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under Section 174 of the Delaware
General Corporation Law or (d) for any transaction from which the director
derived any improper personal benefits.
Any repeal or modification of the foregoing paragraph by the
stockholder of the Corporation shall not adversely affect any right or
protection of a Director of the Corporation existing at the time of such repeal
or modification.
8. INDEMNIFICATION.
8.1 To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
<PAGE>
3
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation, or is or was serving in any capacity at the request
of the Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements). Persons who
are not Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to the extent the Board at any time specifies that such persons
are entitled to the benefits of this Section 8.
8.2 The Corporation shall, from time to time, reimburse or
advance to any Director or officer or other person entitled to indemnification
hereunder the funds necessary for payment of expenses, including attorneys' fees
and disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; PROVIDED, HOWEVER, that, if required by
the Delaware General Corporation Law, such expenses incurred by
<PAGE>
4
or on behalf of any Director or officer or other person may be paid in advance
of the final disposition of a Proceeding only upon receipt by the Corporation of
an undertaking, by or on behalf of such Director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, this Certificate of Incorporation, the
By-laws of the Corporation (the "By-laws"), any agreement, any vote of
stockholders or disinterested Directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
8.4 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall continue as to a person who has ceased to be a Director or officer (or
other person indemnified hereunder) and shall inure to the benefit
<PAGE>
5
of the executors, administrators, legatees and distributees of such person.
8.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 8, the By-laws or under Section 145 of the
Delaware General Corporation Law or any other provision of law.
8.6 The provisions of this Section 8 shall be a contract
between the Corporation, on the one hand, and each Director and officer who
serves in such capacity at any time which this Section 8 is in effect and any
other person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer, or other person intend to be
legally bound. No repeal or modification of this Section 8 shall affect any
rights or obligations with respect to any state of facts then or theretofore
existing or thereafter arising or any proceeding
<PAGE>
6
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts.
8.7 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) to have made a determination prior to the
commencement of such action that such indemnification or reimbursement or
advancement of expenses is proper in the circumstances nor an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel and its stockholders) that such person is not entitled
to such indemnification or reimbursement or advancement of expenses shall
constitute a defense to the action or create a presumption that such person is
not so entitled. Such a person shall also be indemnified for any expenses
incurred in connection with successfully establishing his or her right to such
indemnification or
<PAGE>
7
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding.
8.8 Any Director or officer of the Corporation serving in any
capacity (a) another corporation of which a majority of the shares entitled to
vote in the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
8.9 Any person entitled to be indemnified or to reimbursement
or advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; PROVIDED, HOWEVER, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in
<PAGE>
8
effect at the time indemnification or reimbursement or advancement of expenses
is sought.
9. ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS. The Board of
Directors may from time to time (after adoption by the undersigned of the
original By-laws) make, alter or repeal the By-laws of the Corporation;
PROVIDED, HOWEVER, that any By-laws made, amended or repealed by the Board of
Directors may be amended or repealed, and any By-laws may be made, by the
stockholders of the Corporation.
WITNESS the signature of this Certificate this 29th day of October,
1992.
/s/ James T. Janover
------------------------
James T. Janover
Incorporator
Exhibit 3.3
RESTATED CERTIFICATE OF INCORPORATION
of
TA OPERATING CORPORATION
This Restated Certificate of Incorporation of TA Operating
Corporation was duly adopted in accordance with the provisions of Sections 242
and 245 of the Delaware General Corporation Law. The original Certificate of
Incorporation was filed with the Secretary of State of the State of Delaware on
July 8, 1993 under the name T.S. Network Corp. A Restated Certificate of
Incorporation was filed with the Secretary of State of the State of Delaware on
December 10, 1993, under the name TA Operating Corporation.
1. NAME. The name of the corporation is TA Operating Corporation
(the "Corporation").
2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the
Corporation's registered office is 1209 Orange Street, City of Wilmington,
County of New Castle, State of Delaware; and its registered agent at such
address is The Corporation Trust Company.
3. PURPOSES. The purpose of the Corporation is to engage in, carry
on and conduct any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law.
4. NUMBER OF SHARES. The total number of shares of stock that the
Corporation shall have authority to issue is: one thousand (1,000), all of which
shall be shares of Common Stock of the par value of one cent ($.01) each. Each
such share shall be entitled to one vote per share.
1
<PAGE>
5. ELECTION OF DIRECTORS. Members of the Board of Directors may be
elected either by written ballot or by voice vote.
6. LIMITATION OF LIABILITY. No Director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director, except for liability (a) for any
breach of the Director's duty of loyalty to the Corporation or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under Section 174 of the Delaware
General Corporation Law or (d) for any transaction from which the Director
derived any improper personal benefits.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a Director of the Corporation existing at the time of such repeal
or modification.
7. INDEMNIFICATION.
7.1 To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal
2
<PAGE>
representative, is or was a Director or officer of the Corporation, or is or was
serving in any capacity at the request of the Corporation for any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise (an "Other Entity"), against judgments, fines, penalties, excise
taxes, amounts paid in settlement and costs, charges and expenses (including
attorneys' fees and disbursements). Persons who are not Directors or officers of
the Corporation may be similarly indemnified in respect of service to the
Corporation or to an Other Entity at the request of the Corporation to the
extent the Board at any time specifies that such persons are entitled to the
benefits of this Section 7.
7.2 The Corporation shall, from time to time, reimburse or
advance to any Director or officer or other person entitled to indemnification
hereunder the funds necessary for payment of expenses, including attorneys' fees
and disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; PROVIDED, HOWEVER, that, if required by
the Delaware General Corporation Law, such expenses incurred by or on behalf of
any Director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such Director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which
3
<PAGE>
there is no further right of appeal that such Director, officer or other person
is not entitled to be indemnified for such expenses.
7.3 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 7
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, this Certificate of Incorporation, the
By-laws of the Corporation (the "Bylaws"), any agreement, any vote of
stockholders or disinterested Directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
7.4 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 7
shall continue as to a person who has ceased to be a Director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.
7.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
4
<PAGE>
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 7, the By-laws or under Section 145 of the
Delaware General Corporation Law or any other provision of law.
7.6 The provisions of this Section 7 shall be a contract
between the Corporation, on the one hand, and each Director and officer who
serves in such capacity at any time while this Section 7 is in effect and any
other person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer, or other person intend to be
legally bound. No repeal or modification of this Section 7 shall affect any
rights or obligations with respect to any state of facts then or theretofore
existing or thereafter arising or any proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
7.7 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 7
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) to
5
<PAGE>
have made a determination prior to the commencement of such action that such
indemnification or reimbursement or advancement of expenses is proper in the
circumstances nor an actual determination by the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) that
such person is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that such person is not so entitled. Such a person shall also be
indemnified for any expenses incurred in connection with successfully
establishing his or her right to such indemnification or reimbursement or
advancement of expenses, in whole or in part, in any such proceeding.
7.8 Any Director or officer of the Corporation serving in any
capacity (a) another corporation of which a majority of the shares entitled to
vote in the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
7.9 Any person entitled to be indemnified or to reimbursement
or advancement of expenses as a matter of right pursuant to this Section 7 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
6
<PAGE>
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; PROVIDED, HOWEVER, that if no such notice is given, the right to
indemnification or reimbursement or advancement of expenses shall be determined
by the law in effect at the time indemnification or reimbursement or advancement
of expenses is sought.
8. AMENDMENT AND/OR REPEAL OF BY-LAWS. The Board may from time to
time adopt, amend or repeal the By-laws; PROVIDED, HOWEVER, that any Bylaws
adopted or amended by the Board may be amended or repealed, and any By-laws may
be adopted, by a vote of the stockholders having at least a majority in voting
power of the then issued and outstanding shares of capital stock of the
Corporation.
WITNESS the signature of this Certificate this 25th day of
March, 1997.
/s/ Edwin P. Kuhn
-------------------------------
Name: Edwin P. Kuhn
Title: President and Chief Executive
Officer
7
EXHIBIT 3.4
AMENDED AND RESTATED BY-LAWS
of
TRAVELCENTERS OF AMERICA, INC.
(A Delaware Corporation)
------------------------
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "Business Day" means any day other than a Saturday, Sunday or other day on
which banking institutions are authorized by law to close in the City of New
York.
1.5 "By-laws" means these by-laws of the Corporation, as amended from time to
time.
<PAGE>
1.6 "Certificate of Incorporation" means the certificate of incorporation of the
Corporation, as amended, supplemented or restated from time to time.
1.7 "Chairman" means the Chairman of the Board of Directors of the Corporation.
1.8 "Chief Executive Officer" means the Chief Executive Officer of the
Corporation.
1.9 "Corporation" means TravelCenters of America, Inc.
1.10 "Directors" means Directors of the Corporation.
1.11 "Entire Board" means the total number of Directors that the Corporation
would have if there were no vacancies.
1.12 "General Corporation Law" means the General Corporation Law of the State of
Delaware, as amended from time to time.
2
<PAGE>
1.13 "Office of the Corporation" means the executive office of the Corporation,
anything in Section 131 of the General Corporation Law to the contrary
notwithstanding.
1.14 "President" means the President of the Corporation.
1.15 "Secretary" means the Secretary of the Corporation.
1.16 "Stockholders" means stockholders of the Corporation.
1.17 "Treasurer" means the Treasurer of the Corporation.
1.18 "Vice President" means a Vice President of the Corporation.
3
<PAGE>
ARTICLE 2
STOCKHOLDERS
2.1 PLACE OF MEETINGS. Every meeting of stockholders shall be held at the office
of the Corporation or at such other place within or without the State of
Delaware as shall be specified or fixed in the notice of such meeting or in the
waiver of notice thereof.
2.2 ANNUAL MEETING. A meeting of stockholders shall be held annually for the
election of Directors and the transaction of other business at such hour and on
such business day in April or as may be determined by the Board and designated
in the notice of meeting.
2.3 DEFERRED MEETING FOR ELECTION OF DIRECTORS, ETC. If the annual meeting of
stockholders for the election of Directors and the transaction of other business
is not held within the month specified in Section 2.2 hereof, the Board shall
call a meeting of stockholders for the election of Directors and the transaction
of other business as soon thereafter as convenient.
4
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2.4 OTHER SPECIAL MEETINGS. A special meeting of stockholders, unless otherwise
prescribed by statute, may be called at any time by the Board, the Chairman of
the Board, the Chief Executive Officer, or the Secretary. At any special meeting
of stockholders only such business may be transacted as is related to the
purpose or purposes of such meeting set forth in the notice thereof given
pursuant to Section 2.6 hereof or in any waiver of notice thereof given pursuant
to Section 2.7 hereof.
2.5 FIXING RECORD DATE. For the purpose of (a) determining the stockholders
entitled (i) to notice of or to vote at any meeting of stockholders or any
adjournment thereof, (ii) to express consent to corporate action in writing
without a meeting or (iii) to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock; or (b) any other lawful
action, the Board may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date was adopted by the Board
and which record date shall (x) in the case of clause (a)(i) above, not be more
than 60 nor less than 10 days before the date of such meeting, (y) in the case
of clause (a)(ii) above, not be more than 10 days after the date upon which the
resolution fixing the record date was adopted by the Board and (z) in the case
of clause (a)(iii) or (b) above, not be more than 60 days prior to such action.
If no such record date is fixed:
5
<PAGE>
2.5.1 the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held;
2.5.2 the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the Board is required under the General Corporation Law,
shall be the first day on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded; and when prior action by the Board is required under the General
Corporation Law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the
close of business on the date on which the Board adopts the resolution
taking such prior action; and
2.5.3 the record date for determining stockholders for any purpose
other than those specified in Sections 2.5.1 and 2.5.2 shall be at the
close of business on the day on which the Board adopts the resolution
relating thereto.
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When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting. Delivery made to the Corporation's
registered office in accordance with Section 2.5.2 shall be by hand or by
certified or registered mail, return receipt requested.
2.6 NOTICE OF MEETINGS OF STOCKHOLDERS. Except as otherwise provided in Sections
2.5 and 2.7 hereof, whenever under the provisions of any statute, the
Certificate of Incorporation or these By-laws, stockholders are required or
permitted to take any action at a meeting, written notice shall be given stating
the place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Unless otherwise
provided by any statute, the Certificate of Incorporation or these By-laws, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten nor more than sixty days before the date of the meeting, to each
stockholder entitled to notice of or to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
with postage prepaid, directed to the stockholder at his or her address as it
appears on the records of the Corporation. An affidavit of the Secretary or an
Assistant Secretary or of the transfer agent of the Corporation that the notice
required
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by this Section 2.6 has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. When a meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting any business may be transacted that might
have been transacted at the meeting as originally called. If, however, the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
2.7 WAIVERS OF NOTICE. Whenever the giving of any notice is required by statute,
the Certificate of Incorporation or these By-laws, a waiver thereof, in writing,
signed by the stockholder or stockholders entitled to said notice, whether
before or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance by a stockholder at a meeting shall constitute
a waiver of notice of such meeting except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting (and so
objects), to the transaction of any business on the ground that the meeting has
not been lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special
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meeting of the stockholders need be specified in any written waiver of notice
unless so required by statute, the Certificate of Incorporation or these
By-laws.
2.8 LIST OF STOCKHOLDERS. The Secretary shall prepare and make, or cause to be
prepared and made, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, the stockholder's agent, or attorney, at the
stockholder's expense, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder (or agent or attorney of a stockholder) who is
present. The Corporation shall maintain the stockholder list in written form or
in another form capable of conversion into written form within a reasonable
time. The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list of stockholders or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
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2.9 QUORUM OF STOCKHOLDERS; ADJOURNMENT. Except as otherwise provided by any
statute, the Certificate of Incorporation or these By-laws, the holders of a
majority of all outstanding shares of stock entitled to vote at any meeting of
stockholders, present in person or represented by proxy, shall constitute a
quorum for the transaction of any business at such meeting; PROVIDED, HOWEVER,
that in respect of any matter on which stockholders vote by class, a quorum
shall exist as to such matter if and only if a majority of the outstanding
shares of the class or classes of stock entitled to vote as a class thereon is
present in person or represented by proxy. When a quorum is once present to
organize a meeting of stockholders, it is not broken by the subsequent
withdrawal of any stockholders. The holders of a majority of the shares of stock
present in person or represented by proxy at any meeting of stockholders,
including an adjourned meeting, whether or not a quorum is present, may adjourn
such meeting to another time and place. Shares of its own stock belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of Directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be counted
for quorum purposes; PROVIDED, HOWEVER, that the foregoing shall not limit the
right of the Corporation to vote stock, including but not limited to its own
stock, held by it in a fiduciary capacity.
10
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2.10 VOTING; PROXIES. Unless otherwise provided in the Certificate of
Incorporation, every stockholder of record shall be entitled at every meeting of
stockholders to one vote for each share of capital stock standing in his or her
name on the record of stockholders determined in accordance with Section 2.5
hereof. If the Certificate of Incorporation provides for more or less than one
vote for any share on any matter, each reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock or votes with respect
to stock shall refer to such majority or other proportion of the votes of such
stock. The provisions of Sections 212 and 217 of the General Corporation Law
shall apply in determining whether any shares of capital stock may be voted and
the persons, if any, entitled to vote such shares; but the Corporation shall be
protected in assuming that the persons in whose names shares of capital stock
stand on the stock ledger of the Corporation are entitled to vote such shares.
At any meeting of stockholders (at which a quorum was present to organize the
meeting), all matters, except as otherwise provided by statute or by the
Certificate of Incorporation or by these By-laws, shall be decided by a majority
of the votes cast at such meeting by the holders of shares present in person or
represented by proxy and entitled to vote thereon, whether or not a quorum is
present when the vote is taken. All elections of Directors shall be by written
ballot. In voting on any other question on which a vote by ballot is required by
law or is demanded by any stockholder entitled to vote, the voting shall be by
ballot. Each
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ballot shall be signed by the stockholder voting or the stockholder's proxy and
shall state the number of shares voted. On all other questions, the voting may
be VIVA VOCE. Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for such stockholder by proxy.
The validity and enforceability of any proxy shall be determined in accordance
with Section 212 of the General Corporation Law. A stockholder may revoke any
proxy that is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or by delivering a proxy
in accordance with applicable law bearing a later date to the Secretary.
2.11 VOTING PROCEDURES AND INSPECTORS OF ELECTION AT MEETINGS OF STOCKHOLDERS.
The Board, in advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting and make a written report thereof. The Board
may designate one or more persons as alternate inspectors to replace any
inspector who fails to act. If no inspector or alternate is able to act at a
meeting, the person presiding at the meeting may appoint, and on the request of
any stockholder entitled to vote thereat shall appoint, one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of his
or her duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and
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according to the best of his or her ability. The inspectors shall (a) ascertain
the number of shares outstanding and the voting power of each, (b) determine the
shares represented at the meeting and the validity of proxies and ballots, (c)
count all votes and ballots, (d) determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by the
inspectors, and (e) certify their determination of the number of shares
represented at the meeting and their count of all votes and ballots. The
inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of their duties. Unless otherwise provided by the
Board, the date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be determined by
the person presiding at the meeting and shall be announced at the meeting. No
ballot, proxies or votes, or any revocation thereof or change thereto, shall be
accepted by the inspectors after the closing of the polls unless the Court of
Chancery of the State of Delaware upon application by a stockholder shall
determine otherwise.
2.12 ORGANIZATION. At each meeting of stockholders, the Chairman, or in the
absence of the Chairman the Chief Executive Officer, or in the absence of the
Chief Executive Officer the President, or in the absence of the President a Vice
President and in case more than one Vice President shall be present, then a Vice
President
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designated by the Board (or in the absence of any such designation, the most
senior Vice President, based on age, present), shall act as chairman of the
meeting. The Secretary, or in his or her absence one of the Assistant
Secretaries, shall act as secretary of the meeting. In case none of the officers
above designated to act as chairman or secretary of the meeting, respectively,
shall be present, a chairman or a secretary of the meeting, as the case may be,
shall be chosen by a majority of the votes cast at such meeting by the holders
of shares of capital stock present in person or represented by proxy and
entitled to vote at the meeting.
2.13 ORDER OF BUSINESS. The order of business at all meetings of stockholders
shall be as determined by the chairman of the meeting, but the order of business
to be followed at any meeting at which a quorum is present may be changed by a
majority of the votes cast at such meeting by the holders of shares of capital
stock present in person or represented by proxy and entitled to vote at the
meeting.
2.14 WRITTEN CONSENT OF STOCKHOLDERS WITHOUT A MEETING. Unless otherwise
provided in the Certificate of Incorporation, any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of
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outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered (by hand
or by certified or registered mail, return receipt requested) to the Corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Every
written consent shall bear the date of signature of each stockholder who signs
the consent and no written consent shall be effective to take the corporate
action referred to therein unless, within 60 days of the earliest dated consent
delivered in the manner required by this Section 2.14, written consents signed
by a sufficient number of holders to take action are delivered to the
Corporation as aforesaid. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 GENERAL POWERS. Except as otherwise provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed by
or
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under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by these By-laws, the Board may exercise all powers and
perform all acts that are not required, by these By-laws or the Certificate of
Incorporation or by statute, to be exercised and performed by the stockholders.
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. The number of Directors shall be
fixed from time to time by action of the Board. Directors need not be
stockholders and shall hold office until a successor is elected and qualified or
until the Director's death, resignation or removal.
3.3 ELECTION. Directors shall be elected as provided in the Certificate of
Incorporation.
3.4 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Vacancies on the Board that arise
for any reason, including vacancies resulting from an increase in the number of
Directors, may be filled by the affirmative vote of a majority of the entire
Board, although less than quorum, or by a sole remaining Director, and the
Director(s) so
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chosen shall hold office for a term expiring the next following annual meeting
of Stockholders, or, in each case until their respective successors are duly
elected and qualify, or until the respective Directors' earlier death,
resignation or removal.
3.5 RESIGNATION. Any Director may resign at any time by written notice to the
Corporation. Such resignation shall take effect at the time therein specified,
and, unless otherwise specified in such resignation, the acceptance of such
resignation shall not be necessary to make it effective.
3.6 REMOVAL. Any one or more (or all) of the Directors may be removed, at any
time, by the stockholders having at least a majority in voting power eligible to
elect Directors in accordance with the Certificate of Incorporation.
3.7 COMPENSATION. Each Director who is not an employee of the Corporation, in
consideration of his or her service as such, shall be entitled to receive from
the Corporation approximately $20,000 per annum plus approximately $1,500 for
attendance in person (and $750 for attendance by telephone) at each Directors'
meeting, together with reimbursement for the reasonable out-of-pocket expenses,
if any, incurred by such Director in connection with the performance of his or
her duties. Each Director who is not an employee of the Corporation who shall
serve as
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a member of any committee of Directors in consideration of serving as such shall
be entitled to such additional amount per annum or such fees for attendance at
committee meetings, or both, as the Board may from time to time determine,
together with reimbursement for the reasonable out-of-pocket expenses, if any,
incurred by such Director in the performance of his or her duties. Nothing
contained in this Section 3.7 shall preclude any Director from serving the
Corporation or its subsidiaries in any other capacity and receiving proper
compensation therefor.
3.8 TIMES AND PLACES OF MEETINGS. The Board may hold meetings, both regular and
special, either within or without the State of Delaware. The times and places
for holding meetings of the Board may be fixed from time to time by resolution
of the Board or (unless contrary to a resolution of the Board) in the notice of
the meeting.
3.9 ANNUAL MEETINGS. On the day when and at the place where the annual meeting
of stockholders for the election of Directors is held, and as soon as
practicable thereafter, the Board may hold its annual meeting, without notice of
such meeting, for the purposes of organization, the election of officers and the
transaction of other business. The annual meeting of the Board may be held at
any other time and place specified in a notice given as provided in Section 3.11
hereof for special meetings of the Board or in a waiver of notice thereof.
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3.10 REGULAR MEETINGS. Regular meetings of the Board may be held without notice
at such times and at such places as shall from time to time be determined by the
Board.
3.11 SPECIAL MEETINGS. Special meetings of the Board may be called by the
Chairman, the Chief Executive Officer or the Secretary or by any two or more
Directors then serving on at least two Business Days' notice to each Director
given by one of the means specified in Section 3.14 hereof. Special meetings
shall be called by the Chairman, Chief Executive Officer or Secretary in like
manner and on like notice on the written request of any two or more of the
Directors then serving.
3.12 TELEPHONE MEETINGS. Any Director or member of any committee designated by
the Board may participate, at his or her election, in any meeting of the Board
or of such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 3.12 shall
constitute presence in person at such meeting. Each regular or special meeting
of the Board or any committee thereof shall have adequate conference telephone
or similar
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communications equipment available to allow any Directors or committee members
who choose to participate by telephone to do so in accordance with this Section
3.12.
3.13 ADJOURNED MEETINGS. A majority of the Directors present at any meeting of
the Board, including an adjourned meeting, whether or not a quorum is present,
may adjourn such meeting to another time and place. At least two Business Days'
notice of any adjourned meeting of the Board shall be given to each Director
whether or not present at the time of the adjournment shall be given by one of
the means specified in Section 3.14 hereof. Any business may be transacted at an
adjourned meeting that might have been transacted at the meeting as originally
called.
3.14 NOTICE PROCEDURE. Subject to Sections 3.11 and 3.17 hereof, whenever, under
the provisions of any statute, the Certificate of Incorporation or these
By-laws, notice is required to be given to any Director, such notice shall be
deemed given effectively if given in person or by telephone, by hand delivery,
or by telegram, telex, telecopy or similar means addressed to such Director at
such Director's address as it appears on the records of the Corporation.
3.15 WAIVER OF NOTICE. Whenever the giving of any notice is required by statute,
the Certificate of Incorporation or these By-laws, a waiver thereof, in writing,
signed
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by the person or persons entitled to said notice, whether before or after the
event as to which such notice is required, shall be deemed equivalent to notice.
Attendance by a person at a meeting shall constitute a waiver of notice of such
meeting except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
on the ground that the meeting has not been lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the Directors or a committee of Directors need be specified in any
written waiver of notice unless so required by statute, the Certificate of
Incorporation or these By-laws.
3.16 ORGANIZATION. At each meeting of the Board, the Chairman, or in the absence
of the Chairman the Chief Executive Officer, or in the absence of the Chief
Executive Officer, the President, or in the absence of the President, a chairman
chosen by a majority of the Directors present, shall preside. The Secretary
shall act as secretary at each meeting of the Board. In case the Secretary shall
be absent from any meeting of the Board, an Assistant Secretary shall perform
the duties of secretary at such meeting; and in the absence from any such
meeting of the Secretary and all Assistant Secretaries, the person presiding at
the meeting may appoint any person to act as secretary of the meeting.
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3.17 QUORUM OF DIRECTORS. The presence in person of a majority of the entire
Board shall be necessary and sufficient to constitute a quorum for the
transaction of business at any meeting of the Board, but a majority of a smaller
number may adjourn any such meeting to a later date.
3.18 ACTION BY MAJORITY VOTE. Except as otherwise expressly required by statute,
the Certificate of Incorporation or the By-laws, the act of a majority of the
Directors present at a meeting at which a quorum is present shall be the act of
the Board.
3.19 ACTION WITHOUT MEETING. Unless otherwise restricted by the Certificate of
Incorporation or these By-laws, any action required or permitted to be taken at
any meeting of the Board or of any committee thereof may be taken without a
meeting if all Directors or members of such committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a vote of the entire Board,
designate one or more committees, each committee to consist of one or more of
the
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Directors of the Corporation. The Board may designate one or more Directors as
alternate members of any committee to replace absent or disqualified members at
any meeting of such committee. If a member of a committee shall be absent from
any meeting, or disqualified from voting thereat, the remaining member or
members present and not disqualified from voting, whether or not such member or
members constitute a quorum, may, by a unanimous vote, appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in a resolution of the Board
passed as aforesaid, shall have and may exercise all the powers and authority of
the Board in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be impressed on all papers that may
require it, but no such committee shall have the power or authority in reference
to the following matters: (i) approving or adopting, or recommending to the
stockholders. any action or matter expressly required by the GCL to be submitted
to stockholders for approval or (ii) adopting, amending or repealing any by-law
of the Corporation. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board.
Unless otherwise specified in the resolution of the Board designating a
committee, at all meetings of such committee a majority of the total number of
members of the committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members of the committee
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present at any meeting at which there is a quorum shall be the act of the
committee. Each committee shall keep regular minutes of its meetings. Unless the
Board otherwise provides, each committee designated by the Board may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board
conducts its business pursuant to Article 3 of these By-laws.
ARTICLE 5
OFFICERS
5.1 POSITIONS. The officers of the Corporation shall be a Chairman, a Chief
Executive Officer, a President, a Secretary, a Treasurer and such other officers
as the Board may appoint, including one or more Vice Presidents and one or more
Assistant Secretaries and Assistant Treasurers, who shall exercise such powers
and perform such duties as shall be determined from time to time by the Board.
The Board may designate one or more Vice Presidents as Executive Vice Presidents
and may use descriptive words or phrases to designate the standing, seniority or
areas of special competence of the Vice Presidents elected or appointed by it.
Any number of offices may be held by the same person unless the Certificate of
Incorporation or these Bylaws otherwise provide.
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5.2 APPOINTMENT. The officers of the Corporation shall be chosen by the Board
annually or at such other time or times as the Board shall determine.
5.3 COMPENSATION. The compensation of all officers of the Corporation shall be
fixed by the Board. No officer shall be prevented from receiving a salary or
other compensation by reason of the fact that the officer is also a Director.
5.4 TERM OF OFFICE. Each officer of the Corporation shall hold office until such
officer's successor is chosen and qualifies or until such officer's earlier
death, resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. Such resignation shall take effect at the date of
receipt of such notice or at such later time as is therein specified, and,
unless otherwise specified, the acceptance of such resignation shall not be
necessary to make it effective. The resignation of an officer shall be without
prejudice to the contract rights of the Corporation, if any. Any officer elected
or appointed by the Board may be removed at any time, with or without cause, by
vote of a majority of the entire Board. Any vacancy occurring in any office of
the Corporation shall be filled by the Board. The removal of an officer without
cause shall be without prejudice to the officer's contract
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rights, if any. The election or appointment of an officer shall not of itself
create contract rights.
5.5 FIDELITY BONDS. The Corporation may secure the fidelity of any or all of its
officers or agents by bond or otherwise.
5.6 CHAIRMAN. The Chairman shall preside at all meetings of the Board and shall
exercise such powers and perform such other duties as shall be determined from
time to time by the Board.
5.7 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the Chief
Executive Officer of the Corporation and shall have general supervision over the
business of the Corporation, subject, however, to the control of the Board and
of any duly authorized committee of Directors. The Chief Executive Officer shall
preside at all meetings of the stockholders and at all meetings of the Board at
which the Chairman is not present. All officers shall be subject to the
direction of the Chief Executive Officer. The Chief Executive Officer may sign
and execute in the name of the Corporation deeds, mortgages, bonds, contracts
and other instruments except in cases in which the signing and execution thereof
shall be expressly delegated by the Board or by these By-laws to some other
officer or agent of the Corporation or shall
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be required by statute otherwise to be signed or executed and, in general, the
Chief Executive Officer shall perform all duties incident to the office of Chief
Executive Officer of a corporation and such other duties as may from time to
time be assigned to the Chief Executive Officer by the Board.
5.8 PRESIDENT. At the request of the Chief Executive Officer, or, in the Chief
Executive Officer's absence, at the request of the Board, the President shall
perform all of the duties of the Chief Executive Officer and, in so performing,
shall have all the powers of, and be subject to all restrictions upon, the Chief
Executive Officer. The President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall be expressly delegated by
the Board or by these By-laws to some other officer or agent of the Corporation,
or shall be required by statute otherwise to be signed or executed, and the
President shall perform such other duties as from time to time may be assigned
to the President by the Board or by the Chief Executive Officer.
5.9 VICE PRESIDENTS. At the request of the President, or in the President's
absence, at the request of the Board, the Vice Presidents shall (in such order
as may be designated by the Board or, in the absence of any such designation, in
order of
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seniority based on age) perform all of the duties of the President and, in so
performing, shall have all of the powers of, and be subject to all restrictions
upon, the President. Any Vice President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall be expressly delegated by
the Board or by these By-laws to some other officer or agent of the Corporation,
or shall be required by statute otherwise to be signed or executed, and each
Vice President shall perform such other duties as from time to time may be
assigned to such Vice President by the Board or by the President.
5.10 SECRETARY. The Secretary shall attend all meetings of the Board and of the
stockholders and shall record all the proceedings of the meetings of the Board
and of the stockholders in a book to be kept for that purpose, and shall perform
like duties for committees of the Board, when required. The Secretary shall
give, or cause to be given, notice of all special meetings of the Board and of
the stockholders and shall perform such other duties as may be prescribed by the
Board or by the Chief Executive Officer, under whose supervision the Secretary
shall be. The Secretary shall have custody of the corporate seal of the
Corporation, and the Secretary, or an Assistant Secretary, shall have authority
to impress the same on any instrument requiring it, and when so impressed the
seal may be attested by the signature of the
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Secretary or by the signature of such Assistant Secretary. The Board may give
general authority to any other officer to impress the seal of the Corporation
and to attest the same by such officer's signature. The Secretary or an
Assistant Secretary may also attest all instruments signed by the President or
any Vice President. The Secretary shall have charge of all the books, records
and papers of the Corporation relating to its organization and management, shall
see that the reports, statements and other documents required by statute are
properly kept and filed and, in general, shall perform all duties incident to
the office of Secretary of a corporation and such other duties as may from time
to time be assigned to the Secretary by the Board or by the Chief Executive
Officer.
5.11 TREASURER. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositaries of the Corporation signed in such manner
as shall be determined by the Board and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books or other records maintained for the
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purpose full and adequate account of all moneys received or paid for the account
of the Corporation; have the right to require from time to time reports or
statements giving such information as the Treasurer may desire with respect to
any and all financial transactions of the Corporation from the officers or
agents transacting the same; render to the Chief Executive Officer or the Board,
whenever the Chief Executive Officer or the Board shall require the Treasurer so
to do, an account of the financial condition of the Corporation and of all
financial transactions of the Corporation; exhibit at all reasonable times the
records and books of account to any of the Directors upon application at the
office of the Corporation where such records and books are kept; disburse the
funds of the Corporation as ordered by the Board; and, in general, perform all
duties incident to the office of Treasurer of a corporation and such other
duties as may from time to time be assigned to the Treasurer by the Board or the
Chief Executive Officer.
5.12 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant Secretaries and
Assistant Treasurers shall perform such duties as shall be assigned to them by
the Secretary or by the Treasurer, respectively, or by the Board or by the Chief
Executive Officer.
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ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 EXECUTION OF CONTRACTS. The Board, except as otherwise provided in these
Bylaws, may prospectively or retroactively authorize any officer or officers,
employee or employees or agent or agents, in the name and on behalf of the
Corporation, to enter into any contract or execute and deliver any instrument,
and any such authority may be general or confined to specific instances, or
otherwise limited.
6.2 LOANS. The Board may prospectively or retroactively authorize the Chief
Executive Officer or any other officer, employee or agent of the Corporation to
effect loans and advances at any time for the Corporation from any bank, trust
company or other institution, or from any firm, corporation or individual, and
for such loans and advances the person so authorized may make, execute and
deliver promissory notes, bonds or other certificates or evidences of
indebtedness of the Corporation, and, when authorized by the Board so to do, may
pledge and hypothecate or transfer any securities or other property of the
Corporation as security for any such loans or advances. Such authority conferred
by the Board may be general or confined to specific instances, or otherwise
limited.
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6.3 CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the payment of
money out of the funds of the Corporation and all evidences of indebtedness of
the Corporation shall be signed on behalf of the Corporation in such manner as
shall from time to time be determined by resolution of the Board.
6.4 DEPOSITS. The funds of the Corporation not otherwise employed shall be
deposited from time to time to the order of the Corporation with such banks,
trust companies, investment banking firms, financial institutions or other
depositaries as the Board may select or as may be selected by an officer,
employee or agent of the Corporation to whom such power to select may from time
to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 CERTIFICATES REPRESENTING SHARES. The shares of capital stock of the
Corporation shall be represented by certificates in such form (consistent with
the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the Chairman, the
Chief Executive Officer or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and may be impressed with
the seal of the
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Corporation or a facsimile thereof. The signatures of the officers upon a
certificate may be facsimiles, if the certificate is countersigned by a transfer
agent or registrar other than the Corporation itself or its employee. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon any certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may, unless otherwise ordered by the Board, be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue.
7.2 TRANSFER OF SHARES. Transfers of shares of capital stock of the Corporation
shall be made only on the books of the Corporation by the holder thereof or by
the holder's duly authorized attorney appointed by a power of attorney duly
executed and filed with the Secretary or a transfer agent of the Corporation,
and on surrender of the certificate or certificates representing such shares of
capital stock properly endorsed for transfer and upon payment of all necessary
transfer taxes. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked "Cancelled," with the date of cancellation, by the
Secretary or an Assistant Secretary or the transfer agent of the Corporation. A
person in whose name shares of capital stock shall stand on the books of the
Corporation shall be deemed the owner thereof to receive dividends, to vote as
such owner and for all other purposes as respects the
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Corporation. No transfer of shares of capital stock shall be valid as against
the Corporation, its stockholders and creditors for any purpose, except to
render the transferee liable for the debts of the Corporation to the extent
provided by law, until such transfer shall have been entered on the books of the
Corporation by an entry showing from and to whom transferred.
7.3 TRANSFER AND REGISTRY AGENTS. The Corporation may from time to time maintain
one or more transfer offices or agents and registry offices or agents at such
place or places as may be determined from time to time by the Board.
7.4 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. The holder of any shares
of capital stock of the Corporation shall immediately notify the Corporation of
any loss, destruction, theft or mutilation of the certificate representing such
shares, and the Corporation may issue a new certificate to replace the
certificate alleged to have been lost, destroyed, stolen or mutilated. The Board
may, in its discretion, as a condition to the issue of any such new certificate,
require the owner of the lost, destroyed, stolen or mutilated certificate, or
his or her legal representatives, to make proof satisfactory to the Board of
such loss, destruction, theft or mutilation and to advertise such fact in such
manner as the Board may require, and to give the Corporation and its transfer
agents and registrars, or such of them as the Board may
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require, a bond in such form, in such sums and with such surety or sureties as
the Board may direct, to indemnify the Corporation and its transfer agents and
registrars against any claim that may be made against any of them on account of
the continued existence of any such certificate so alleged to have been lost,
destroyed, stolen or mutilated and against any expense in connection with such
claim.
7.5 RULES AND REGULATIONS. The Board may make such rules and regulations as it
may deem expedient, not inconsistent with these By-laws or with the Certificate
of Incorporation, concerning the issue, transfer and registration of
certificates representing shares of its capital stock.
7.6 DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the Certificate of
Incorporation and of law, the Board:
7.6.1 may declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such amounts
and at such time or times as it, in its discretion, shall deem advisable
giving due consideration to the condition of the affairs of the
Corporation;
7.6.2 may use and apply, in its discretion, any of the surplus
of the Corporation in purchasing or acquiring any shares of capital stock
of the Corporation, or purchase warrants therefor, in accordance with law,
or any of
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its bonds, debentures, notes, scrip or other securities or evidences of
indebtedness; and
7.6.3 may set aside from time to time out of such surplus or
net profits such sum or sums as, in its discretion, it may think proper,
as a reserve fund to meet contingencies, or for equalizing dividends or
for the purpose of maintaining or increasing the property or business of
the Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNITY UNDERTAKING. The Corporation shall indemnify any person who is or
was made, or threatened to be made, a party to any threatened, pending or
completed action, suit or proceeding (a "Proceeding"), whether civil, criminal,
administrative or investigative, including, without limitation, an action by or
in the right of the Corporation to procure a judgment in its favor, by reason of
the fact that such person, or a person of whom such person is the legal
representative, is or was a Director or officer of the Corporation, or is or was
serving in any capacity at the request of the Corporation for any other
corporation, partnership, joint venture, trust,
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employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements) as provided
in the Certificate of Incorporation.
ARTICLE 9
BOOKS AND RECORDS
9.1 BOOKS AND RECORDS. There shall be kept at the principal office of the
Corporation correct and complete records and books of account recording the
financial transactions of the Corporation and minutes of the proceedings of the
stockholders, the Board and any committee of the Board. The Corporation shall
keep at its principal office, or at the office of the transfer agent or
registrar of the Corporation, a record containing the names and addresses of all
stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 FORM OF RECORDS. Any records maintained by the Corporation in the regular
course of its business, including its stock ledger, books of account, and minute
books, may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, microphotographs, or any other information storage device, provided
that the records
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so kept can be converted into clearly legible written form within a reasonable
time. The Corporation shall so convert any records so kept upon the request of
any person entitled to inspect the same.
9.3 INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided by law, the
Board shall determine from time to time whether, and, if allowed, when and under
what conditions and regulations, the accounts, books, minutes and other records
of the Corporation, or any of them, shall be open to the stockholders for
inspection.
ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and may be
changed, by resolution of the Board.
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ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise directed by the Board, the Chairman, the President,
any Vice President, the Secretary or the Treasurer, or any one of them, may
execute and deliver on behalf of the Corporation proxies respecting any and all
shares or other ownership interests of any Other Entity owned by the Corporation
appointing such person or persons as the officer executing the same shall deem
proper to represent and vote the shares or other ownership interests so owned at
any and all meetings of holders of shares or other ownership interests, whether
general or special, and/or to execute and deliver consents respecting such
shares or other ownership interests; or any of the aforesaid officers may attend
any meeting of the holders of shares or other ownership interests of such Other
Entity and thereat vote or exercise any or all other powers of the Corporation
as the holder of such shares or other ownership interests.
ARTICLE 13
AMENDMENTS
The Board of Directors may from time to time adopt, amend or repeal
the By-laws; PROVIDED, HOWEVER, that any By-laws adopted or amended by the Board
may be amended or repealed, and any By-laws may be adopted, by a vote of the
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Stockholders having at least a majority in voting power of the capital stock of
the Corporation eligible to vote thereon under applicable law.
40
Exhibit 3.5
BY-LAWS
of
NATIONAL AUTO/TRUCKSTOPS, INC.
(A Delaware Corporation)
------------------------
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "Business Day" means any day other than a Saturday, Sunday or
other day on which banking institutions are authorized by law to close in the
City of New York.
1.5 "By-laws" means the initial by-laws of the Corporation, as
amended from time to time.
1.6 "Certificate of Incorporation" means the initial certificate
of incorporation of the Corporation, as amended, supplemented or restated from
time to time.
1.7 "Chairman" means the Chairman of the Board of Directors of
the Corporation.
<PAGE>
1.8 "Chief Executive Officer" means the Chief Executive Officer of
the Corporation.
1.9 "Corporation" means National Auto/Truckstops, Inc.
1.10 "Directors" means Directors of the Corporation.
1.11 "Entire Board" means the total number of Directors that the
Corporation would have, if there were no vacancies.
1.12 "General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended from time to time.
1.13 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.14 "President" means the President of the Corporation.
1.15 "Secretary" means the Secretary of the Corporation.
1.16 "Stockholders" means stockholders of the Corporation.
1.17 "Treasurer" means the Treasurer of the Corporation.
1.18 "Vice President" means a Vice President of the Corporation.
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ARTICLE 2
STOCKHOLDERS
2.1 PLACE OF MEETINGS. Every meeting of stockholders shall be held
at the office of the Corporation or at such other place within or without the
State of Delaware as shall be specified or fixed in the notice of such meeting
or in the waiver of notice thereof.
2.2 ANNUAL MEETING. A meeting of stockholders shall be held annually
for the election of Directors and the transaction of other business at such hour
and on such business day in April or as may be determined by the Board and
designated in the notice of meeting.
2.3 DEFERRED MEETING FOR ELECTION OF DIRECTORS, ETC. If the annual
meeting of stockholders for the election of Directors and the transaction of
other business is not held within the month specified in Section 2.2 hereof, the
Board shall call a meeting of stockholders for the election of Directors and the
transaction of other business as soon thereafter as convenient.
2.4 OTHER SPECIAL MEETINGS. A special meeting of stockholders (other
than a special meeting for the election of Directors), unless otherwise
prescribed by statute, may be called at any time by the Board or by the Chief
Executive Officer, by the President or by the Secretary. At any special meeting
of stockholders only such business may be transacted as is related to the
purpose or
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purposes of such meeting set forth in the notice thereof given pursuant to
Section 2.6 hereof or in any waiver of notice thereof given pursuant to Section
2.7 hereof.
2.5 FIXING RECORD DATE. For the purpose of (a) determining the
stockholders entitled (i) to notice of or to vote at any meeting of stockholders
or any adjournment thereof, (ii) to express consent to corporate action in
writing without a meeting or (iii) to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock; or (b) any other lawful
action, the Board may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date was adopted by the Board
and which record date shall (x) in the case of clause (a)(i) above, be not more
than 60 nor less than 10 days before the date of such meeting, (y) in the case
of clause (a)(ii) above, be not more than 10 days after the date upon which the
resolution fixing the record date was adopted by the Board and (z) in the case
of clause (a)(iii) or (b) above, be not more than 60 days prior to such action.
If no such record date is fixed:
2.5.1 the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at
the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held;
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2.5.2 the record date for determining stockholders
entitled to express consent to corporate action in writing without a
meeting, when no prior action by the Board is required under the General
Corporation Law, shall be the first day on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of
stockholders are recorded; and when prior action by the Board is required
under the General Corporation Law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which the Board
adopts the resolution taking such prior action; and
2.5.3 the record date for determining stockholders for
any purpose other than those specified in Sections 2.5.1 and 2.5.2 shall
be at the close of business on the day on which the Board adopts the
resolution relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting. Delivery made to the Corporation's
registered office in
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accordance with Section 2.5.2 shall be by hand or by certified or registered
mail, return receipt requested.
2.6 NOTICE OF MEETINGS OF STOCKHOLDERS. Except as otherwise provided
in Sections 2.5 and 2.7 hereof, whenever under the provisions of any statute,
the Certificate of Incorporation or these By-laws, stockholders are required or
permitted to take any action at a meeting, written notice shall be given stating
the place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Unless otherwise
provided by any statute, the Certificate of Incorporation or these By-laws, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than forty (in the case of any meeting for the election of directors) or
thirty (in all other instances) nor more than sixty days before the date of the
meeting, to each stockholder entitled to notice of or to vote at such meeting.
If mailed, such notice shall be deemed to be given when deposited in the United
States mail, with postage prepaid, directed to the stockholder at his or her
address as it appears on the records of the Corporation. An affidavit of the
Secretary or an Assistant Secretary or of the transfer agent of the Corporation
that the notice required by this Section 2.6 has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. When a
meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken,
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and at the adjourned meeting any business may be transacted that might have been
transacted at the meeting as originally called. If, however, the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.7 WAIVERS OF NOTICE. Whenever the giving of any notice is required
by statute, the Certificate of Incorporation or these By-laws, a waiver thereof,
in writing, signed by the stockholder or stockholders entitled to said notice,
whether before or after the event as to which such notice is required, shall be
deemed equivalent to notice. Attendance by a stockholder at a meeting shall
constitute a waiver of notice of such meeting except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice unless so required by statute, the
Certificate of Incorporation or these By-laws.
2.8 LIST OF STOCKHOLDERS. The Secretary shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the
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number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, the stockholder's agent, or
attorney, at the stockholder's expense, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder (or agent or attorney of a
stockholder) who is present. The Corporation shall maintain the stockholder list
in written form or in another form capable of conversion into written form
within a reasonable time. The stock ledger shall be the only evidence as to who
are the stockholders entitled to examine the stock ledger, the list of
stockholders or the books of the Corporation, or to vote in person or by proxy
at any meeting of stockholders.
2.9 QUORUM OF STOCKHOLDERS; ADJOURNMENT. Except as otherwise
provided by any statute, the Certificate of Incorporation or these By-laws, the
holders of a majority of all outstanding shares of stock entitled to vote at any
meeting of stockholders, present in person or represented by proxy, shall
constitute a quorum for the transaction of any business at such meeting. When a
quorum is once present to organize a meeting of stockholders, it is not broken
by the subsequent withdrawal of
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any stockholders. The holders of a majority of the shares of stock present in
person or represented by proxy at any meeting of stockholders, including an
adjourned meeting, whether or not a quorum is present, may adjourn such meeting
to another time and place. Shares of its own stock belonging to the Corporation
or to another corporation, if a majority of the shares entitled to vote in the
election of Directors of such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; PROVIDED, HOWEVER, that the foregoing shall not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
2.10 VOTING; PROXIES. Unless otherwise provided in the Certificate
of Incorporation, every stockholder of record shall be entitled at every meeting
of stockholders to one vote for each share of capital stock standing in his or
her name on the record of stockholders determined in accordance with Section 2.5
hereof. If the Certificate of Incorporation provides for more or less than one
vote for any share on any matter, each reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock or votes with respect
to stock shall refer to such majority or other proportion of the votes of such
stock. The provisions of Sections 212 and 217 of the General Corporation Law
shall apply in determining whether any shares of capital stock may be voted and
the persons, if any, entitled to vote such shares; but the Corporation shall be
protected in assuming that the persons in whose
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names shares of capital stock stand on the stock ledger of the Corporation are
entitled to vote such shares. Holders of redeemable shares of stock are not
entitled to vote after the notice of redemption is mailed to such holders and a
sum sufficient to redeem the stocks has been deposited with a bank, trust
company, or other financial institution under an irrevocable obligation to pay
the holders the redemption price on surrender of the shares of stock. At any
meeting of stockholders (at which a quorum was present to organize the meeting),
all matters, except as otherwise provided by statute or by the Certificate of
Incorporation or by these By-laws, shall be decided by a majority of the votes
cast at such meeting by the holders of shares present in person or represented
by proxy and entitled to vote thereon, whether or not a quorum is present when
the vote is taken. All elections of Directors shall be by written ballot. In
voting on any other question on which a vote by ballot is required by law or is
demanded by any stockholder entitled to vote, the voting shall be by ballot.
Each ballot shall be signed by the stockholder voting or the stockholder's proxy
and shall state the number of shares voted. On all other questions, the voting
may be VIVA VOCE. Each stockholder entitled to vote at a meeting of stockholders
or to express consent or dissent to corporate action in writing without a
meeting may authorize another person or persons to act for such stockholder by
proxy. The validity and enforceability of any proxy shall be determined in
accordance with Section 212 of the General Corporation Law. A stockholder may
revoke any proxy that is not
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irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or by delivering a proxy in accordance
with applicable law bearing a later date to the Secretary.
2.11 VOTING PROCEDURES AND INSPECTORS OF ELECTION AT MEETINGS OF
STOCKHOLDERS. The Board, in advance of any meeting of stockholders, may appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Board may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at a
meeting, the person presiding at the meeting may appoint, and on the request of
any stockholder entitled to vote thereat shall appoint, one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of his
or her duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall (a) ascertain the number of shares outstanding and
the voting power of each, (b) determine the shares represented at the meeting
and the validity of proxies and ballots, (c) count all votes and ballots, (d)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (e) certify their
determination of the number of shares represented at the meeting and their count
of all votes and ballots. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of their duties. Unless
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otherwise provided by the Board, the date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at a
meeting shall be determined by the person presiding at the meeting and shall be
announced at the meeting. No ballot, proxies or votes, or any revocation thereof
or change thereto, shall be accepted by the inspectors after the closing of the
polls unless the Court of Chancery of the State of Delaware upon application by
a stockholder shall determine otherwise.
2.12 ORGANIZATION. At each meeting of stockholders, the Chairman, or
in the absence of the Chairman the Chief Executive Officer, or in the absence of
the Chief Executive Officer the President, or in the absence of the President a
Vice President and in case more than one Vice President shall be present, that
Vice President designated by the Board (or in the absence of any such
designation, the most senior Vice President, based on age, present), shall act
as chairman of the meeting. The Secretary, or in his or her absence one of the
Assistant Secretaries, shall act as secretary of the meeting. In case none of
the officers above designated to act as chairman or secretary of the meeting,
respectively, shall be present, a chairman or a secretary of the meeting, as the
case may be, shall be chosen by a majority of the votes cast at such meeting by
the holders of shares of capital stock present in person or represented by proxy
and entitled to vote at the meeting.
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2.13 ORDER OF BUSINESS. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 WRITTEN CONSENT OF STOCKHOLDERS WITHOUT A MEETING. Unless
otherwise provided in the Certificate of Incorporation, any action required by
the General Corporation Law to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered (by hand or by certified or registered mail, return
receipt requested) to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within 60
days of the earliest dated consent delivered in the manner required by this
Section 2.14, written
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consents signed by a sufficient number of holders to take action are delivered
to the Corporation as aforesaid. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 GENERAL POWERS. Except as otherwise provided in the Certificate
of Incorporation, the business and affairs of the Corporation shall be managed
by or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by these By-laws, the Board may exercise all powers and
perform all acts that are not required, by these By-laws or the Certificate of
Incorporation or by statute, to be exercised and performed by the stockholders.
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. The Board shall consist
of one or more members. The number of Directors shall be fixed from time to time
by resolution adopted by a majority of the entire Board then in office, whether
or not
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present at a meeting. Each Director shall hold office until his successor is
elected and qualified, or until his earlier death, resignation or removal.
3.3 ELECTION. The persons qualified to be Directors pursuant to
Section 3.2 hereof shall, except as otherwise required by statute or by the
Certificate of Incorporation, be elected by a plurality of the votes cast at a
meeting of stockholders by the holders of shares entitled to vote in the
election.
3.4 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Vacancies on the
Board that arise for any reason may be filled by the affirmative vote of a
majority of the entire Board, although less than a quorum, or by a sole
remaining Director, and the Director(s) so chosen shall hold office for a term
expiring the next following annual meeting of Stockholders, or, in each case
until their respective successors are duly elected and qualify, or until the
respective Directors' earlier death, resignation or removal.
3.5 RESIGNATION. Any Director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified in such resignation, the
acceptance of such resignation shall not be necessary to make it effective.
3.6 REMOVAL. Any or all of the Directors may be removed with or
without cause by vote of the holders of a majority of the shares then entitled
to vote at an election of Directors.
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3.7 COMPENSATION. Each Director who is not an employee of the
Corporation, in consideration of his or her service as such, shall be entitled
to receive from the Corporation such amount per annum or such fees for
attendance at Directors' meetings, or both, as the Board may from time to time
determine, together with reimbursement for the reasonable out-of-pocket
expenses, if any, incurred by such Director in connection with the performance
of his or her duties. Each Director who is not an employee of the Corporation
who shall serve as a member of any committee of Directors in consideration of
serving as such shall be entitled to such additional amount per annum or such
fees for attendance at committee meetings, or both, as the Board may from time
to time determine, together with reimbursement for the reasonable out-of-pocket
expenses, if any, incurred by such Director in the performance of his or her
duties. Nothing contained in this Section 3.7 shall preclude any Director from
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
3.8 TIMES AND PLACES OF MEETINGS. The Board may hold meetings, both
regular and special, either within or without the State of Delaware. The times
and places for holding meetings of the Board may be fixed from time to time by
resolution of the Board or (unless contrary to a resolution of the Board) in the
notice of the meeting.
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3.9 ANNUAL MEETINGS. On the day when and at the place where the
annual meeting of stockholders for the election of Directors is held, and as
soon as practicable thereafter, the Board may hold its annual meeting, without
notice of such meeting, for the purposes of organization, the election of
officers and the transaction of other business. The annual meeting of the Board
may be held at any other time and place specified in a notice given as provided
in Section 3.11 hereof for special meetings of the Board or in a waiver of
notice thereof.
3.10 REGULAR MEETINGS. Regular meetings of the Board may be held
without notice at such times and at such places as shall from time to time be
determined by the Board.
3.11 SPECIAL MEETINGS. Special meetings of the Board may be called
by the Chairman, the Chief Executive Officer or the Secretary or by any two or
more Directors then serving on at least two Business Days' notice to each
Director given by one of the means specified in Section 3.14 hereof. Special
meetings shall be called by the Chairman, Chief Executive Officer or Secretary
in like manner and on like notice on the written request of any two or more of
the Directors then serving.
3.12 TELEPHONE MEETINGS. Any Director or member of any committee
designated by the Board may participate, at his or her election, in any meeting
of the Board or of such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting
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can hear each other, and participation in a meeting pursuant to this Section
3.12 shall constitute presence in person at such meeting. Each regular or
special meeting of the Board or any committee thereof shall have adequate
conference telephone or similar communications equipment available to allow any
Directors or committee members who choose to participate by telephone to do so
in accordance with this Section 3.12.
3.13 ADJOURNED MEETINGS. A majority of the Directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. At least two
Business Days' notice of any adjourned meeting of the Board shall be given to
each Director whether or not present at the time of the adjournment, shall be
given by one of the means specified in Section 3.14 hereof. Any business may be
transacted at an adjourned meeting that might have been transacted at the
meeting as originally called.
3.14 NOTICE PROCEDURE. Subject to Sections 3.11 and 3.17 hereof,
whenever, under the provisions of any statute, the Certificate of Incorporation
or these By-laws, notice is required to be given to any Director, such notice
shall be deemed given effectively if given in person or by telephone, by hand
delivery, or by telegram, telex, telecopy or similar means addressed to such
Director at such Director's address as it appears on the records of the
Corporation.
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3.15 WAIVER OF NOTICE. Whenever the giving of any notice is required
by statute, the Certificate of Incorporation or these By-laws, a waiver thereof,
in writing, signed by the person or persons entitled to said notice, whether
before or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance by a person at a meeting shall constitute a
waiver of notice of such meeting except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Directors or a committee of Directors
need be specified in any written waiver of notice unless so required by statute,
the Certificate of Incorporation or these By-laws.
3.16 ORGANIZATION. At each meeting of the Board, the Chairman, or in
the absence of the Chairman the Chief Executive Officer, or in the absence of
the Chief Executive Officer, the President, or in the absence of the President,
a chairman chosen by a majority of the Directors present, shall preside. The
Secretary shall act as secretary at each meeting of the Board. In case the
Secretary shall be absent from any meeting of the Board, an Assistant Secretary
shall perform the duties of secretary at such meeting; and in the absence from
any such meeting of the Secretary and all Assistant Secretaries, the person
presiding at the meeting may appoint any person to act as secretary of the
meeting.
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3.17 QUORUM OF DIRECTORS. The presence in person of a majority of
the entire Board shall be necessary and sufficient to constitute a quorum for
the transaction of business at any meeting of the Board, but a majority of a
smaller number may adjourn any such meeting to a later date.
3.18 ACTION BY MAJORITY VOTE. Except as otherwise expressly required
by statute, the Certificate of Incorporation or the By-laws, the act of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board.
3.19 ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if all Directors or members of such committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a vote of the entire Board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation. The Board may designate one or more Directors
as
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alternate members of any committee to replace absent or disqualified members at
any meeting of such committee. If a member of a committee shall be absent from
any meeting, or disqualified from voting thereat, the remaining member or
members present and not disqualified from voting, whether or not such member or
members constitute a quorum, may, by a unanimous vote, appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in a resolution of the Board
passed as aforesaid, shall have and may exercise all the powers and authority of
the Board in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be impressed on all papers that may
require it, but no such committee shall have the power or authority in reference
to the following matters: (i) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by the GCL to be submitted
to stockholders for approval or (ii) adopting, amending or repealing any By-law
of the Corporation. Such committee or committees shall have such name or names
as may be determined from time to time by resolution adopted by the Board.
Unless otherwise specified in the resolution of the Board designating a
committee, at all meetings of such committee a majority of the total number of
members of the committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members of the committee present at
any meeting at which there is a quorum shall be the act of the committee.
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Each committee shall keep regular minutes of its meetings. Unless the Board
otherwise provides, each committee designated by the Board may make, alter and
repeal rules for the conduct of its business. In the absence of such rules each
committee shall conduct its business in the same manner as the Board conducts
its business pursuant to Article 3 of these By-laws.
ARTICLE 5
OFFICERS
5.1 POSITIONS. The officers of the Corporation shall be a Chairman,
a Chief Executive Officer, a President, a Secretary, a Treasurer and such other
officers as the Board may appoint, including one or more Vice Presidents and one
or more Assistant Secretaries and Assistant Treasurers, who shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board. The Board may designate one or more Vice Presidents as Executive Vice
Presidents and may use descriptive words or phrases to designate the standing,
seniority or areas of special competence of the Vice Presidents elected or
appointed by it. Any number of offices may be held by the same person unless the
Certificate of Incorporation or these By-laws otherwise provide.
5.2 APPOINTMENT. The officers of the Corporation shall be chosen by
the Board annually or at such other time or times as the Board shall determine.
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5.3 COMPENSATION. The compensation of all officers of the
Corporation shall be fixed by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that the officer
is also a Director.
5.4 TERM OF OFFICE. Each officer of the Corporation shall hold
office until such officer's successor is chosen and qualifies or until such
officer's earlier death, resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Such resignation shall take effect
at the date of receipt of such notice or at such later time as is therein
specified, and, unless otherwise specified, the acceptance of such resignation
shall not be necessary to make it effective. The resignation of an officer shall
be without prejudice to the contract rights of the Corporation, if any. Any
officer elected or appointed by the Board may be removed at any time, with or
without cause, by vote of a majority of the entire Board. Any vacancy occurring
in any office of the Corporation shall be filled by the Board. The removal of an
officer without cause shall be without prejudice to the officer's contract
rights, if any. The election or appointment of an officer shall not of itself
create contract rights.
5.5 FIDELITY BONDS. The Corporation may secure the fidelity of
any or all of its officers or agents by bond or otherwise.
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5.6 CHAIRMAN. The Chairman shall preside at all meetings of the
Board and shall exercise such powers and perform such other duties as shall be
determined from time to time by the Board.
5.7 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be
the Chief Executive Officer of the Corporation and shall have general
supervision over the business of the Corporation, subject, however, to the
control of the Board and of any duly authorized committee of Directors. The
Chief Executive Officer shall preside at all meetings of the stockholders and at
all meetings of the Board at which the Chairman is not present. All officers
shall be subject to the direction of the Chief Executive Officer. The Chief
Executive Officer may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts and other instruments except in cases in which the
signing and execution thereof shall be expressly delegated by the Board or by
these By-laws to some other officer or agent of the Corporation or shall be
required by statute otherwise to be signed or executed and, in general, the
Chief Executive Officer shall perform all duties incident to the office of Chief
Executive Officer of a corporation and such other duties as may from time to
time be assigned to the Chief Executive Officer by the Board.
5.8 PRESIDENT. At the request of the Chief Executive Officer, or, in
the Chief Executive Officer's absence, at the request of the Board, the
President shall perform all of the duties of the Chief Executive Officer and, in
so performing, shall
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have all the powers of, and be subject to all restrictions upon, the Chief
Executive Officer. The President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except in
cases in which the signing and execution thereof shall be expressly delegated by
the Board or by these By-laws to some other officer or agent of the Corporation,
or shall be required by statute otherwise to be signed or executed, and the
President shall perform such other duties as from time to time may be assigned
to the President by the Board or by the Chief Executive Officer.
5.9 VICE PRESIDENTS. At the request of the President, or in the
President's absence, at the request of the Board, the Vice Presidents shall (in
such order as may be designated by the Board or, in the absence of any such
designation, in order of seniority based on age) perform all of the duties of
the President and, in so performing, shall have all of the powers of, and be
subject to all restrictions upon, the President. Any Vice President may sign and
execute in the name of the Corporation deeds, mortgages, bonds, contracts or
other instruments, except in cases in which the signing and execution thereof
shall be expressly delegated by the Board or by these By-laws to some other
officer or agent of the Corporation, or shall be required by statute otherwise
to be signed or executed, and each Vice President shall perform such other
duties as from time to time may be assigned to such Vice President by the Board
or by the President.
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5.10 SECRETARY. The Secretary shall attend all meetings of the Board
and of the stockholders and shall record all the proceedings of the meetings of
the Board and of the stockholders in a book to be kept for that purpose, and
shall perform like duties for committees of the Board, when required. The
Secretary shall give, or cause to be given, notice of all special meetings of
the Board and of the stockholders and shall perform such other duties as may be
prescribed by the Board or by the Chief Executive Officer, under whose
supervision the Secretary shall be. The Secretary shall have custody of the
corporate seal of the Corporation, and the Secretary, or an Assistant Secretary,
shall have authority to impress the same on any instrument requiring it, and
when so impressed the seal may be attested by the signature of the Secretary or
by the signature of such Assistant Secretary. The Board may give general
authority to any other officer to impress the seal of the Corporation and to
attest the same by such officer's signature. The Secretary or an Assistant
Secretary may also attest all instruments signed by the President or any Vice
President. The Secretary shall have charge of all the books, records and papers
of the Corporation relating to its organization and management, shall see that
the reports, statements and other documents required by statute are properly
kept and filed and, in general, shall perform all duties incident to the office
of Secretary of a corporation and such other duties as may from time to time be
assigned to the Secretary by the Board or by the Chief Executive Officer.
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5.11 TREASURER. The Treasurer shall have charge and custody of, and
be responsible for, all funds, securities and notes of the Corporation; receive
and give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositaries of the Corporation signed in such manner
as shall be determined by the Board and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books or other records maintained for the purpose full and adequate account of
all moneys received or paid for the account of the Corporation; have the right
to require from time to time reports or statements giving such information as
the Treasurer may desire with respect to any and all financial transactions of
the Corporation from the officers or agents transacting the same; render to the
Chief Executive Officer or the Board, whenever the Chief Executive Officer or
the Board shall require the Treasurer so to do, an account of the financial
condition of the Corporation and of all financial transactions of the
Corporation; exhibit at all reasonable times the records and books of account to
any of the Directors upon application at the office of the Corporation where
such records and books are kept; disburse the funds of the Corporation as
ordered by the Board; and, in general, perform all duties incident to the office
of Treasurer of a corporation
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and such other duties as may from time to time be assigned to the Treasurer by
the Board or the Chief Executive Officer.
5.12 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board or by the Chief Executive Officer.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 EXECUTION OF CONTRACTS. The Board, except as otherwise
provided in these By-laws, may prospectively or retroactively authorize any
officer or officers, employee or employees or agent or agents, in the name and
on behalf of the Corporation, to enter into any contract or execute and deliver
any instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 LOANS. The Board may prospectively or retroactively authorize
the Chief Executive Officer or any other officer, employee or agent of the
Corporation to effect loans and advances at any time for the Corporation from
any bank, trust company or other institution, or from any firm, corporation or
individual, and for such loans and advances the person so authorized may make,
execute and deliver promissory notes, bonds or other certificates or evidences
of indebtedness of
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the Corporation, and, when authorized by the Board so to do, may pledge and
hypothecate or transfer any securities or other property of the Corporation as
security for any such loans or advances. Such authority conferred by the Board
may be general or confined to specific instances, or otherwise limited.
6.3 CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all evidences of
indebtedness of the Corporation shall be signed on behalf of the Corporation in
such manner as shall from time to time be determined by resolution of the Board.
6.4 DEPOSITS. The funds of the Corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation with such
banks, trust companies, investment banking firms, financial institutions or
other depositaries as the Board may select or as may be selected by an officer,
employee or agent of the Corporation to whom such power to select may from time
to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 CERTIFICATES REPRESENTING SHARES. The shares of capital stock of
the Corporation shall be represented by certificates in such form (consistent
with the provisions of Section 158 of the General Corporation Law) as shall be
approved by
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the Board. Such certificates shall be signed by the Chairman, the Chief
Executive Officer or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and may be impressed with
the seal of the Corporation or a facsimile thereof. The signatures of the
officers upon a certificate may be facsimiles, if the certificate is
countersigned by a transfer agent or registrar other than the Corporation itself
or its employee. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon any certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, such certificate may, unless otherwise ordered by the Board, be
issued by the Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
7.2 TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by the holder's duly authorized attorney appointed by a power of
attorney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation. A person in whose name shares of
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capital stock shall stand on the books of the Corporation shall be deemed the
owner thereof to receive dividends, to vote as such owner and for all other
purposes as respects the Corporation. No transfer of shares of capital stock
shall be valid as against the Corporation, its stockholders and creditors for
any purpose, except to render the transferee liable for the debts of the
Corporation to the extent provided by law, until such transfer shall have been
entered on the books of the Corporation by an entry showing from and to whom
transferred.
7.3 TRANSFER AND REGISTRY AGENTS. The Corporation may from time to
time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.
7.4 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. The holder
of any shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen or
mutilated certificate, or his or her legal representatives, to make proof
satisfactory to the Board of such loss, destruction, theft or mutilation and to
advertise such fact in such manner as the Board may require, and to give the
Corporation and its transfer agents and registrars, or such of them as the
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Board may require, a bond in such form, in such sums and with such surety or
sureties as the Board may direct, to indemnify the Corporation and its transfer
agents and registrars against any claim that may be made against any of them on
account of the continued existence of any such certificate so alleged to have
been lost, destroyed, stolen or mutilated and against any expense in connection
with such claim.
7.5 RULES AND REGULATIONS. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these By-laws or
with the Certificate of Incorporation, concerning the issue, transfer and
registration of certificates representing shares of its capital stock.
7.6 DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the
Certificate of Incorporation and of law, the Board:
7.6.1 may declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such amounts
and at such time or times as it, in its discretion, shall deem advisable
giving due consideration to the condition of the affairs of the
Corporation;
7.6.2 may use and apply, in its discretion, any of the
surplus of the Corporation in purchasing or acquiring any shares of
capital stock of the Corporation, or purchase warrants therefor, in
accordance with law, or any of its bonds, debentures, notes, scrip or
other securities or evidences of indebtedness; and
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7.6.3 may set aside from time to time out of such
surplus or net profits such sum or sums as, in its discretion, it may
think proper, as a reserve fund to meet contingencies, or for equalizing
dividends or for the purpose of maintaining or increasing the property or
business of the Corporation, or for any purpose it may think conducive to
the best interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNITY UNDERTAKING. The Corporation shall indemnify any
person who is or was made, or threatened to be made, a party to any threatened,
pending or completed action, suit or proceeding (a "Proceeding"), whether civil,
criminal, administrative or investigative, including, without limitation, an
action by or in the right of the Corporation to procure a judgment in its favor,
by reason of the fact that such person, or a person of whom such person is the
legal representative, is or was a Director or officer of the Corporation, or is
or was serving in any capacity at the request of the Corporation for any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise (an "Other Entity"), against judgments, fines, penalties, excise
taxes, amounts paid in settlement and costs,
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charges and expenses (including attorneys' fees and disbursements) as provided
in the Certificate of Incorporation.
ARTICLE 9
BOOKS AND RECORDS
9.1 BOOKS AND RECORDS. There shall be kept at the principal office
of the Corporation correct and complete records and books of account recording
the financial transactions of the Corporation and minutes of the proceedings of
the stockholders, the Board and any committee of the Board. The Corporation
shall keep at its principal office, or at the office of the transfer agent or
registrar of the Corporation, a record containing the names and addresses of all
stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 FORM OF RECORDS. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
written form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
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9.3 INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided by
law, the Board shall determine from time to time whether, and, if allowed, when
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
stockholders for inspection.
ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and may be
changed, by resolution of the Board.
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ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise directed by the Board, the Chairman, the President,
any Vice President, the Secretary or the Treasurer, or any one of them, may
execute and deliver on behalf of the Corporation proxies respecting any and all
shares or other ownership interests of any Other Entity owned by the Corporation
appointing such person or persons as the officer executing the same shall deem
proper to represent and vote the shares or other ownership interests so owned at
any and all meetings of holders of shares or other ownership interests, whether
general or special, and/or to execute and deliver consents respecting such
shares or other ownership interests; or any of the aforesaid officers may attend
any meeting of the holders of shares or other ownership interests of such Other
Entity and thereat vote or exercise any or all other powers of the Corporation
as the holder of such shares or other ownership interests.
ARTICLE 13
AMENDMENTS
The Board of Directors may from time to time adopt, amend or repeal
the By-laws; PROVIDED, HOWEVER, that any By-laws adopted or amended by the Board
may be amended or repealed, and any By-laws may be adopted, by a vote of the
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Stockholders having at least a majority in voting power of the then issued and
outstanding shares of capital stock of the Corporation.
37
Exhibit 3.6
BY-LAWS
of
TA OPERATING CORPORATION
(A Delaware Corporation)
------------------------
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the
term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "Business Day" means any day other than Saturday, Sunday or
other day on which banking institutions are authorized by law to close in the
City of New York.
1.5 "By-laws" means the initial by-laws of the Corporation, as
amended from time to time.
1.6 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
<PAGE>
2
1.7 "Chairman" means the Chairman of the Board of Directors of the
Corporation.
1.8 "Chief Executive Officer" means the Chief Executive Officer of
the Corporation.
1.9 "Corporation" means TA Operating Corporation.
1.10 "Directors" means directors of the Corporation.
1.11 "Entire Board" means all directors of the Corporation in
office, whether or not present at a meeting of the Board, but disregarding
vacancies.
1.12 "General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended from time to time.
1.13 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
1.14 "President" means the President of the Corporation.
1.15 "Secretary" means the Secretary of the Corporation.
1.16 "Stockholders" means stockholders of the Corporation.
1.17 "Treasurer" means the Treasurer of the Corporation.
1.18 "Vice President" means a Vice President of the Corporation.
<PAGE>
3
ARTICLE 2
STOCKHOLDERS
2.1 PLACE OF MEETINGS. Every meeting of stockholders shall be held
at the office of the Corporation or at such other place within or without the
State of Delaware as shall be specified or fixed in the notice of such meeting
or in the waiver of notice thereof.
2.2 ANNUAL MEETING. A meeting of stockholders shall be held annually
for the election of Directors and the transaction of other business at such hour
and on such business day in April or as may be determined by the Board and
designated in the notice of meeting.
2.3 DEFERRED MEETING FOR ELECTION OF DIRECTORS, ETC. If the annual
meeting of stockholders for the election of Directors and the transaction of
other business is not held within the month specified in Section 2.2 hereof, the
Board shall call a meeting of stockholders for the election of Directors and the
transaction of other business as soon thereafter as convenient.
2.4 OTHER SPECIAL MEETINGS. A special meeting of stockholders (other
than a special meeting for the election of Directors), unless otherwise
prescribed by statute, may be called at any time by the Board or the Chief
Executive Officer, or by the President or by the Secretary. At any special
meeting of stockholders only such business may be transacted as is related to
the purpose or purposes of such meeting set forth in the notice thereof given
pursuant to Section 2.6 hereof or in any waiver of notice thereof given pursuant
to Section 2.7 hereof.
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4
2.5 FIXING RECORD DATE. For the purpose of (a) determining the
stockholders entitled (i) to notice of or to vote at any meeting of stockholders
or any adjournment thereof, (ii) to express consent to corporate action in
writing without a meeting or (iii) to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock; or (b) any other lawful
action, the Board may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date was adopted by the Board
and which record date shall not be (x) in the case of clause (a)(i) above, more
than 60 nor less than 10 days before the date of such meeting, (y) in the case
of clause (a)(ii) above, more than 10 days after the date upon which the
resolution fixing the record date was adopted by the Board and (z) in the case
of clause (a)(iii) or (b) above, more than 60 days prior to such action. If no
such record date is fixed:
2.5.1 the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at
the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held;
2.5.2 the record date for determining stockholders
entitled to express consent to corporate action in writing without a
meeting, when no prior action by the Board is required under the General
Corporation Law, shall be the first day on which a signed written consent
setting forth the
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5
action taken or proposed to be taken is delivered to the Corporation by
delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded; and when prior action by the Board is required under the General
Corporation Law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the
close of business on the date on which the Board adopts the resolution
taking such prior action; and
2.5.3 the record date for determining stockholders for
any purpose other than those specified in Sections 2.5.1 and 2.5.2 shall
be at the close of business on the day on which the Board adopts the
resolution relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting. Delivery made to the Corporation's
registered office in accordance with Section 2.5.2 shall be by hand or by
certified or registered mail, return receipt requested.
2.6 NOTICE OF MEETINGS OF STOCKHOLDERS. Except as otherwise provided
in Sections 2.5 and 2.7 hereof, whenever under the provisions of any statute,
the Certificate of Incorporation or these By-laws, stockholders are required or
permitted to take any action at a meeting, written notice shall be given stating
the
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6
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by any statute, the Certificate of Incorporation or these By-laws, a copy of the
notice of any meeting shall be given, personally or by mail, not less than ten
nor more than sixty days before the date of the meeting, to each stockholder
entitled to notice of or to vote at such meeting. If mailed, such notice shall
be deemed to be given when deposited in the United States mail, with postage
prepaid, directed to the stockholder at his or her address as it appears on the
records of the Corporation. An affidavit of the Secretary or an Assistant
Secretary or of the transfer agent of the Corporation that the notice required
by this Section 2.6 has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. When a meeting is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting any business may be transacted that might
have been transacted at the meeting as originally called. If, however, the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
2.7 WAIVERS OF NOTICE. Whenever the giving of any notice is required
by statute, the Certificate of Incorporation or these By-laws, a waiver thereof,
in writing, signed by the stockholder or stockholders entitled to said notice,
whether before or after the event as to which such notice is required, shall be
deemed
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7
equivalent to notice. Attendance by a stockholder at a meeting shall constitute
a waiver of notice of such meeting except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders need be specified in any
written waiver of notice unless so required by statute, the Certificate of
Incorporation or these By-laws.
2.8 LIST OF STOCKHOLDERS. The Secretary shall prepare and make, or
cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, the stockholder's
agent, or attorney, at the stockholder's expense, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The Corporation
shall maintain the stockholder list in written form or in another form capable
of conversion into written form within a reasonable time. Upon the willful
neglect or refusal of the Directors to produce such a list at any meeting for
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8
the election of Directors, they shall be ineligible for election to any office
at such meeting. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of stockholders or
the books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
2.9 QUORUM OF STOCKHOLDERS; ADJOURNMENT. Except as otherwise
provided by any statute, the Certificate of Incorporation or these By-laws, the
holders of one-third of all outstanding shares of stock entitled to vote at any
meeting of stockholders, present in person or represented by proxy, shall
constitute a quorum for the transaction of any business at such meeting. When a
quorum is once present to organize a meeting of stockholders, it is not broken
by the subsequent withdrawal of any stockholders. The holders of a majority of
the shares of stock present in person or represented by proxy at any meeting of
stockholders, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Shares of its own
stock belonging to the Corporation or to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; PROVIDED, HOWEVER, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
2.10 VOTING; PROXIES. Unless otherwise provided in the Certificate
of Incorporation, every stockholder of record shall be entitled at every meeting
of stockholders to one vote for each share of capital stock standing in his or
her name on
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9
the record of stockholders determined in accordance with Section 2.5 hereof. If
the Certificate of Incorporation provides for more or less than one vote for any
share on any matter, each reference in the By-laws or the General Corporation
Law to a majority or other proportion of stock shall refer to such majority or
other proportion of the votes of such stock. The provisions of Sections 212 and
217 of the General Corporation Law shall apply in determining whether any shares
of capital stock may be voted and the persons, if any, entitled to vote such
shares; but the Corporation shall be protected in assuming that the persons in
whose names shares of capital stock stand on the stock ledger of the Corporation
are entitled to vote such shares. Holders of redeemable shares of stock are not
entitled to vote after the notice of redemption is mailed to such holders and a
sum sufficient to redeem the stocks has been deposited with a bank, trust
company, or other financial institution under an irrevocable obligation to pay
the holders the redemption price on surrender of the shares of stock. At any
meeting of stockholders (at which a quorum was present to organize the meeting),
all matters, except as otherwise provided by statute or by the Certificate of
Incorporation or by these By-laws, shall be decided by a majority of the votes
cast at such meeting by the holders of shares present in person or represented
by proxy and entitled to vote thereon, whether or not a quorum is present when
the vote is taken. All elections of Directors shall be by written ballot unless
otherwise provided in the Certificate of Incorporation. In voting on any other
question on which a vote by ballot is required by law or is demanded by any
stockholder entitled to vote, the voting shall be by ballot. Each ballot shall
be signed by the stockholder voting or the
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10
stockholder's proxy and shall state the number of shares voted. On all other
questions, the voting may be VIVA VOCE. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
such stockholder by proxy. The validity and enforceability of any proxy shall be
determined in accordance with Section 212 of the General Corporation Law. A
stockholder may revoke any proxy that is not irrevocable by attending the
meeting and voting in person or by filing an instrument in writing revoking the
proxy or by delivering a proxy in accordance with applicable law bearing a later
date to the Secretary.
2.11 VOTING PROCEDURES AND INSPECTORS OF ELECTION AT MEETINGS OF
STOCKHOLDERS. The Board, in advance of any meeting of stockholders, may appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Board may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at a
meeting, the person presiding at the meeting may appoint, and on the request of
any stockholder entitled to vote thereat shall appoint, one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of his
or her duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall (a) ascertain the number of shares outstanding and
the voting power of each, (b) determine the shares represented at the meeting
and the validity of proxies and ballots, (c) count all votes and ballots, (d)
determine and retain for a reasonable period a record of the
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11
disposition of any challenges made to any determination by the inspectors, and
(e) certify their determination of the number of shares represented at the
meeting and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
their duties. Unless otherwise provided by the Board, the date and time of the
opening and the closing of the polls for each matter upon which the stockholders
will vote at a meeting shall be determined by the person presiding at the
meeting and shall be announced at the meeting. No ballot, proxies or votes, or
any revocation thereof or change thereto, shall be accepted by the inspectors
after the closing of the polls unless the Court of Chancery of the State of
Delaware upon application by a stockholder shall determine otherwise.
2.12 ORGANIZATION. At each meeting of stockholders, the Chairman, or
in the absence of the Chairman, the Chief Executive Officer, or in the absence
of the Chief Executive Officer, the President, or in the absence of the
President a Vice President, and in case more than one Vice President shall be
present, that Vice President designated by the Board (or in the absence of any
such designation, the most senior Vice President, based on age, present), shall
act as chairman of the meeting. The Secretary, or in his or her absence one of
the Assistant Secretaries, shall act as secretary of the meeting. In case none
of the officers above designated to act as chairman or secretary of the meeting,
respectively, shall be present, a chairman or a secretary of the meeting, as the
case may be, shall be chosen by a majority of
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12
the votes cast at such meeting by the holders of shares of capital stock present
in person or represented by proxy and entitled to vote at the meeting.
2.13 ORDER OF BUSINESS. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
2.14 WRITTEN CONSENT OF STOCKHOLDERS WITHOUT A MEETING. Unless
otherwise provided in the Certificate of Incorporation, any action required by
the General Corporation Law to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered (by hand or by certified or registered mail, return
receipt requested) to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within 60
days of the earliest dated consent delivered in the manner required by this
Section 2.14, written
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13
consents signed by a sufficient number of holders to take action are delivered
to the Corporation as aforesaid. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 GENERAL POWERS. Except as otherwise provided in the Certificate
of Incorporation, the business and affairs of the Corporation shall be managed
by or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by these By-laws, the Board may exercise all powers and
perform all acts that are not required, by these By-laws or the Certificate of
Incorporation or by statute, to be exercised and performed by the stockholders.
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. The Board shall consist
of one or more members. The number of Directors shall be fixed from time to time
by resolution adopted by a majority of the entire Board then in office, whether
or not present at a meeting. Each Director shall hold office until his successor
is elected and qualified, or until his earlier death, resignation or removal.
3.3 ELECTION. Directors shall, except as otherwise required by
statute or by the Certificate of Incorporation, be elected by a plurality of the
votes
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14
cast at a meeting of stockholders by the holders of shares entitled to vote in
the election.
3.4 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Unless otherwise
provided in the Certificate of Incorporation, newly created Directorships
resulting from an increase in the number of Directors and vacancies occurring in
the Board for any other reason, including the removal of Directors without
cause, may be filled by persons having the qualifications set forth in Section
3.2 hereof by the affirmative votes of a majority of the entire Board, although
less than a quorum, or by a sole remaining Director, or may be elected by a
plurality of the votes cast by the holders of shares of capital stock entitled
to vote in the election at a special meeting of stockholders called for that
purpose. A Director elected to fill a vacancy shall be elected to hold office
until a successor is elected and qualified, or until the Director's earlier
death, resignation or removal.
3.5 RESIGNATION. Any Director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified in such resignation, the
acceptance of such resignation shall not be necessary to make it effective.
3.6 REMOVAL. Subject to the provisions of Section 141(k) of the
General Corporation Law, any or all of the Directors may be removed with or
without cause by vote of the holders of a majority of the shares then entitled
to vote at an election of Directors.
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15
3.7 COMPENSATION. Each Director who is not an employee of the
Corporation, in consideration of his or her service as such, shall be entitled
to receive from the Corporation such amount per annum or such fees for
attendance at Directors' meetings, or both, as the Board may from time to time
determine, together with reimbursement for the reasonable out-of-pocket
expenses, if any, incurred by such Director in connection with the performance
of his or her duties. Each Director who is not an employee of the Corporation
who shall serve as a member of any committee of Directors in consideration of
serving as such shall be entitled to such additional amount per annum or such
fees for attendance at committee meetings, or both, as the Board may from time
to time determine, together with reimbursement for the reasonable out-of-pocket
expenses, if any, incurred by such Director in the performance of his or her
duties. Nothing contained in this Section 3.7 shall preclude any Director from
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
3.8 TIMES AND PLACES OF MEETINGS. The Board may hold meetings, both
regular and special, either within or without the State of Delaware. The times
and places for holding meetings of the Board may be fixed from time to time by
resolution of the Board or (unless contrary to a resolution of the Board) in the
notice of the meeting.
3.9 ANNUAL MEETINGS. On the day when and at the place where the
annual meeting of stockholders for the election of Directors is held, and as
soon as practicable thereafter, the Board may hold its annual meeting, without
notice of such
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16
meeting, for the purposes of organization, the election of officers and the
transaction of other business. The annual meeting of the Board may be held at
any other time and place specified in a notice given as provided in Section 3.11
hereof for special meetings of the Board or in a waiver of notice thereof.
3.10 REGULAR MEETINGS. Regular meetings of the Board may be held
without notice at such times and at such places as shall from time to time be
determined by the Board.
3.11 SPECIAL MEETINGS. Special meetings of the Board may be called
by the Chairman, the Chief Executive Officer or the Secretary or by any two or
more Directors then serving on at least two Business Day's notice to each
Director given by one of the means specified in Section 3.14 hereof other than
by mail. Special meetings shall be called by the Chairman, Chief Executive
Officer or Secretary in like manner and on like notice on the written request of
any two or more of the Directors then serving.
3.12 TELEPHONE MEETINGS. Directors or members of any committee
designated by the Board may participate in a meeting of the Board or of such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 3.12 shall constitute
presence in person at such meeting. Each regular or special meeting of the Board
or any committee thereof shall have adequate conference telephone or similar
communications equipment available to allow any one of the directors or
committee
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17
members who choose to participate by telephone to do so in accordance with this
Section 3.12.
3.13 ADJOURNED MEETINGS. A majority of the Directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. At least one day's
notice of any adjourned meeting of the Board shall be given to each Director
whether or not present at the time of the adjournment, if such notice shall be
given by one of the means specified in Section 3.14 hereof other than by mail,
or at least three days' notice if by mail. Any business may be transacted at an
adjourned meeting that might have been transacted at the meeting as originally
called.
3.14 NOTICE PROCEDURE. Subject to Sections 3.11 and 3.17 hereof,
whenever, under the provisions of any statute, the Certificate of Incorporation
or these By-laws, notice is required to be given to any Director, such notice
shall be deemed given effectively if given in person or by telephone, by hand
delivery, or by telegram, telex, telecopy or similar means addressed to such
Director at such Director's address as it appears on the records of the
Corporation.
3.15 WAIVER OF NOTICE. Whenever the giving of any notice is required
by statute, the Certificate of Incorporation or these By-laws, a waiver thereof,
in writing, signed by the person or persons entitled to said notice, whether
before or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance by a person at a meeting shall constitute a
waiver of notice of such meeting except when the person attends a meeting for
the express
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18
purpose of objecting, at the beginning of the meeting, to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Directors or a committee of Directors need be
specified in any written waiver of notice unless so required by statute, the
Certificate of Incorporation or these By-laws.
3.16 ORGANIZATION. At each meeting of the Board, the Chairman, or in
the absence of the Chairman the Chief Executive Officer, or in the absence of
the Chief Executive Officer a chairman chosen by a majority of the Directors
present, shall preside. The Secretary shall act as secretary at each meeting of
the Board. In case the Secretary shall be absent from any meeting of the Board,
an Assistant Secretary shall perform the duties of secretary at such meeting;
and in the absence from any such meeting of the Secretary and all Assistant
Secretaries, the person presiding at the meeting may appoint any person to act
as secretary of the meeting.
3.17 QUORUM OF DIRECTORS. The presence in person of a majority of
the entire Board shall be necessary and sufficient to constitute a quorum for
the transaction of business at any meeting of the Board, but a majority of a
smaller number may adjourn any such meeting to a later date.
3.18 ACTION BY MAJORITY VOTE. Except as otherwise expressly required
by statute, the Certificate of Incorporation or these By-laws, the act of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board.
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19
3.19 ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if all Directors or members of such committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a vote of the entire Board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation. The Board may designate one or more Directors
as alternate members of any committee to replace absent or disqualified members
at any meeting of such committee. If a member of a committee shall be absent
from any meeting, or disqualified from voting thereat, the remaining member or
members present and not disqualified from voting, whether or not such member or
members constitute a quorum, may, by a unanimous vote, appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in a resolution of the Board
passed as aforesaid, shall have and may exercise all the powers and authority of
the Board in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be impressed on all papers that may
require it, but no such committee shall have the power or authority in reference
to the following matters: (i)
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20
approving or adopting, or recommending to the stockholders. any action or matter
expressly required by the GCL to be submitted to stockholders for approval or
(ii) adopting, amending or repealing any by-law of the Corporation. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board. Unless otherwise specified in
the resolution of the Board designating a committee, at all meetings of such
committee a majority of the total number of members of the committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of the members of the committee present at any meeting at which there is a
quorum shall be the act of the committee. Each committee shall keep regular
minutes of its meetings. Unless the Board otherwise provides, each committee
designated by the Board may make, alter and repeal rules for the conduct of its
business. In the absence of such rules each committee shall conduct its business
in the same manner as the Board conducts its business pursuant to Article 3 of
these By-laws.
ARTICLE 5
OFFICERS
5.1 POSITIONS. The officers of the Corporation shall be a Chairman,
a Chief Executive Officer, a President, a Secretary, a Treasurer and such other
officers as the Board may appoint, including one or more Vice Presidents and one
or more Assistant Secretaries and Assistant Treasurers, who shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board. The Board may designate one or more Vice Presidents as Executive Vice
Presidents and
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21
may use descriptive words or phrases to designate the standing, seniority or
areas of special competence of the Vice Presidents elected or appointed by it.
Any number of offices may be held by the same person unless the Certificate of
Incorporation or these By-laws otherwise provide.
5.2 APPOINTMENT. The officers of the Corporation shall be chosen by
the Board annually or at such other time or times as the Board shall determine.
5.3 COMPENSATION. The compensation of all officers of the
Corporation shall be fixed by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that the officer
is also a Director.
5.4 TERM OF OFFICE. Each officer of the Corporation shall hold
office until such officer's successor is chosen and qualifies or until such
officer's earlier death, resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Such resignation shall take effect
at the date of receipt of such notice or at such later time as is therein
specified, and, unless otherwise specified, the acceptance of such resignation
shall not be necessary to make it effective. The resignation of an officer shall
be without prejudice to the contract rights of the Corporation, if any. Any
officer elected or appointed by the Board may be removed at any time, with or
without cause, by vote of a majority of the entire Board. Any vacancy occurring
in any office of the Corporation shall be filled by the Board. The removal of an
officer without cause shall be without prejudice to the
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22
officer's contract rights, if any. The election or appointment of an officer
shall not of itself create contract rights.
5.5 FIDELITY BONDS. The Corporation may secure the fidelity of any
or all of its officers or agents by bond or otherwise.
5.6 CHAIRMAN. The Chairman shall preside at all meetings of the
Board and shall exercise such powers and perform such other duties as shall be
determined from time to time by the Board.
5.7 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be
the Chief Executive Officer of the Corporation and shall have general
supervision over the business of the Corporation, subject, however, to the
control of the Board and of any duly authorized committee of Directors. The
Chief Executive Officer shall preside at all meetings of the stockholders and at
all meetings of the Board at which the Chairman is not present. The Chief
Executive Officer may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts and other instruments except in cases in which the
signing and execution thereof shall be expressly delegated by the Board or by
these By-laws to some other officer or agent of the Corporation or shall be
required by statute otherwise to be signed or executed and, in general, the
Chief Executive Officer shall perform all duties incident to the office of Chief
Executive Officer of a corporation and such other duties as may from time to
time be assigned to the Chief Executive Officer by the Board.
5.8 PRESIDENT. At the request of the Chief Executive Officer, or, in
the Chief Executive Officer's absence, at the request of the Board, the
President shall
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23
perform all of the duties of the Chief Executive Officer and, in so performing,
shall have all the powers of, and be subject to all the restrictions upon, the
Chief Executive Officer. The President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments, except in
the cases in which the signing and execution thereof shall be expressly
delegated by the Board or these Bylaws to some other officer or agent of the
Corporation, or shall be required by statute otherwise to be signed or executed,
and the President shall perform such other duties as from time to time may be
assigned to the President by the Board or the Chief Executive Officer.
5.9 VICE PRESIDENTS. At the request of the President, or, in the
President's absence, at the request of the Board, the Vice Presidents shall (in
such order as may be designated by the Board or, in the absence of any such
designation, in order of seniority based on age) perform all of the duties of
the President and, in so performing, shall have all the powers of, and be
subject to all restrictions upon, the President. Any Vice President may sign and
execute in the name of the Corporation deeds, mortgages, bonds, contracts or
other instruments, except in cases in which the signing and execution thereof
shall be expressly delegated by the Board or by these By-laws to some other
officer or agent of the Corporation, or shall be required by statute otherwise
to be signed or executed, and each Vice President shall perform such other
duties as from time to time may be assigned to such Vice President by the Board
or by the President.
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24
5.10 SECRETARY. The Secretary shall attend all meetings of the Board
and of the stockholders and shall record all the proceedings of the meetings of
the Board and of the stockholders in a book to be kept for that purpose, and
shall perform like duties for committees of the Board, when required. The
Secretary shall give, or cause to be given, notice of all special meetings of
the Board and of the stockholders and shall perform such other duties as may be
prescribed by the Board or by the President, under whose supervision the
Secretary shall be. The Secretary shall have custody of the corporate seal of
the Corporation, and the Secretary, or an Assistant Secretary, shall have
authority to impress the same on any instrument requiring it, and when so
impressed the seal may be attested by the signature of the Secretary or by the
signature of such Assistant Secretary. The Board may give general authority to
any other officer to impress the seal of the Corporation and to attest the same
by such officer's signature. The Secretary or an Assistant Secretary may also
attest all instruments signed by the President or any Vice President. The
Secretary shall have charge of all the books, records and papers of the
Corporation relating to its organization and management, shall see that the
reports, statements and other documents required by statute are properly kept
and filed and, in general, shall perform all duties incident to the office of
Secretary of a corporation and such other duties as may from time to time be
assigned to the Secretary by the Board or by the Chief Executive Officer.
5.11 TREASURER. The Treasurer shall have charge and custody of, and
be responsible for, all funds, securities and notes of the Corporation; receive
and give
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25
receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositaries of the Corporation signed in such manner
as shall be determined by the Board and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books or other records maintained for the purpose full and adequate account of
all moneys received or paid for the account of the Corporation; have the right
to require from time to time reports or statements giving such information as
the Treasurer may desire with respect to any and all financial transactions of
the Corporation from the officers or agents transacting the same; render to the
Chief Executive Officer or the Board, whenever the Chief Executive Officer or
the Board shall require the Treasurer so to do, an account of the financial
condition of the Corporation and of all financial transactions of the
Corporation; exhibit at all reasonable times the records and books of account to
any of the Directors upon application at the office of the Corporation where
such records and books are kept; disburse the funds of the Corporation as
ordered by the Board; and, in general, perform all duties incident to the office
of Treasurer of a corporation and such other duties as may from time to time be
assigned to the Treasurer by the Board or the Chief Executive Officer.
5.12 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to
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26
them by the Secretary or by the Treasurer, respectively, or by the Board or by
the Chief Executive Officer.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 EXECUTION OF CONTRACTS. The Board, except as otherwise
provided in these By-laws, may prospectively or retroactively authorize any
officer or officers, employee or employees or agent or agents, in the name and
on behalf of the Corporation, to enter into any contract or execute and deliver
any instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 LOANS. The Board may prospectively or retroactively authorize
the Chief Executive Officer or any other officer, employee or agent of the
Corporation to effect loans and advances at any time for the Corporation from
any bank, trust company or other institution, or from any firm, corporation or
individual, and for such loans and advances the person so authorized may make,
execute and deliver promissory notes, bonds or other certificates or evidences
of indebtedness of the Corporation, and, when authorized by the Board so to do,
may pledge and hypothecate or transfer any securities or other property of the
Corporation as security for any such loans or advances. Such authority conferred
by the Board may be general or confined to specific instances, or otherwise
limited.
6.3 CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all evidences of
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27
indebtedness of the Corporation shall be signed on behalf of the Corporation in
such manner as shall from time to time be determined by resolution of the Board.
6.4 DEPOSITS. The funds of the Corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation with such
banks, trust companies, investment banking firms, financial institutions or
other depositaries as the Board may select or as may be selected by an officer,
employee or agent of the Corporation to whom such power to select may from time
to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 CERTIFICATES REPRESENTING SHARES. The shares of capital stock of
the Corporation shall be represented by certificates in such form (consistent
with the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the Chairman, the
Chief Executive Officer, the President or a Vice President and by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and may be
impressed with the seal of the Corporation or a facsimile thereof. The
signatures of the officers upon a certificate may be facsimiles, if the
certificate is countersigned by a transfer agent or registrar other than the
Corporation itself or its employee. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon any
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, such certificate may, unless otherwise
<PAGE>
28
ordered by the Board, be issued by the Corporation with the same effect as if
such person were such officer, transfer agent or registrar at the date of issue.
7.2 TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by the holder's duly authorized attorney appointed by a power of
attorney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation. A person in whose name shares of capital stock shall stand
on the books of the Corporation shall be deemed the owner thereof to receive
dividends, to vote as such owner and for all other purposes as respects the
Corporation. No transfer of shares of capital stock shall be valid as against
the Corporation, its stockholders and creditors for any purpose, except to
render the transferee liable for the debts of the Corporation to the extent
provided by law, until such transfer shall have been entered on the books of the
Corporation by an entry showing from and to whom transferred.
7.3 TRANSFER AND REGISTRY AGENTS. The Corporation may from time to
time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.
<PAGE>
29
7.4 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. The holder
of any shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to have been lost, destroyed, stolen or
mutilated. The Board may, in its discretion, as a condition to the issue of any
such new certificate, require the owner of the lost, destroyed, stolen or
mutilated certificate, or his or her legal representatives, to make proof
satisfactory to the Board of such loss, destruction, theft or mutilation and to
advertise such fact in such manner as the Board may require, and to give the
Corporation and its transfer agents and registrars, or such of them as the Board
may require, a bond in such form, in such sums and with such surety or sureties
as the Board may direct, to indemnify the Corporation and its transfer agents
and registrars against any claim that may be made against any of them on account
of the continued existence of any such certificate so alleged to have been lost,
destroyed, stolen or mutilated and against any expense in connection with such
claim.
7.5 RULES AND REGULATIONS. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these By-laws or
with the Certificate of Incorporation, concerning the issue, transfer and
registration of certif icates representing shares of its capital stock.
7.6 RESTRICTION ON TRANSFER OF STOCK. A written restriction on the
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted conspicuously
on the
<PAGE>
30
certificate representing such capital stock, may be enforced against the holder
of the restricted capital stock or any successor or transferee of the holder,
including an executor, administrator, trustee, guardian or other fiduciary
entrusted with like responsibility for the person or estate of the holder.
Unless noted conspicuously on the certificate representing such capital stock, a
restriction, even though permitted by Section 202 of the General Corporation
Law, shall be ineffective except against a person with actual knowledge of the
restriction. A restriction on the transfer or registration of transfer of
capital stock of the Corporation may be imposed either by the Certificate of
Incorporation or by an agreement among any number of stockholders or among such
stockholders and the Corporation. No restriction so imposed shall be binding
with respect to capital stock issued prior to the adoption of the restriction
unless the holders of such capital stock are parties to an agreement or voted in
favor of the restriction.
7.7 DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the
Certificate of Incorporation and of law, the Board:
7.7.1 may declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such amounts
and at such time or times as it, in its discretion, shall deem advisable
giving due consideration to the condition of the affairs of the
Corporation;
7.7.2 may use and apply, in its discretion, any of the
surplus of the Corporation in purchasing or acquiring any shares of
capital stock of the Corporation, or purchase warrants therefor, in
accordance with
<PAGE>
31
law, or any of its bonds, debentures, notes, scrip or other securities or
evidences of indebtedness; and
7.7.3 may set aside from time to time out of such
surplus or net profits such sum or sums as, in its discretion, it may
think proper, as a reserve fund to meet contingencies, or for equalizing
dividends or for the purpose of maintaining or increasing the property or
business of the Corporation, or for any purpose it may think conducive to
the best interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
The Corporation shall indemnify any person who is or was made, or
threatened to be made, a party to any threatened, pending or completed action,
suit or proceeding (a "Proceeding"), whether civil, criminal, administrative or
investigative, including, without limitation, an action by or in the right of
the Corporation to procure a judgment in its favor, by reason of the fact that
such person, or a person of whom such person is the legal representative, is or
was a Director or officer of the Corporation, or is or was serving in any
capacity at the request of the Corporation for any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise (an
"Other Entity"), against judgments, fines, penalties, excise taxes, amounts paid
in settlement and costs, charges and expenses (including attorneys' fees and
disbursements) as provided in the Certificate of Incorporation.
<PAGE>
32
ARTICLE 9
BOOKS AND RECORDS
9.1 BOOKS AND RECORDS. There shall be kept at the principal office
of the Corporation correct and complete records and books of account recording
the financial transactions of the Corporation and minutes of the proceedings of
the stockholders, the Board and any committee of the Board. The Corporation
shall keep at its principal office, or at the office of the transfer agent or
registrar of the Corporation, a record containing the names and addresses of all
stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 FORM OF RECORDS. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
written form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
9.3 INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided by
law, the Board shall determine from time to time whether, and, if allowed, when
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
stockholders for inspection.
<PAGE>
33
ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and may be
changed, by resolution of the Board.
ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise directed by the Board, the Chairman, the Chief
Executive Officer, the President, any Vice President, the Secretary or the
Treasurer, or any one of them, may execute and deliver on behalf of the
Corporation proxies respecting any and all shares or other ownership interests
of any Other Entity owned by the Corporation appointing such person or persons
as the officer executing the same shall deem proper to represent and vote the
shares or other ownership interests so owned at any and all meetings of holders
of shares or other ownership interests, whether general or special, and/or to
execute and deliver consents respecting such shares or other ownership
interests; or any of the aforesaid officers may attend any
<PAGE>
34
meeting of the holders of shares or other ownership interests of such Other
Entity and thereat vote or exercise any or all other powers of the Corporation
as the holder of such shares or other ownership interests.
ARTICLE 13
EMERGENCY BY-LAWS
Unless the Certificate of Incorporation provides otherwise, the
following provisions of this Article 13 shall be effective during an emergency,
which is defined as when a quorum of the Corporation's Directors cannot be
readily assembled because of some catastrophic event. During such emergency:
13.1 NOTICE TO BOARD MEMBERS. Any one member of the Board or any one
of the following officers: Chairman, Chief Executive Officer, President, any
Vice President, Secretary, or Treasurer, may call a meeting of the Board. Notice
of such meeting need be given only to those Directors whom it is practicable to
reach, and may be given in any practical manner, including by publication and
radio. Such notice shall be given at least six hours prior to commencement of
the meeting.
13.2 TEMPORARY DIRECTORS AND QUORUM. One or more officers of the
Corporation present at the emergency Board meeting, as is necessary to achieve a
quorum, shall be considered to be Directors for the meeting, and shall so serve
in order of rank, and within the same rank, in order of seniority. In the event
that less than a quorum of the Directors are present (including any officers who
are to serve as Directors for the meeting), those Directors present (including
the officers serving as Directors) shall constitute a quorum.
<PAGE>
13.3 ACTIONS PERMITTED TO BE TAKEN. The Board as constituted in
Section 13.2, and after notice as set forth in Section 13.1 may:
(a) prescribe emergency powers to any officer of the
Corporation;
(b) delegate to any officer or Director, any of the powers of
the Board;
(c) designate lines of succession of officers and agents, in
the event that any of them are unable to discharge their duties;
(d) relocate the principal place of business, or designate
successive or simultaneous principal places of business; and
(e) take any other convenient, helpful or necessary action to
carry on the business of the Corporation.
ARTICLE 14
ADOPTION, AMENDMENT AND REPEAL OF BY-LAWS
The Board may from time to time adopt, amend or repeal the By-laws;
PROVIDED, HOWEVER, that any By-laws adopted or amended by the Board may be
amended or repealed, and any By-laws may be adopted, by a vote of the
Stockholders having at least a majority in voting power of the then issued and
outstanding shares of capital stock of the Corporation.
EXHIBIT 4.1
EXECUTION COPY
================================================================================
TRAVELCENTERS OF AMERICA, INC.
10-1/4% Senior Subordinated Notes due April 1, 2007
Guaranteed by TA Operating Corporation and National
Auto/Truckstops, Inc.
--------------------------------
INDENTURE
Dated as of March 27, 1997
--------------------------------
FLEET NATIONAL BANK,
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.................................................. 1
SECTION 1.02. Other Definitions............................................ 24
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act.............................................. 24
SECTION 1.04. Rules of Construction........................................ 25
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating.............................................. 26
SECTION 2.02. Execution and Authentication................................. 27
SECTION 2.03. Registrar and Paying Agent................................... 28
SECTION 2.04. Paying Agent to Hold Money in Trust.......................... 29
SECTION 2.05. Securityholder Lists......................................... 29
SECTION 2.06. Transfer and Exchange........................................ 29
SECTION 2.07. Replacement Securities....................................... 30
SECTION 2.08. Outstanding Securities....................................... 31
SECTION 2.09. Temporary Securities......................................... 31
SECTION 2.10. Cancelation.................................................. 31
SECTION 2.11. CUSIP Numbers................................................ 31
SECTION 2.12. Book-Entry Provisions for U.S. Global
Security................................................... 39
SECTION 2.13 Special Transfer Provisions................................... 34
SECTION 2.14 Default Interest.............................................. 39
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee........................................... 39
SECTION 3.02. Selection of Securities
To Be Redeemed............................................. 39
SECTION 3.03. Notice of Redemption......................................... 40
SECTION 3.04. Effect of Notice of Redemption............................... 41
SECTION 3.05. Deposit of Redemption Price.................................. 41
SECTION 3.06. Securities Redeemed in Part.................................. 41
SECTION 3.07. Optional Redemption.......................................... 41
<PAGE>
2
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities........................................ 42
SECTION 4.02. SEC Reports.................................................. 42
SECTION 4.03. Limitation on Indebtedness................................... 43
SECTION 4.04. Limitation on Restricted Payments............................ 46
SECTION 4.05. Limitation on Restrictions on
Distributions from Subsidiaries............................ 49
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock........................................... 50
SECTION 4.07. Limitation on Transactions with
Affiliates................................................. 54
SECTION 4.08. Change of Control............................................ 55
SECTION 4.09. Compliance Certificate....................................... 57
SECTION 4.10. Further Instruments and Acts................................. 57
SECTION 4.11. Future Subsidiary Guarantors................................. 57
SECTION 4.12. Limitation on Lines of Business.............................. 57
SECTION 4.13. Limitation on Sale/Leaseback
Transaction................................................ 58
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. When Company May Merge or Transfer
Assets..................................................... 58
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default............................................ 59
SECTION 6.02. Acceleration................................................. 61
SECTION 6.03. Other Remedies............................................... 62
SECTION 6.04. Waiver of Past Defaults...................................... 62
SECTION 6.05. Control by Majority.......................................... 62
SECTION 6.06. Limitation on Suits.......................................... 63
SECTION 6.07. Rights of Holders to
Receive Payment............................................ 63
SECTION 6.08. Collection Suit by Trustee................................... 63
SECTION 6.09. Trustee May File Proofs of Claim............................. 63
SECTION 6.10. Priorities................................................... 64
SECTION 6.11. Undertaking for Costs........................................ 64
SECTION 6.12. Waiver of Stay or Extension Laws............................. 65
<PAGE>
3
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee............................................ 65
SECTION 7.02. Rights of Trustee............................................ 66
SECTION 7.03. Individual Rights of Trustee................................. 67
SECTION 7.04. Trustee's Disclaimer......................................... 67
SECTION 7.05. Notice of Defaults........................................... 67
SECTION 7.06. Reports by Trustee to Holders................................ 68
SECTION 7.07. Compensation and Indemnity................................... 68
SECTION 7.08. Replacement of Trustee....................................... 69
SECTION 7.09. Successor Trustee by Merger.................................. 70
SECTION 7.10. Eligibility; Disqualification................................ 70
SECTION 7.11. Preferential Collection of Claims
Against Company............................................ 70
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Securities;
Defeasance................................................. 71
SECTION 8.02. Conditions to Defeasance..................................... 72
SECTION 8.03. Application of Trust Money................................... 73
SECTION 8.04. Repayment to Company......................................... 73
SECTION 8.05. Indemnity for Government
Obligations................................................ 73
SECTION 8.06. Reinstatement................................................ 74
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders................................... 74
SECTION 9.02. With Consent of Holders...................................... 75
SECTION 9.03. Compliance with Trust Indenture Act.......................... 76
SECTION 9.04. Revocation and Effect of Consents and
Waivers.................................................... 76
SECTION 9.05. Notation on or Exchange
of Securities.............................................. 77
SECTION 9.06. Trustee to Sign Amendments................................... 77
SECTION 9.07. Payment for Consent.......................................... 77
<PAGE>
4
ARTICLE 10
SUBORDINATION
SECTION 10.01. Agreement To Subordinate.................................... 78
SECTION 10.02. Liquidation, Dissolution, Bankruptcy........................ 78
SECTION 10.03. Default on Senior Indebtedness.............................. 78
SECTION 10.04. Acceleration of Payment of Securities....................... 79
SECTION 10.05. When Distribution Must Be Paid Over......................... 80
SECTION 10.06. Subrogation................................................. 80
SECTION 10.07. Relative Rights............................................. 80
SECTION 10.08. Subordination May Not Be Impaired by
Company................................................... 80
SECTION 10.09. Rights of Trustee and Paying Agent.......................... 80
SECTION 10.10. Distribution or Notice to
Representative............................................ 81
SECTION 10.11. Article 10 Not To Prevent Events
of Default or Limit
Right To Accelerate....................................... 81
SECTION 10.12. Trust Moneys Not Subordinated............................... 81
SECTION 10.13. Trustee Entitled To Rely.................................... 82
SECTION 10.14. Trustee to Effectuate Subordination......................... 82
SECTION 10.15. Trustee Not Fiduciary for Holders of
Senior Indebtedness....................................... 82
SECTION 10.16. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions................................................ 83
SECTION 10.17. Trustee's Compensation Not Prejudiced....................... 83
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. Subsidiary Guarantees....................................... 83
SECTION 11.02. Limitation on Liability..................................... 85
SECTION 11.03. Successors and Assigns...................................... 86
SECTION 11.04. No Waiver................................................... 86
SECTION 11.05. Modification................................................ 86
SECTION 11.06. Execution of Supplemental Indenture for
Future Guarantor Subsidiaries............................. 87
ARTICLE 12
SUBORDINATION OF THE SUBSIDIARY GUARANTEES
SECTION 12.01. Agreement to Subordinate.................................... 87
SECTION 12.02. Liquidation, Dissolution, Bankruptcy........................ 87
SECTION 12.03. Default on Senior Indebtedness of a
Guarantor Subsidiary...................................... 88
SECTION 12.04. Demand for Payment.......................................... 89
<PAGE>
5
SECTION 12.05. When Distribution Must Be Paid Over......................... 89
SECTION 12.06. Subrogation................................................. 90
SECTION 12.07. Relative Rights............................................. 90
SECTION 12.08. Subordination May Not Be Impaired by a
Guarantor Subsidiary...................................... 90
SECTION 12.09. Rights of Trustee and Paying Agent.......................... 90
SECTION 12.10. Distribution or Notice to
Representative ........................................... 91
SECTION 12.11. Article 13 Not to Prevent Events of
Default or Limit Right to Accelerate...................... 91
SECTION 12.12. Trustee Entitle to Rely..................................... 91
SECTION 12.13. Trustee to Effectuate Subordination......................... 92
SECTION 12.14. Trustee Not Fiduciary for Holders of
Senior Indebtedness of a Guarantor
Subsidiary................................................ 92
SECTION 12.15. Reliance by Holders of Senior
Indebtedness of a Guarantor Subsidiary
on Subordination Provisions............................... 92
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls................................ 93
SECTION 13.02. Notices..................................................... 93
SECTION 13.03. Communication by Holders with Other
Holders................................................... 94
SECTION 13.04. Certificate of Opinion as to Conditions
Precedent................................................. 94
SECTION 13.05. Statements Required in Certificate or
Opinion................................................... 94
SECTION 13.06. When Securities Disregarded................................. 94
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar................................................. 95
SECTION 13.08. Legal Holidays.............................................. 95
SECTION 13.09. Governing Law............................................... 95
SECTION 13.10. No Recourse Against Others.................................. 95
SECTION 13.11. Successors.................................................. 95
SECTION 13.12. Multiple Originals.......................................... 95
SECTION 13.13. Table of Contents; Headings................................. 96
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security
Exhibit C - Form of Transferee Letter of Representation
Exhibit D - Form of Supplemental Indenture
Exhibit E - Form of Certificate to be Delivered Upon
Termination of Restricted Period
Exhibit F - Form of Certificate to be Delivered in
Connection with Transfers to Non-QIB
Institutional Accredited Investors
<PAGE>
6
Exhibit G - Form of Certificate to be Delivered in
Connection with Transfers Pursuant to
Regulation S
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
SECTION SECTION
310(a)(1) ..................................................... 7.10
(a)(2) ..................................................... 7.10
(a)(3)...................................................... N.A
(a)(4)...................................................... N.A
(b)......................................................... 7.08; 7.10
(c)......................................................... N.A
311(a)......................................................... 7.11
(b)......................................................... 7.11
(c)......................................................... N.A
312(a)......................................................... 2.05
(b)......................................................... 13.03
(c)......................................................... 13.03
313(a)......................................................... 7.06
(b)(1)...................................................... N.A
(b)(2)...................................................... 7.06
(c)......................................................... 13.02
(d)......................................................... 7.06
314(a)......................................................... 4.02; 4.12;
13.02
(b)......................................................... N.A
(c)(1)...................................................... 13.04
(c)(2)...................................................... 13.04
(c)(3)...................................................... N.A
(d)......................................................... N.A
(e)......................................................... 13.05
(f)......................................................... 4.12
315(a)......................................................... 7.01
(b)......................................................... 7.05; 13.02
(c)......................................................... 7.01
(d)......................................................... 7.01
(e)......................................................... 6.11
316(a)(last
sentence)...................................................... 13.06
(a)(1)(A)................................................... 6.05
(a)(1)(B)................................................... 6.04
(a)(2)...................................................... N.A
(b)......................................................... 6.07
317(a)(1)...................................................... 6.08
(a)(2)...................................................... 6.09
(b)......................................................... 2.04
318(a)......................................................... 13.01
N.A. means Not Applicable.
- ---------------------
Note: This Cross-Reference Table shall not, for any
purpose, be deemed to be part of the Indenture.
<PAGE>
1
INDENTURE dated as of March 27, 1997, among
TRAVELCENTERS OF AMERICA, INC., a Delaware corporation (the
"Company"), TA OPERATING CORPORATION, a Delaware corporation,
and NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware corporation,
and FLEET NATIONAL BANK, a national banking association (the
"Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Company's 10-1/4% Senior
Subordinated Notes due April 1, 2007 (the "Initial Securities"), and, if and
when issued as provided in the Exchange and Registration Rights Agreement of
even date herewith, the Company's 10- 1/4% Senior Subordinated Series A Notes
due April 1, 2007 (the "Exchange Securities", and together with the Initial
Securities, the "Securities").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary; or (iii) Capital Stock
constituting a minority interest in any Person that at such time is a Restricted
Subsidiary; PROVIDED, HOWEVER, that any such Restricted Subsidiary described in
clauses (ii) or (iii) above, is or following such acquisition will be, in the
good faith judgment of the Company's management, primarily engaged in a Related
Business.
"Additional Interest" means liquidated damages under the Exchange
and Registration Rights Agreement in respect of the Initial Securities.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this
<PAGE>
2
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value of all remaining required
interest and principal payments due on such Security, computed using a discount
rate equal to the Treasury Rate plus 75 basis points, over (B) the
then-outstanding principal amount of such Security.
"Asset Disposition" means any sale, lease, trans fer or other
disposition of shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares), property or other assets (each referred to for
the purposes of this definition as a "disposition") by the Company or any of its
Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction) in one transaction or in a series of
related transactions other than (i) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Subsidiary, (ii) a
disposition of inventory in the ordinary course of business, (iii) dispositions
with a fair market value of less than $500,000 in the aggregate in any fiscal
year, (iv) for purposes of Section 4.06 only, a disposition subject to Section
4.04 and (v) the disposition of all or substantially all the assets of the
Company permitted under Section 5.01.
"Asset Swap" means the execution of a definitive agreement, subject
only to customary closing conditions that the Company's management in good faith
believes will be satisfied, for a substantially concurrent purchase and sale, or
exchange, of Productive Assets between the Company or any of its Restricted
Subsidiaries and another Person or group of affiliated Persons; PROVIDED,
HOWEVER, that any amendment to or waiver of any closing condition that
individually or in the aggregate is material to the Asset Swap shall be deemed
to be a new Asset Swap.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
<PAGE>
3
"Average Life" means, as of the date of determina tion, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Indebtedness
or redemption or similar payment with respect to such Preferred Stock multi
plied by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Senior Bank Documents and any Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism), in whole or in part, Indebtedness under such
Senior Bank Documents including Indebtedness that refinances such Indebtedness,
as amended from time to time, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for postfiling interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, Guarantees and all other amounts payable
thereunder or in respect thereof (including, without limitation, cash
collateralization of letters of credit).
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means a day other than a Saturday, Sunday or other
day on which banking institutions in a place of payment or receipt are
authorized or required by law to close.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
Lessee without payment of a penalty.
<PAGE>
4
"Change of Control" means the occurrence of any of
the following events:
(i) prior to the first public offering of Voting Stock of the
Company, the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of
the Voting Stock of the Company, whether as a result of issuance of
securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect transfer of securities
by any Permitted Holder or otherwise (for purposes of this clause (i), the
Permitted Holders shall be deemed to own beneficially any Voting Stock of
an entity (the "specified entity") held by any other entity (the "parent
entity") so long as the Permitted Holders beneficially own (as so
defined), directly or indirectly, in the aggregate a majority of the
voting power of the Voting Stock of the parent entity);
(ii) any "person" (as such term is used in Sec tions 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (i) above, except that
such person shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock
of the Company (including any successor by merger, consolidation or the
sale of all or substantially all assets); or
(iii) during any period of two consecutive years, individuals who at
the beginning of such period consti tuted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of a majority of the directors of the
Company then still in office who were either directors at the beginning of
such period or whose election or nomination for elec tion was previously
so approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
"Chase" means the Chase Manhattan Bank, a New York
banking corporation.
"Code" means the Internal Revenue Code of 1986, as
amended.
<PAGE>
5
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters for which financial statements are then
available but ending at least 60 days prior to the date of such determination to
(ii) Consolidated Interest Expense for such four fiscal quarters; PROVIDED,
HOWEVER, that (A) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding on such
date of determination or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such period, (B) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive) directly
attributable to the assets that are the subject of such Asset Disposition for
such period or increased by an amount equal to the EBITDA (if negative) directly
attributable thereto for such period and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to
the Company and its continuing Restricted Subsidiaries in connection with such
Asset Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (C) if since the beginning of such period the
Company or any Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
under this Indenture, which constitutes all or substantially all of an operating
unit of a business (it being understood that a TravelCenter
<PAGE>
6
constitutes such an operating unit), EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (D) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (B) or (C) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition of assets occurred on the first day
of such period. For purposes of this definition, whenever pro forma effect is to
be given to an acquisition of assets, the amount of Consolidated Net Income
relating thereto and the amount of Consolidated Interest Expense associated with
any Indebtedness Incurred in connection therewith, the pro forma calculations
shall be determined in good faith by a responsible financial or accounting
Officer of the Company. If any Indebtedness bears a floating or adjustable rate
of interest and is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of the Company and its Restricted Subsidiaries,
plus, to the extent Incurred by the Company and its Restricted Subsidiaries in
such period but not included in such interest expense, (i) interest expense
attributable to Capitalized Lease Obligations and Attributable Debt, (ii)
amortization of debt discount, (iii) capitalized interest, (iv) noncash interest
expense, (v) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing, (vi) net costs associated
with Hedging Obligations (including amortization of fees), (vii) Preferred Stock
dividends in respect of all Preferred Stock of Subsidiaries of the Company and
Disqualified Stock of the Company held by Persons other than the Company or a
Wholly Owned Subsidiary, (viii) the interest portion of any deferred payment
obligation, (ix) interest actually paid on any Indebtedness of any other Person
and (x) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness
<PAGE>
7
Incurred by such plan or trust but in no event shall Consolidated Interest
Expense include the amortization of fees Incurred on or prior to the Issue Date
in respect of the Credit Agreement, the Senior Notes or the Securities.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Subsidiaries; PROVIDED, HOWEVER, that
there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations
contained in clause (iv) below, the Company's equity in the net income of
any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or
other distribution to a Restricted Subsidiary, to the limitations
contained in clause (iii) below) and (B) the Company's equity in a net
loss of any such Person (other than an Unrestricted Subsidiary) for such
period shall be included in determining such Consolidated Net Income;
(ii) any net income (loss) of any person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(iii) any net income (loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company, except that
(A) subject to the limitations contained in clause (iv) below, the
Company's equity in the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend
that could have been made to another Restricted Subsidiary, to the
limitation contained in this clause) and (B) the Company's equity in a net
loss of any such Restricted Subsidiary for such period shall be included
in determining such Consolidated Net Income;
(iv) any gain or loss realized upon the sale or other disposition of
any asset of the Company or its consolidated Subsidiaries (including
pursuant to any
<PAGE>
8
Sale/Leaseback Transaction) that is not sold or otherwise disposed of in
the ordinary course of business and any gain or loss realized upon the
sale or other disposition of any Capital Stock of any Person;
(v) any extraordinary gain or loss; and
(vi) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries to
the Company or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under such
Section pursuant to clause (a)(3)(D) thereof.
"Consolidation" means the consolidation of the amounts of each of
the Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; PROVIDED, HOWEVER, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary shall
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of March 21,
1997, as amended, waived or otherwise modified from time to time, among the
Company, Chase, as administrative agent, and the several lenders party thereto.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form of
Exhibit A or Exhibit B attached hereto that do not include the Global Security
Legend thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.03
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable
<PAGE>
9
provisions of this Indenture, and thereafter, "Depository" shall mean or include
such successor.
"Designated Consideration" means a purchase money note or other
noncash consideration received in connection with the sale by the Company of a
TravelCenter (including any related personal or real property) or any portion
thereof; PROVIDED that the aggregate amount of Designated Consideration that the
Company or any Restricted Subsidiary may receive from Asset Dispositions shall
not exceed $10,000,000 in fair market value as determined in good faith by the
Board of Directors plus the amount of cash received pursuant to the terms or
from the disposition of Designated Consideration.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness,
(ii) the Senior Note Indebtedness and (iii) any other Senior Indebtedness which,
at the date of determination, has an aggregate principal amount outstanding of,
or under which, at the date of determination, the holders thereof, are committed
to lend up to, at least $25,000,000 and is specifically designated by the
Company in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the Stated Maturity of the Securities.
"Domestic Subsidiary" means any Restricted Sub sidiary of the
Company other than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense; (ii) Consolidated Interest
Expense; (iii) any payments made in respect of Attributable Debt in excess of
the amount of such payments included in Consolidated Interest Expense; (iv)
Transition Expenses not in excess of $7,000,000 in any year and $11,000,000 in
the aggregate; (v) depreciation expense; (vi) amortization expense; and (vii)
any other noncash charge, in each case for such period, but excluding any other
noncash charge to the extent it represents an accrual or reserve for a cash
charge for any future period. Notwithstanding the
<PAGE>
10
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization of, a Subsidiary of the Company shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Subsidiary or
its stockholders.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated as of the Issue Date between the Company and
the Initial Purchaser.
"Foreign Subsidiary" means any Restricted Sub sidiary of the Company
that is not organized under the laws of the United States of America or any
State thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Global Security" means a Security that is in the form of Exhibit A
or Exhibit B hereto that includes the Global Security Legend thereof.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
<PAGE>
11
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
PROVIDED, HOWEVER, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"IAI" shall have the meaning set forth in
Section 2.01.
"IAI Initial Investor" means any Person that (i) acquires an
interest in the Securities directly from the initial Purchaser in connection
with the initial distribution of the Securities and (ii) is an IAI and not a
QIB.
"Indenture" means this Indenture as amended or
supplemented from time to time.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Subsidiary. With respect to Indebtedness to be
borrowed under a binding commitment previously entered into that provides for
the Company to Incur Indebtedness on a revolving basis, the Company shall be
deemed to have Incurred the greater of (a) the Indebtedness actually Incurred or
(b) all or a portion of the amount of such commitment, if the Company shall have
so designated such amount of Indebtedness to be Incurred in an Officers'
Certificate delivered to the Trustee. If such an Officers' Certificate is so
delivered and the amount specified therein is then permitted to be Incurred
under Section 4.03 hereof, any subsequent Incurrence of Indebtedness pursuant to
such commitment, as in existence on the date of such Officers'
<PAGE>
12
Certificate, shall be permitted under Section 4.03 hereof. A change in GAAP that
results in an obligation of such Person that exists at such time becoming
Indebtedness shall not be deemed an Incurrence of such Indebtedness.
"Indebtedness" means, with respect to any Person
on any date of determination (without duplication),
(i) the principal of and premium (if any) in
respect of indebtedness of such Person for borrowed
money;
(ii) the principal of and premium (if any) in respect of obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments;
(iii) all obligations of such Person in respect of letters of credit
or other similar instruments (including reimbursement obligations with
respect thereto);
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion
of such services;
(v) all Capitalized Lease Obligations and all
Attributable Debt of such Person;
(vi) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of the Company, any Preferred Stock
(but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; PROVIDED, HOWEVER, that the amount of Indebtedness of such Person
shall be the lesser of (A) the fair market value of such asset at such
date of determination and (B) the amount of such Indebtedness of such
other Persons;
(viii) all Indebtedness of other Persons to the
extent Guaranteed by such Person; and
(ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
Notwithstanding the foregoing, Indebtedness shall not include any liability for
Federal, state, local or other taxes owed or owing by the Company to any
governmental
<PAGE>
13
entity or obligations arising from agreements of the Company or any Restricted
Subsidiary providing for indemnification, adjustment of purchase price, earn out
or other obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or Restricted Subsidiary, other than
Guarantees of Indebtedness incurred by any Person acquiring all or a portion of
such business, assets or Restricted Subsidiary.
"Initial Purchaser" means Chase Securities Inc.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of such Person) or
other extension of credit (including by way of Guarantee or similar arrangement)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04, (i) "Investment" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED,
HOWEVER, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Board of Directors.
"Issue Date" means the date on which the Initial
Securities are originally issued.
"Lessee Operator" means a Person who operates a
TravelCenter pursuant to a lease agreement and a franchise
<PAGE>
14
agreement, in each case with the Company or a Restricted Subsidiary, with
respect to such TravelCenter.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"National" means National Auto/Truckstops, Inc., a
Delaware corporation.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise (other than
amounts constituting interest thereon), but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring person of Indebtedness or other obligations relating to the properties
or assets that are the subject of such Asset Disposition or received in any
other noncash form) therefrom, in each case net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all federal, state, provincial, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien upon
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Disposition and (iv) appropriate amounts to
be provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition (including without limitation amounts reserved for the cost of any
indemnification payments (fixed or contingent) attributable to the seller's
indemnities to the purchaser in respect of such Asset Disposition).
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Officer" means the Chairman of the Board, the
Chief Executive Officer, the Chief Financial Officer, the
<PAGE>
15
President, any Vice President, the Treasurer, the Secretary,
any Assistant Treasurer or Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed
by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holders" means: (i) U.S. Trust; (ii) Clipper Capital
Associates, L.P., UBS Capital Corporation, First Plaza Group Trust, Olympus
Private Placement Fund, L.P., The Travelers Indemnity Company, Barclays U.S.A.,
Inc., Credit Suisse Group, Phoenix Insurance Company and their respective
Affiliates; and (iii) any Person acting in the capacity of an underwriter in
connection with a public or private offering of the Company's Capital Stock.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary; PROVIDED,
HOWEVER, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
PROVIDED, HOWEVER, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; PROVIDED,
HOWEVER, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees of the Company or such Restricted Subsidiary
and not exceeding $1,000,000 in the aggregate outstanding at any time; (vii)
stock, obligations or securities received in settlement of debts (including
payment obligations of customers) created in the ordinary course of business and
owing to the Company or any Restricted Subsidiary or in satisfaction of
judgments; (viii) loans to employees for the purchase of Capital Stock or the
payment of the exercise price of options to purchase Capital Stock of the
Company or loans to satisfy Federal or state income tax withholding
<PAGE>
16
requirements relating to the issuance of Capital Stock of the Company pursuant
to the Company's employee stock plans, in an aggregate amount with respect to
all loans described in this clause (viii) not to exceed $2,000,000 outstanding
at any one time; (ix) a Person to the extent such Investment represents the
noncash consideration otherwise permitted to be received by the Company or its
Restricted Subsidiaries in connection with an Asset Disposition; (x) prepayments
and other credits to suppliers made in the ordinary course of business
consistent with the past practices of the Company and its Restricted
Subsidiaries; (xi) payments to customers in consideration for such customers'
agreements with the Company to purchase goods and inventory made in the ordinary
course of business consistent with past practices of the Company and its
Restricted Subsidiaries; and (xii) performance bonds or similar Investments in
connection with pledges, deposits or payments made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or environmental
regulations.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
that is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is to
become due at the relevant time.
"Private Placement Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
"Productive Assets" means assets of a kind used or usuable by the
Company and its Restricted Subsidiaries in the Company's business or any Related
Business.
"Public Equity Offering" means an underwritten primary public
offering of common stock of the Company pursuant to an effective registration
statement
<PAGE>
17
under the Securities Act (or the equivalent if the current registration system
of the Securities Act is changed).
"Purchase Agreement" means the agreement dated March 24, 1997,
providing for the purchase by the Initial Purchaser of the Securities.
"Purchase Date" shall have the meaning set forth
in Section 4.06(c).
"QIB" shall have the meaning set forth in Section
2.01(b).
"Redemption Date" means the date on which the Securities are
optionally redeemed pursuant to Section 3.07.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, renews, replaces or extends any Indebtedness permitted to be
Incurred by the Company or any Restricted Subsidiary pursuant to the terms of
this Indenture, whether involving the same or any other lender or creditor or
group of lenders or creditors, but only to the extent that (i) the Refinancing
Indebtedness is subordinated to the Securities to at least the same extent as
the Indebtedness being refunded, refinanced or extended, if at all, (ii) the
Refinancing Indebtedness is scheduled to mature either (a) no earlier than the
Indebtedness being refunded, refinanced or extended or (b) at least 91 days
after the maturity date of the Securities, (iii) the Refinancing Indebtedness
has a weighted average life to maturity at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the weighted average
life to maturity of the Indebtedness being refunded, refinanced or extended,
(iv) such Refinancing Indebtedness is in an aggregate principal amount that is
less than or equal to the sum of (a) the aggregate principal or accreted amount
(in the case of any Indebtedness issued with original issue discount, as such)
then outstanding under the Indebtedness being refunded, refinanced or extended,
(b) the amount of accrued and unpaid interest, if any, and premiums owed, if
any, not in excess of preexisting prepayment provisions on such Indebtedness
being refunded, refinanced or extended and (c) the amount of customary fees,
expenses and costs related to the incurrence of such Refinancing Indebtedness
and (v) such Refinancing Indebtedness is Incurred by the same Person (or its
successor) that initially Incurred the Indebtedness being refunded, refinanced
or extended, except that the Company may Incur Refinancing Indebtedness to
refund, refinance or extend Indebtedness of any Restricted Subsidiary of the
Company.
"Registered Exchange Offer" shall have the meaning set forth in the
Exchange and Registration Rights Agreement.
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18
"Related Business" means any business in which the Company engages
on the Issue Date and any business related, ancillary or complementary (in the
good faith judgment of the Board of Directors) to any of the businesses of the
Company or any of its Restricted Subsidiaries on the Issue Date.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Indebtedness. In the case of the Bank Indebtedness and
Senior Note Indebtedness, the term "Representative" includes any Person
designated to act in such capacity pursuant to the procedures set forth in the
intercreditor agreement dated as of the Issue Date, among the Company, Chase, as
collateral agent, the lenders party to the Credit Agreement and the holders of
Senior Note Indebtedness. In the case of other Senior Indebtedness that does not
by its terms designate a representative, the term "Representative" means any
Person designated to act in such capacity by the holders of a majority in
principal amount of such Indebtedness.
"Restricted Subsidiary" means any Subsidiary of
the Company other than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property, whether owned as of the Issue Date or thereafter acquired, whereby the
Company or a Restricted Subsidiary transfers such property to a Person and the
Company or a Restricted Subsidiary leases it from such Person, other than leases
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of
the Company secured by a Lien.
"Securities" means, collectively, the Initial Securities and, when
and if issued as provided in the Exchange and Registration Rights Agreement, the
Exchange
Securities.
"Securities Act" means the Securities Act of 1933,
as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depository), or any successor entity
thereto and shall initially be the Trustee.
"Senior Bank Documents" means the collective reference to the Credit
Agreement, any notes issued pursuant thereto and the Guarantee thereof, and the
Security
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19
Agreement, the Mortgages and the Pledge Agreement (each as defined in the Credit
Agreement).
"Senior Credit Documents" means the collective
reference to the Senior Bank Documents and the Senior Note
Documents.
"Senior Indebtedness" means the principal of, premium (if any) and
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization of the Company regardless of whether postfiling
interest is allowed in such proceeding) on, and fees and other amounts owing in
respect of, the Bank Indebtedness, the Senior Note Indebtedness and all other
Indebtedness of the Company, whether outstanding on the Issue Date or thereafter
issued, unless in the instrument creating or evidencing the same or pursuant to
which the same is outstanding it is provided that such obligations are not
superior in right of payment to the Securities; PROVIDED, HOWEVER, that Senior
Indebtedness shall not include (i) any obligation of the Company to any
Subsidiary, (ii) any liability for Federal, state, local or other taxes owed or
owing by the Company, (iii) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (iv) any Indebtedness or
obligation of the Company that by its terms is subordinate or junior in any
respect to any other Indebtedness or obligation of the Company, including any
Senior Subordinated Indebtedness and any Subordinated Obligations, (v) any
Capital Stock or (vi) any Indebtedness Incurred in violation of this Indenture.
If any Designated Senior Indebtedness is disallowed, avoided or subordinated
pursuant to provisions of Section 548 of Title 11 of the United State Code or
any applicable state fraudulent conveyance law, such Designated Senior
Indebtedness nevertheless will constitute Senior Indebtedness. "Senior
Indebtedness" of any Subsidiary Guarantor has a correlative meaning.
"Senior Note Agreement" means each of the Senior Secured Note
Exchange Agreements, dated as of the Issue Date, as amended, waived or otherwise
modified from time to time, between the Company and the several purchasers party
thereto.
"Senior Note Documents" means the collective reference to the Senior
Note Agreement, the Senior Notes issued pursuant thereto and the Guarantees
thereof, and the Security Agreement, the Mortgages and the Pledge Agreement
(each as defined in the Senior Note Agreement).
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20
"Senior Note Indebtedness" means any and all amounts payable under
and in respect of the Senior Note Documents and any Indebtedness that is
incurred to refund, refinance, replace, renew, repay or extend (including
pursuant to any defeasance or discharge mechanism) Indebtedness under such
Senior Note Documents including Indebtedness that refinances such Indebtedness,
as amended from time to time, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for postfiling interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, Guarantees and all other amounts payable
thereunder or in respect thereof (including, without limitation, cash
collateralization of letters of credit).
"Senior Notes" means the fixed rate and floating rate Senior Secured
Notes of the Company due 2002 and 2005, respectively, issued pursuant to the
Senior Note Agreement in exchange for certain other Indebtedness of
Subsidiaries.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank PARI PASSU with the Securities and is not subordinated
by its terms to any Indebtedness or other obligation of the Company which is not
Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) that by its terms
is subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiaries" means subsidiaries of the Company,
whether now existing or hereafter organized or acquired.
<PAGE>
21
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person or (ii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantee" means the Guarantee of the Securities by TA
and National and any Guarantee of the Securities that may from time to time be
executed and delivered by a Subsidiary pursuant to the terms of this Indenture.
Each such future Subsidiary Guarantee will be in the form of a supplemental
indenture substantially in the form of Exhibit D hereto.
"Subsidiary Guarantors" means TA Operating Corporation, a Delaware
corporation, and National Auto/Truckstops, Inc., a Delaware corporation, and
each Subsidiary acquired or organized after the Issue Date that becomes a
Subsidiary Guarantor in accordance with the terms of this Indenture.
"TA" means TA Operating Corporation, a Delaware
corporation.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof or in the shares of a money market mutual fund registered under the
Investment Company Act of 1940, the principal of which is invested only in such
obligations, (ii) investments in time deposit accounts, certificates of deposit
and money market deposits maturing within 365 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and undivided
profits aggregating in excess of $250,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act), (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above, (iv) investments in
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under
<PAGE>
22
the laws of the United States of America or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's Investors
Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings
Service, a division of The McGraw-Hill Companies, Inc. ("S&P"), and (v)
investments in securities with maturities of 365 days or fewer from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by S&P or "A" by Moody's Investors
Service, Inc.
"TIA" means the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of this
Indenture.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Transition Expenses" means to the extent deducted in determining
Consolidated Net Income, transition costs in connection with effecting the
Company's conversion of owned or franchised TravelCenters from the National
network to the TA network, disposition of TravelCenters or termination of lease
or franchise agreements and consolidation of the management and operation of its
Subsidiaries' two TravelCenter networks into a single network, including but not
limited to any severance or relocation expenses related thereto.
"TravelCenter" means a facility owned, operated or franchised by the
Company or a Restricted Subsidiary that provides fuel and nonfuel products,
services and amenities primarily to the trucking industry.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to March 27, 2002; PROVIDED, HOWEVER, that if
the period from the Redemption Date to March 27, 2002, is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth
<PAGE>
23
of a year) from the weekly average yields of United States Treasury securities
for which such yields are given, except that if the period from the Redemption
Date to March 27, 2002, is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer in the corporate trust
administration department of the Trustee or any other officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors in the manner provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; PROVIDED, HOWEVER, that either (A) the Subsidiary to be so
designated has total consolidated assets of $10,000 or less or (B) if such
Subsidiary has consolidated assets greater than $10,000, then such designation
would be permitted under Section 4.04. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED, HOWEVER, that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness under Section 4.03(a) and (y) no Default shall
have occurred and be continuing. Any such designation shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the resolution of the
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obliga
tions (or certificates representing an ownership interest in
such obligations) of the United States of America (including
any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of
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24
America is pledged and which are not callable or redeemable at the issuer's
option.
"U.S. Trust" means United States Trust Company of New York, as
trustee under the voting trust agreement dated as of April 14, 1993, as amended
as of March 6, 1997, among the Company, the United States Trust Company of New
York and certain beneficial holders of common stock of the Company, and as the
same may be further amended without allowing any beneficial owners thereunder
other than current or future Lessee Operators, franchisees of the Company or
their permitted transferees (as defined in such voting trust agreement).
"Voting Stock" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the
Company all the Capital Stock of which (other than directors' qualifying shares)
is owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
TERM SECTION
"Agent Member" .......................... 2.12
"Affiliate Transaction" ................. 4.07
"Bankruptcy Law" ........................ 6.01
"Blockage Notice" ....................... 10.03
"covenant defeasance option"............. 8.01(b)
"Custodian" ............................. 6.01
"Event of Default" ...................... 6.01
"legal defeasance option" ............... 8.01(b)
"Legal Holiday" ......................... 11.08
"Offer" ................................. 4.06
"Offer Amount" .......................... 4.06
"Offer Period" .......................... 4.06
"Pay the Securities" .................... 10.03
"Paying Agent" .......................... 2.03
"Payment Blockage Period" ............... 10.03
"Purchase Date" ......................... 4.06
"Registrar" ............................. 2.03
"Restricted Payment" .................... 4.04
"Successor Company" ..................... 5.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT. This Indenture is subject to the mandatory
<PAGE>
25
provisions of the TIA, which are incorporated by reference in and made a part of
this Indenture. The following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee"
means the Trustee.
"obligor" on the indenture securities means the
Company and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the
context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limita
tion;
(5) words in the singular include the plural and
words in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP and accretion of principal on such security shall
be deemed to be the Incurrence of Indebtedness; and
(8) the principal amount of any Preferred Stock
shall be (i) the maximum liquidation value of such
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26
Preferred Stock or (ii) the maximum mandatory redemption or mandatory
repurchase price with respect to such Preferred Stock, whichever is
greater.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING. (a) The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article 2. Any Exchange Securities
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit B, which is incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article 2. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Security shall be dated the date of its authentication. The terms of the
Securities set forth in Exhibits A and B are part of the terms of this
Indenture.
(b) Initial Securities are being offered and sold by the Company
pursuant to the Purchase Agreement. Initial Securities offered and sold to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act) ("QIBs") and institutional "Accredited Investors" (within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) ("IAIs"), in each case
in accordance with Rule 144A under the Securities Act ("Rule 144A") as provided
in the Purchase Agreement, shall be issued on the Issue Date initially in the
form of two permanent global Securities (with separate CUSIP numbers)
substantially in the form set forth in Exhibit A (each a "U.S. Global Security")
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. One U.S.
Global Security(which may be represented by more than one certificate, if so
required by the Depositary's rules regarding the maximum principal amount to be
represented by a single certificate) will represent Initial Securities sold to
QIBs (the "QIB Global Note"), and the other will represent Initial Securities
sold to IAIs (the "IAI Global Note"). The aggregate principal amount of each
U.S. Global Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depositary
or its nominee, as hereinafter provided. Transfers of Initial Securities from
QIBs to IAIs, and from IAIs to QIBs, will be represented by appropriate
increases and decreases to the
<PAGE>
27
respective amounts of the appropriate U.S. Global Securities, as more fully
provided in Section 2.13.
(c) Initial Securities offered and sold in reliance on Regulation S,
if any, shall be issued initially in the form of temporary certificated
Securities in registered form substantially in the form set forth in Exhibit A
(the "Temporary Offshore Physical Securities"). The Temporary Offshore Physical
Securities will be registered in the name of, and held by, a temporary
certificate holder designated by Chase Securities Inc. until the later of the
completion of the distribution of the Initial Securities and the termination of
the "restricted period" (as defined in Regulation S) with respect to the offer
and sale of the Initial Securities (the "Offshore Securities Exchange Date").
The Company shall promptly notify the Trustee in writing of the occurrence of
the Offshore Securities Exchange Date and, at any time following the Offshore
Securities Exchange Date, upon receipt by the Trustee and the Company of a
certificate substantially in the form set forth in Exhibit E, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more permanent
certificated Securities in registered form substantially in the form set forth
in Exhibit A (the "Permanent Offshore Physical Securities") in exchange for the
Temporary Offshore Physical Securities of like tenor and amount.
(d) Initial Securities offered and sold other than as described in
the preceding two paragraphs, if any, shall be issued in the form of permanent
certificated Securities in registered form in substantially the form set forth
in Exhibits A (the "U.S. Physical Securities").
(e) The Temporary Offshore Physical Securities, Permanent Offshore
Physical Securities and U.S. Physical Securities are sometimes collectively
herein referred to as the "Physical Securities".
SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign
the Securities for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Secu rities and
may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenti cates the Security, the Security shall
be valid neverthe less.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be con clusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and deliver (1) Initial Securities
for original issue in an aggregate principal amount of $125,000,000 and (2)
Exchange Securities for issue only in a Registered Exchange Offer, pursuant to
the Exchange and Registration Rights Agreement for Initial Securities for a like
principal amount of Initial Securities exchanged pursuant thereto, in each case
upon a written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated and if such
order is being delivered other than on the Issue Date, whether the Securities
are to be Initial Securities or Exchange Securities. The aggregate principal
amount of Securities outstanding at any time may not exceed $125,000,000 except
as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appoint ment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authen tication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for its services hereunder.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Secur ities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any addi tional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the provi
sions of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of any such agent. If the Company fails to
maintain a Regis trar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
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28
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
The Company initially appoints The Depository Trust Company to act
as Depository with respect to the Global Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to each due
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.05. SECURITYHOLDER LISTS. The Trustee shall preserve in as
current a form as is reasonably prac ticable the most recent list available to
it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date, as of the relevant record date,
and at such other times as the Trustee may request in writing, a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders.
SECTION 2.06. TRANSFER AND EXCHANGE. The Securities shall be issued
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(l)
of the Uniform Commercial Code are met. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-registrar's
request. The Company may require payment of a sum sufficient to pay all taxes,
<PAGE>
29
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section. The Company shall not be required to make and
the Registrar need not register transfers or exchanges of Securities selected
for redemption (except, in the case of Securities to be redeemed in part, the
portion thereof not to be redeemed) or any Securities for a period of 15 days
before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest, if any, on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent, the Registrar or any co registrar shall
be affected by notice to the contrary.
Any Holder of a U.S. Global Security shall, by acceptance of such
Global Note, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by the Holder of
such Global Security(or its agent), and that ownership of a beneficial interest
in such Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to this
Section 2.06 will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Securities surrendered upon such transfer
or exchange.
SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss that any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security has
become due and payable, the Company, in its discretion, may instead of issuing a
new Security, pay such Security.
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Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
as not outstanding. A Security does not cease to be outstand ing because the
Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Sec tion 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date, if any, money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.09. TEMPORARY SECURITIES. Until Definitive Securities and
Global Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate Definitive
Securities and deliver them in exchange for temporary Securities upon surrender
of such temporary Securities at the office or agency of the Company, without
charge to the Holder.
SECTION 2.10. CANCELATION. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel
Securities surrendered for registration of transfer, exchange, payment or
cancelation and the Trustee deliver such canceled Securities to the Company upon
the Company's written request. The Company may not issue new Securities to
replace Securities it has redeemed, paid or delivered to the Trustee for
cancelation. The Trustee shall not authenticate Securities in place of canceled
Securities other than pursuant to the terms of this Indenture.
SECTION 2.11. CUSIP NUMBERS. The Company in issuing the Securities
may use "CUSIP" numbers (if then
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31
generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
SECTION 2.12. BOOK-ENTRY PROVISIONS FOR U.S.
GLOBAL SECURITY.
(a) Each U.S. Global Security initially shall (i) be registered in
the name of the Depositary for such U.S. Global Security or the nominee of such
Depositary and (ii) be delivered to the Trustee as custodian for such
Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any U.S. Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under such U.S. Global Security, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such U.S. Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of a U.S. Global Security shall be limited to
transfers of such U.S. Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of beneficial
owners in a U.S. Global Security may be transferred in accordance with the rules
and procedures of the Depositary and the provisions of Section 2.13. If required
to do so pursuant to any applicable law or regulation, beneficial owners may
obtain U.S. Physical Securities in exchange for their beneficial interests in a
U.S. Global Security upon written request in accordance with the Depositary's
and the Registrar's procedures. In addition, U.S. Physical Securities shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a U.S. Global Security if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such U.S. Global Security or
the Depositary ceases to be a
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32
clearing agency registered under the Exchange Act, at a time when the Depositary
is required to be so registered in order to act as Depositary, and in each case
a successor depositary is not appointed by the Company within 90 days of such
notice or, (ii) the Company executes and delivers to the Trustee and Security
Registrar an Officers' Certificate stating that such U.S. Global Security shall
be so exchangeable or (iii) an Event of Default has occurred and is continuing
and the Registrar has received a request from the Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in a U.S. Global Security pursuant to subsection (b) of this Section to
beneficial owners who are required to hold U.S. Physical Securities, the
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of such U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in the U.S. Global Security to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Securities of like tenor and amount.
(d) In connection with the transfer of an entire U.S. Global
Security to beneficial owners pursuant to subsection (b) of this Section, such
U.S. Global Security shall be deemed to be surrendered to the Trustee for
cancelation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in such U.S. Global Security, an equal aggregate
principal amount of U.S. Physical Securities of authorized denominations.
(e) Any U.S. Physical Security delivered in exchange for an interest
in a U.S. Global Security pursuant to subsection (c) or subsection (d) of this
Section shall, except as otherwise provided by paragraph (f) of Section 2.13,
bear the applicable legend regarding transfer restrictions applicable to the
U.S. Physical Security set forth in Exhibit A.
(f) The registered holder of a U.S. Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
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33
SECTION 2.13. SPECIAL TRANSFER PROVISIONS.
Unless and until an Initial Security is transferred or exchanged
under an effective registration statement under the Securities Act, the
following provisions shall apply:
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. Any
interest in a Security acquired by an IAI Initial Investor in the initial
distribution of Securities by the Initial Purchaser may only be transferred as
provided in clause (A) of the Private Placement Legend. The following provisions
shall apply with respect to the registration of any proposed transfer of an
Initial Security to any IAI which is not a QIB (excluding Non-U.S. Persons) that
is consistent with the Private Placement Legend:
(i) The Registrar shall register the transfer of any Initial
Security if (x) the requested transfer is at least two years after the
original issue date of the Initial Security or (y) the proposed transferee
has delivered to the Registrar a certificate substantially in the form set
forth in Exhibit C.
(ii) If the proposed transferee is an Agent Member, and the Initial
Security to be transferred consists of U.S. Physical Securities or an
interest in the QIB Global Security, upon receipt by the Registrar of (x)
the document, if any, required by paragraph (i) and (y) instructions given
in accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the IAI Global Security in an
amount equal to (x) the principal amount of the U.S. Physical Securities
to be transferred, and the Trustee shall cancel the U.S. Physical Security
so transferred or (y) the amount of the beneficial interest in the QIB
Global Security to be so transferred (in which case the Registrar shall
reflect on its books and records the date and an appropriate decrease in
the principal amount of the QIB Global Security).
(iii) If the proposed transferee is entitled to receive a U.S.
Physical Security as provided in Section 2.12 and the proposed transferor
is an Agent Member holding a beneficial interest in a U.S. Global
Security, upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (i) and (y) instructions given in accordance with
the Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and a decrease in the
principal amount of such U.S. Global Security in an amount equal to the
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34
principal amount of the beneficial interest in such U.S. Global Security
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Securities of like
tenor and amount.
(iv) If the Initial Security to be transferred consists of U.S.
Physical Securities and the proposed transferee is entitled to receive a
U.S. Physical Security as provided in Section 2.12, upon receipt by the
Registrar of the document, if any, required by paragraph (i), the
Registrar shall register such transfer and the Company shall execute, and
the Trustee shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(v) Notwithstanding any provision herein to the contrary, transfers
by an IAI Initial Investor that is not a QIB cannot be made to an IAI that
is not a QIB.
(b) TRANSFERS TO QIBS. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Security to a
QIB (excluding Non-U.S.
Persons):
(i) If the Security to be transferred consists of U.S. Physical
Securities, Temporary Offshore Physical Securities, Permanent Offshore
Physical Securities or an interest in the IAI Global Security, the
Registrar shall register the transfer if such transfer is being made by a
proposed transferor who has provided the Registrar with a certificate
substantially in the form set forth in Exhibit F hereto.
(ii) If the proposed transferee is an Agent Member, and the Initial
Security to be transferred consists of U.S. Physical Securities, Temporary
Offshore Physical Securities, Permanent Offshore Physical Securities or an
interest in the IAI Global Security, upon receipt by the Registrar of (x)
the document, if any, required by paragraph (i) and (y) instructions given
in accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the QIB Global Security in an
amount equal to (x) the principal amount of the U.S. Physical Securities,
Temporary Offshore Physical Securities or Permanent Offshore Physical
Securities, as the case may be, to be transferred, and the Trustee shall
cancel the Physical Security so transferred or (y) the amount of the
beneficial interest in the IAI Global Security to be so transferred (in
which case the Registrar shall reflect on its books and records the date
and an appropriate
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35
decrease in the principal amount of the IAI Global
Security).
(iii) If the proposed transferee is entitled to receive a U.S.
Physical Security as provided in Section 2.12 and the proposed transferor
is an Agent Member holding a beneficial interest in a U.S. Global
Security, upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (i) and (y) instructions given in accordance with
the Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and a decrease in the
principal amount of such U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in such U.S. Global Security
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Securities of like
tenor and amount.
(iv) If the Initial Security to be transferred consists of U.S.
Physical Securities, Temporary Offshore Physical Securities or Permanent
Offshore Physical Securities and the proposed transferee is entitled to
receive a U.S. Physical Security as provided in Section 2.12, upon receipt
by the Registrar of the document, if any, required by paragraph (i), the
Registrar shall register such transfer and the Company shall execute, and
the Trustee shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(c) TRANSFERS BY NON-U.S. PERSONS PRIOR TO MAY 5, 1997. The
following provisions shall apply with respect to registration of any proposed
transfer of an Initial Security by a Non-U.S. Person prior to May 5, 1997:
(i) The Registrar shall register the transfer of any Initial
Security (x) if the proposed transferee is a Non-U.S. Person and the
proposed transferor has provided the Registrar with a certificate
substantially in the form set forth in Exhibit G hereto or (y) if the
proposed transferee is a QIB and the proposed transferor has provided the
Registrar with a certificate substantially in the form set forth in
Exhibit F hereto. Unless clause (ii) below is applicable, the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Temporary Offshore Physical Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in connection
with a proposed transfer of an Initial Security to a QIB, upon receipt by
the Registrar of (x) the document, if any, required by paragraph (i) and
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36
(y) instructions given in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of the QIB
Global Security in an amount equal to the principal amount of the
Temporary Offshore Physical Security to be transferred, and the Registrar
shall cancel the Temporary Offshore Physical Securities so transferred.
(d) TRANSFERS BY NON-U.S. PERSONS ON OR AFTER
MAY 5, 1997. The following provisions shall apply with
respect to any transfer of an Initial Security by a Non-U.S.
Person on or after May 5, 1997:
(i) (x) If the Initial Security to be transferred is a Permanent
Offshore Physical Note, the Registrar shall register such transfer, (y) if
the Initial Security to be transferred is a Temporary Offshore Physical
Note, upon receipt of a certificate substantially in the form set forth in
Exhibit E from the proposed transferor, the Registrar shall register such
transfer and (z) in the case of either clause (x) or (y), unless clause
(ii) below is applicable, the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Permanent Offshore Physical
Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in connection
with a proposed transfer of an Initial Security to a QIB, upon receipt by
the Registrar of instructions given in accordance with the Depositary's
and the Registrar's procedures therefor, the Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the QIB Global Security in an amount equal to the principal amount of the
Temporary Offshore Physical Security or of the Permanent Offshore Physical
Security to be transferred, and the Trustee shall cancel the Physical
Security so transferred.
(e) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME.
The following provisions shall apply with respect to any
transfer of an Initial Security to a Non-U.S. Person:
(i) Prior to May 5, 1997, the Registrar shall register any proposed
transfer of an Initial Security to a Non-U.S. Person upon receipt of a
certificate substantially in the form set forth in Exhibit G from the
proposed transferor and the Company shall execute, and the Trustee shall
authenticate and make available for delivery, one or more Temporary
Offshore Physical Securities.
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37
(ii) On and after May 5, 1997, the Registrar shall register any
proposed transfer to any Non-U.S. Person (w) if the Initial Security to be
transferred is a Permanent Offshore Physical Note, (x) if the Initial
Security to be transferred is a Temporary Offshore Physical Note, upon
receipt of a certificate substantially in the form set forth in Exhibit E
from the proposed transferor, (y) if the Initial Security to be
transferred is a U.S. Physical Security or an interest in a U.S. Global
Security, upon receipt of a certificate substantially in the form set
forth in Exhibit E from the proposed transferor and (z) in the case of
either clause (w), (x) or (y), the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Permanent Offshore Physical
Securities of like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in a U.S. Global Security, upon receipt by the
Registrar of (x) the document, if any, required by paragraph (i), and (y)
instructions in accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its books and records
the date and a decrease in the principal amount of such U.S. Global
Security in an amount equal to the principal amount of the beneficial
interest in the U.S. Global Security to be transferred and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Permanent Offshore Physical Securities of like tenor and amount.
(f) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless either (i) the circumstances contemplated by
the paragraph of Section 2.01 (relating to Permanent Offshore Physical
Securities) or paragraph (a)(i)(x), (d)(i) or (e)(ii) of this Section 2.13 exist
or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(g) GENERAL. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
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38
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.12 or this Section 2.13.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
SECTION 2.14. DEFAULTED INTEREST. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the condi tions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee, which record date shall be
not fewer than 15 days after the date of notice to the Trustee. Any such notice
may be canceled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies
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39
with applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Secur ities that have denominations larger than $1,000. Secur ities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more
than 60 days before a date for redemp tion of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemp tion price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities being
redeemed; and
(9) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
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At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date; PROVIDED that if the redemption date is after a regular record date and on
or prior to the interest payment date, the accrued interest shall be payable to
the Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to 10:00 a.m. on
the redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption that have been delivered by the Company to the
Trustee for cancelation.
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Secur ity
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION. (a) Except as set forth in the
next two paragraphs, the Securities may not be redeemed prior to April 1, 2002.
On and after that date, the Company may redeem the Securities in whole or in
part at any time at the following redemption prices (expressed in percentages of
principal amount), plus accrued interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date):
if redeemed during the 12-month period beginning on or after April 1
of the years set forth below:
Redemption
PERIOD PRICE
2002............................................................. 105.125%
2003............................................................. 103.417%
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41
2004............................................................. 101.708%
2005 and thereafter.............................................. 100.000%
(b) Notwithstanding the foregoing, at any time prior to April 1,
2000, the Company may redeem in the aggregate up to 35% of the original
aggregate principal amount of Securities with the proceeds of one or more Public
Equity Offerings by the Company, at a redemption price (expressed as a
percentage of principal amount) of 110.25% plus accrued interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
PROVIDED, HOWEVER, that at least 65% of the original aggregate principal amount
of the Securities must remain outstanding after each such redemption.
(c) At any time on or prior to April 1, 2002 the Securities may be
redeemed as a whole at the option of the Company upon the occurrence of a Change
of Control, upon not fewer than 30 nor more than 60 days' prior notice (but in
no event more than 180 days after the occurrence of such Change of Control)
mailed by first-class mail to each Holder's registered address, at a redemption
price equal to 100% of the principal amount thereof plus the Applicable Premium
as of, and accrued but unpaid interest, if any, to, the Redemption Date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date).
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue princi pal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC REPORTS. Notwithstanding that the Company may not
be required to be subject to the
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42
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall file with the SEC (if then permitted to do so) and provide (whether or not
so filed with the SEC) the Trustee and Securityholders and prospective
Securityholders (upon request) within 15 days after it files (or would be
obligated to file, if subject to Section 13 or 15(d) of the Exchange Act) them
with the SEC, copies of its annual report and the information, documents and
other reports that are specified in Section 13 or 15(d) of the Exchange Act. In
addition, following a Public Equity Offering, the Company shall furnish to the
Trustee and the Securityholders, promptly upon their becoming available, copies
of the annual report to shareholders and any other information provided by the
Company to its public shareholders generally. The Company also shall comply with
the other provisions of Section 314(a) of the TIA.
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company shall not,
and shall not permit any Restricted Subsidiary to, Incur any Indebtedness;
PROVIDED, HOWEVER, that the Company or any Restricted Subsidiary may Incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio would be
greater than 2.0:1.00 if such Indebtedness is Incurred on or prior to March 31,
2000, and 2.25:1.00 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding Section 4.03(a), the Company
and its Restricted Subsidiaries may Incur the following
Indebtedness:
(i) Bank Indebtedness and Senior Note Indebtedness collectively not
in excess of $225,000,000 less the aggregate amount of all payments of
principal applied to permanently reduce any such Indebtedness actually
made since the Issue Date (excluding any payments to the extent refinanced
at the time of payment under replacement Bank Indebtedness or Senior Note
Indebtedness);
(ii) Indebtedness of the Company owing to and held by any Subsidiary
or Indebtedness of a Restricted Subsidiary owing to and held by the
Company or any Subsidiary; PROVIDED, HOWEVER, that any subsequent issuance
or transfer of any Capital Stock or any other event that results in any
such Subsidiary ceasing to be a Subsidiary or any subsequent transfer of
any such Indebtedness (except to the Company or a Restricted Subsidiary)
will be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof;
(iii) Indebtedness represented by the Securities, the Subsidiary
Guarantees, any Indebtedness (other than the Indebtedness described in
clause (i) above)
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43
outstanding on the Issue Date and any Refinancing Indebtedness Incurred in
respect of any Indebtedness described in clause (i), this clause (iii) or
Section 4.03(a);
(iv) (A) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary
was acquired by the Company (other than Indebtedness Incurred as
consideration in, in contemplation of, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Subsidiary or was otherwise acquired by the Company);
PROVIDED, HOWEVER, that at the time such Restricted Subsidiary is acquired
by the Company, the Company would have been able to Incur $1.00 of
additional Indebtedness pursuant to Section 4.03(a) after giving effect to
the Incurrence of such Indebtedness pursuant to this clause (iv) and (B)
Refinancing Indebtedness Incurred by a Restricted Subsidiary in respect of
Indebtedness Incurred by such Restricted Subsidiary pursuant to this
clause (iv);
(v) Indebtedness (A) in respect of performance bonds, bankers'
acceptances, letters of credit and surety or appeal bonds provided by the
Company and the Restricted Subsidiaries in the ordinary course of their
business and which do not secure other Indebtedness of the Company or any
Restricted Subsidiary (except Indebtedness permitted under this Indenture)
and (B) under Currency Agreements and Interest Rate Agreements, in each
case entered into for bona fide hedging purposes of the Company in the
ordinary course of business and not for the purposes of speculation;
PROVIDED, HOWEVER, that, in the case of Currency Agreements and Interest
Rate Agreements, such Currency Agreements and Interest Rate Agreements do
not increase the Indebtedness of the Company outstanding at any time other
than as a result of fluctuations in foreign currency exchange rates or
interest rates or by reason of fees, indemnities and compensation payable
thereunder; and
(vi) Indebtedness (which may constitute Bank Indebtedness or Senior
Note Indebtedness) of the Company or any Restricted Subsidiary (other than
Indebtedness permitted to be Incurred pursuant to Section 4.03(a) or any
other clause of this clause (b)) in an aggregate principal amount on the
date of Incurrence which, when added to the principal amount of all other
Indebtedness Incurred pursuant to this clause (vi) and then outstanding,
will not exceed $20,000,000.
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44
(c) Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness pursuant to clause (b) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. The Company shall not Incur any Indebtedness if such Indebtedness
is by its terms expressly subordinate or junior in ranking in any respect to any
Senior Indebtedness of the Company unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness of the Company. In addition, the Company shall
not Incur any Secured Indebtedness which is not Senior Indebtedness of the
Company unless contemporaneously therewith effective provision is made to secure
the Securities equally and ratably with (or on a senior basis to, in the case of
Indebtedness subordinated in right of payment to the Securities) such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien. A
Subsidiary Guarantor may not Incur any Indebtedness if such Indebtedness is by
its terms expressly subordinate or junior in ranking in any respect to any
Senior Indebtedness of the Subsidiary Guarantor unless such Indebtedness is
Senior Subordinated Indebtedness of such Subsidiary Guarantor or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness of such
Subsidiary Guarantor. In addition, a Subsidiary Guarantor may not Incur any
Secured Indebtedness which is not Senior Indebtedness of such Subsidiary
Guarantor unless contemporaneously therewith effective provision is made to
secure the Subsidiary Guarantee equally and ratably with (or on a senior basis
to, in the case of Indebtedness subordinated in right of payment to such
Subsidiary Guarantee) such Secured Indebtedness for as long as such Secured
Indebtedness is secured by a Lien.
(d) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or any Restricted Subsidiary may
Incur pursuant to this Section shall not be deemed to be exceeded solely as a
result of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this Section 4.03, (i) Indebtedness Incurred pursuant to
the Credit Agreement prior to or on the date of this Indenture shall be treated
as Incurred pursuant to Section 4.03(b)(i), (ii) Indebtedness permitted by this
Section 4.03 need not be permitted solely by reference to one provision
permitting such Indebtedness but may be permitted in part by one such provision
and in part by one or more other provisions of this Section permitting such
Indebtedness and (iii) in the event that Indebtedness or any portion thereof
meets the criteria of more than one of the
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45
types of Indebtedness described in this Section, the Company, in its sole
discretion, shall classify such Indebtedness and only be required to include the
amount of such Indebtedness in one of such clauses.
SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) except dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to the Company or another Restricted
Subsidiary (and, if such Restricted Subsidiary is not wholly owned, to its other
shareholders on a pro rata basis in accordance with their respective ownership
of the class of Capital Stock affected thereby), (ii) purchase, redeem, retire
or otherwise acquire for value any Capital Stock of the Company or any
Restricted Subsidiary held by Persons other than the Company or another
Restricted Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations (other than the pur
chase, repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) make any Investment (other than a Permitted Investment) in any Person (any
such dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a "Restricted
Payment") if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Pay ment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution of the Board of
Directors) declared or made subsequent to the Issue Date would exceed the
sum of:
(A) 50% of the Consolidated Net Income accrued during the
period (treated as one account ing period) from the Issue Date to
the end of the
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46
most recent fiscal quarter for which financial statements are then
available but ending not more than 60 days prior to the date of such
Restricted Payment (or, in case such Consolidated Net Income shall
be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the Company
from the issue or sale of its Capital Stock (other than Disqualified
Stock) or other cash contribution subsequent to the Issue Date
(other than an issuance or sale to a Subsidiary of the Company or an
employee stock ownership plan or other trust established by the
Company or any of its Subsidiaries);
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Subsidiary) of any
Indebtedness issued subsequent to the Issue Date of the Company or
its Restricted Subsidiaries convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the
amount of any cash or other assets of the Company or any Subsidiary
distributed to holders of such Indebtedness by the Company or any
Restricted Subsidiary upon such conversion or exchange);
(D) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (i) payments of dividends,
repayments of the principal of loans or advances or other transfers
of assets to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries or (ii) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investment") not to exceed, in the
case of any Unrestricted Subsidiary, the amount of Investments
previously made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments; and
(E) to the extent that any Investment (other than a Permitted
Investment or Investment referred to in clause (D)) that was made
after the Issue Date is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (x) the cash received with respect to
such sale, liquidation or repayment of such Investment (less the
cost of such sale, liquidation or repayment, if any) and (y) the
amount of such Investment that was
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47
included in calculating the amount of Restricted
Payments.
(b) The provisions of Section 4.04(a) shall not
prohibit:
(i) any purchase or redemption of Capital Stock of the Company or
Subordinated Obligations made by exchange for, or out of the proceeds of
the substan tially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock (unless otherwise permitted to be Incurred under
this Indenture) and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or other trust established
by the Company or any of its Subsidiaries); PROVIDED, HOWEVER, that (A)
such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds applied to
make such purchase or redemption from such sale shall be excluded from
clause (3)(B) of Sec tion 4.04(a);
(ii) any purchase or redemption of Subordinated Obligations made by
exchange for, or out of the pro ceeds of the substantially concurrent sale
of, Indebtedness of the Company that is permitted to be Incurred pursuant
to Section 4.03; PROVIDED, HOWEVER, that such purchase or redemption shall
be excluded in the calculation of the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from
Net Available Cash to the extent permitted by Section 4.06; PROVIDED,
HOWEVER, that such purchase or redemption shall be excluded in the cal
culation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with Section 4.04(a); PROVIDED, HOWEVER, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(v) the repurchase of shares of, or options to purchase shares of,
or the payment of the stock appreciation on any options to purchase,
common stock of the Company or any of its Subsidiaries from employees,
former employees, directors or former directors of the Company or any of
its Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors), pursuant to the terms of
agreements (including employment agreements), plans (or amendments
thereto) or other arrangements approved by the Board of Directors or the
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48
board of directors of the applicable Subsidiary, as the case may be;
PROVIDED, HOWEVER, that the aggregate amount of such repurchases shall not
exceed $2,000,000 in any calendar year and $5,000,000 in the aggregate
(which amount shall be increased by the amount of any cash proceeds to the
Company from sales of its Capital Stock to employees, former employees,
directors or former directors subsequent to the Issue Date); PROVIDED
FURTHER, HOWEVER, that such repurchases shall be included in the
calculation of the amount of Restricted Payments; and
(vi) the repurchase of shares of Capital Stock of the Company in an
aggregate amount not in excess of $15,000,000 from Lessee Operators or
their Affiliates in connection with the termination of one or more lease
agreements and one or more franchise agreements in respect of one or more
TravelCenters operated directly or indirectly by such Lessee Operator or
its Affiliates.
SECTION 4.05. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness owed to the Company, (ii) make any
loans or advances to the Company or (iii) transfer any of its property or assets
to the Company, except:
(A) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including the Credit
Agreement and the Senior Note Agreement;
(B) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness Incurred
as consideration in, in contemplation of, or to provide all or any portion
of the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was otherwise acquired by the
Company) and outstanding on such date;
(C) any encumbrance or restriction assumed pursuant to an agreement
constituting Bank Indebtedness, Senior Note Indebtedness or Refinancing
Indebtedness Incurred in compliance with this
<PAGE>
49
Indenture; PROVIDED, HOWEVER, that the encumbrances and restrictions
contained in such Senior Bank Documents, Senior Note Documents or any
other agreement providing for Refinancing Indebtedness are no less
favorable to the Securityholders than encumbrances and restrictions
contained in the agreements relating to the Indebtedness being replaced;
(D) any encumbrance or restriction assumed pursuant to an agreement
relating to an acquisition of property, so long as the encumbrances or
restrictions in any such agreement relate solely to the property so
acquired (and are not or were not created in anticipation of or in
connection with the acquisition thereof);
(E) in the case of clause (iii), any encumbrance or restriction (1)
that restricts in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property asset, (2) contained in security agreements
or mortgages securing Indebtedness of a Subsidiary to the extent such
encumbrance or restrictions restrict the transfer or the property subject
to such security agreements or mortgages or (3) arising or agreed to in
the ordinary course of business and that does not, individually or in the
aggregate, detract from the value of property or assets of the Company or
any of its Subsidiaries in any manner material to the Company or any such
Restricted Subsidiary;
(F) restrictions on the transfer of assets subject to any Lien
permitted under this Indenture imposed by the holder of such Lien; and
(G) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition.
SECTION 4.06. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Disposition unless (i) the Company or such Restricted Subsidiary
receives consideration (including by way of relief from, or by any other Person
assuming sole responsibility for, any liabilities, contingent or otherwise) at
the time of such Asset Disposition at least equal to the fair market value as
determined in good faith by the Board of Directors, whose determination will be
conclusive and evidenced by a resolution of the Board of
<PAGE>
50
Directors (including as to the value of all noncash consideration) of the shares
and assets disposed of by the Company or such Restricted Subsidiary pursuant to
such Asset Disposition, (ii) at least 75% of the consideration thereof received
by the Company or such Restricted Subsidiary is in the form of cash or
Designated Consideration and (iii) an amount equal to 100% of the Net Available
Cash from such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be) (A) FIRST, to the extent the Company elects or
is required to prepay, repay or purchase Senior Indebtedness (in each case other
than Indebtedness owed to the Company or an Affiliate of the Company) within 180
days after the later of the date of such Asset Disposition or the receipt of
such Net Available Cash; (B) SECOND, to the extent of the balance of Net
Available Cash after application in accordance with clause (A), to the extent
the Company or such Restricted Subsidiary elects, to reinvest in Additional
Assets (including by means of an Investment in Additional Assets by a Restricted
Subsidiary with Net Available Cash received by the Company or another Restricted
Subsidiary) by the later of (x) December 31, 1999, or (y) 365 days from the
later of such Asset Disposition or the receipt of such Net Available Cash; (C)
THIRD, to the extent of the balance of such Net Available Cash after application
in accordance with clauses (A) and (B), to make an Offer (as defined below) to
purchase Securities pursuant to and subject to the conditions of Section
4.06(b), and (D) FOURTH, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (A), (B) and (C), to fund (to the
extent consistent with any other applicable provision of this Indenture) any
corporate purpose; PROVIDED, HOWEVER that in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A) or (C) above, the
Company or such Restricted Subsidiary shall retire such Indebtedness and shall
cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 4.06, the Company and
the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this Section 4.06 except to the extent that the
aggregate Net Available Cash from all Asset Dispositions that is not applied in
accordance with this Section 4.06 exceeds $2,000,000.
For the purposes of this Section 4.06, the following are deemed to
be cash: (x) the assumption of Indebtedness of the Company (other than
Disqualified Stock of the Company) or any Restricted Subsidiary and the release
of the Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition (in which case the
Company shall, without further action, be deemed to have applied such assumed
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51
Indebtedness in accordance with clause (A) above) and (y) securities or
instruments received by the Company or any Restricted Subsidiary from the
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries will be permitted to consummate any Asset Swap if (i) at the time
of entering into such Asset Swap or immediately after giving effect to such
Asset Swap, no Default or Event of Default shall have occurred or be continuing
or would occur as a consequence thereof, (ii) in the event such Asset Swap
involves an aggregate amount in excess of $2,000,000, the terms of such Asset
Swap have been approved by a majority of the members of the Board of Directors
and (iii) in the event such Asset Swap involves an aggregate amount in excess of
$10,000,000, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Asset Swap
is fair to the Company or such Restricted Subsidiary, as the case may be, from a
financial point of view.
The proceeeds of any sale of Capital Stock of a Restricted
Subsidiary shall be treated as Net Available Cash from an Asset Disposition and
must be applied in accordance with the terms of this covenant.
(b) In the event of an Asset Disposition that requires an Offer
pursuant to Section 4.06(a)(iii)(C), the Company shall be required to purchase
Securities tendered pursuant to an offer by the Company for the Securities (the
"Offer") at a purchase price of 100% of their principal amount plus accrued and
unpaid interest to the Purchase Date in accordance with the procedures
(including prorationing in the event of oversubscription) set forth in Section
4.06(c). If the aggregate purchase price of Securities tendered pursuant to the
Offer is less than the Net Available Cash allotted to the purchase of the
Securities, the Company shall apply the remaining Net Available Cash in
accordance with Section 4.06(a)(iii)(D). The Company shall not be required to
make an Offer for Securities pursuant to this Section if the Net Available Cash
available therefor (after application of the proceeds as provided in clauses (A)
and (B) of Section 4.06(a)(iii)) is less than $10,000,000 (which lesser amount
shall be carried forward for purposes of determining whether an Offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition).
(c) (1) Promptly, and in any event within 10 days after the Company
becomes obligated to make an Offer, the Company shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have such Holder's
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52
Securities purchased by the Company either in whole or in part (subject to
prorationing as hereinafter described in the event the Offer is oversubscribed)
in integral multiples of $1,000 of principal amount, at the applicable purchase
price. The notice shall specify a purchase date not less than 30 days nor more
than 60 days after the date of such notice (the "Purchase Date") and shall
contain such information concerning the business of the Company which the
Company in good faith believes will enable such Holders to make an informed
decision (which at a minimum shall include (i) the most recently filed Annual
Report on Form 10-K (including audited consolidated financial statements) of the
Company, the most recent subsequently filed Quarterly Report on Form 10-Q and
any Current Report on Form 8-K of the Company filed subsequent to such Quarterly
Report, other than Current Reports describing Asset Dispositions otherwise
described in the offering materials (or corresponding successor reports), (ii) a
description of material developments in the Company's business subsequent to the
date of the latest of such Reports, and (iii) if material, appropriate pro forma
financial information) and all instructions and materials necessary to tender
Securities pursuant to the Offer, together with the address referred to in
clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) an amount equal to the Offer Amount to be invested in Temporary Cash
Investments and to be held for payment in accordance with the provisions of this
Section. Upon the expiration of the period for which the Offer remains open (the
"Offer Period"), the Company shall deliver to the Trustee for cancelation the
Securities or portions thereof that have been properly tendered to and are to be
accepted by the Company. The Trustee (or the Paying Agent, if not the Trustee)
shall, on the Purchase Date, mail or deliver payment to each tendering Holder in
the amount of the purchase price. In the event that the aggregate purchase price
of the Securities delivered by the Company to the Trustee is less than the Offer
Amount, the Trustee shall deliver the excess to the Company immediately after
the expiration of the Offer Period for application in accordance with this
Section.
(3) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appro priate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered by the Holder for purchase and a statement that such Holder is
withdrawing his election to have such Security purchased. If at the expiration
of the Offer Period the aggregate principal amount of Securities surrendered by
Holders exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000,
or integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Sec tion. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrender ing
Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.06. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.07. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction (including, the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company (an "Affiliate Transaction") on terms (i) that are
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate and (ii) that,
in the event such Affiliate Transaction involves an aggregate amount in excess
of $5,000,000, are not in writing and have
<PAGE>
53
not been approved by a majority of the members of the Board of Directors having
no personal stake in such Affiliate Transaction. In addition, if such Affiliate
Transaction involves an amount in excess of $10,000,000 (other than fees to
investment banking firms constituting customary underwriting discounts for
offerings of securities or customary advisory fees for merger and acquisition or
recapitalization transactions), a fairness opinion must be provided by a
nationally recognized appraisal or investment banking firm.
(b) The provisions of Section 4.07(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 4.04, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options, stock appreciation rights and stock ownership plans approved by the
Board of Directors, (iii) loans or advances for the purposes set forth under
clauses (vi) and (viii) of the definition of Permitted Investments, (iv)
indemnification agreements with, and the payment of fees and indemnities to,
directors, officers and employees of the Company and its Restricted
Subsidiaries, in each case in the ordinary course of business, (v) any
employment, noncompetition or confidentiality agreements entered into by the
Company or any of its Restricted Subsidiaries with its employees in the ordinary
course of business or (vi) any transaction between the Company and a Wholly
Owned Subsidiary or between Wholly Owned Subsidiaries.
SECTION 4.08. CHANGE OF CONTROL. (a) Upon a Change of Control, each
Holder shall have the right to require the Company to repurchase all or any part
of such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on a record date to
receive interest due on the relevant interest payment date), in accordance with
the terms contemplated in Section 4.08(b); PROVIDED, HOWEVER, that
notwithstanding the occurrence of a Change in Control, the Company shall not be
obligated to purchase the Securities pursuant to this Section 4.08 in the event
that it has exercised its right to redeem all the Securities under Section 3.07
hereof.
In the event that at the time of such Change of Control the terms of
the Bank Indebtedness or the Senior Note Indebtedness restrict or prohibit the
repurchase of Securities pursuant to this Section, then prior to the mailing of
the notice to Holders provided for in Section 4.08(b) below, but in any event
within 30 days following any Change of Control, the Company shall (i) repay in
full all Bank Indebtedness or Senior Note Indebtedness,
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54
as the case may be, or offer to repay in full all Bank Indebtedness or Senior
Note Indebtedness, as the case may be, and repay the Bank Indebtedness of each
lender or Senior Note Indebtedness of each holder, as the case may be, who has
accepted such offer or (ii) obtain the requisite consent under the agreements
governing the Bank Indebtedness or the Senior Note Indebtedness, as the case may
be, to permit the repurchase of the Securities as provided for in Section
4.08(b) below.
(b) Within 30 days following any Change of Control (except as
provided in the proviso to the first sentence of Section 4.08(a)), the Company
shall mail a notice to each Holder with a copy to the Trustee stating:
(i) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of repurchase (subject to
the right of Holders of record on a record date to receive interest due on
the relevant interest payment date);
(ii) the circumstances and relevant facts and
financial information regarding such Change of Control;
(iii) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(iv) the instructions determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appro priate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities pur chased by the Company
under this Section shall be delivered to the Trustee for cancelation, and the
Company shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
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(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.09. COMPLIANCE CERTIFICATE. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with Section 314(a)(4) of
the TIA.
SECTION 4.10. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. FUTURE SUBSIDIARY GUARANTORS. The Company shall cause
each Restricted Subsidiary that is not a Foreign Subsidiary and that Incurs
Indebtedness to execute and deliver to the Trustee a Subsidiary Guarantee in the
form of a supplemental indenture in the form of Exhibit D hereto, pursuant to
which such Subsidiary shall Guarantee payment of the Securities as provided in
Section 11.06, PROVIDED, HOWEVER, that such Subsidiary shall not be required to
execute and deliver a supplemental indenture pursuant to this Section in the
event that such Subsidiary is a party hereto at the time of such Incurrence of
Indebtedness. Each Subsidiary Guarantee shall be limited to an amount not to
exceed the maximum amount that can be Guaranteed by that Subsidiary without
rendering the Subsidiary Guarantee, as it relates to such Subsidiary, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
SECTION 4.12. LIMITATION ON LINES OF BUSINESS. The Company shall
not, and shall not permit any Restricted Subsidiary to, engage in any business,
other than a Related Business; PROVIDED, HOWEVER, that the foregoing limitation
shall not prohibit the acquisition of Additional Assets otherwise permitted
hereunder.
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SECTION 4.13. LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Company
shall not, and shall not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with respect to any property unless (a) the Company
or such Subsidiary would be entitled to (i) Incur Indebtedness in an amount
equal to Attributable Debt with respect to such Sale/Leaseback Transaction
pursuant to Section 4.03 and (ii) create a Lien on such property securing such
Attributable Debt without equally and ratably securing the Securities pursuant
to Section 4.03, (b) the net cash proceeds received by the Company or any
Subsidiary in connection with such Sale/Leaseback Transaction are at least equal
to the fair value (as determined in good faith by the Board of Directors) of
such property and (c) the transfer of such property is permitted by, and the
Company applies the proceeds of such transaction in compliance with, Section
4.06.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substan tially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation, partnership, limited liability company
or business trust organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transac tion), no Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a); and
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(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture.
Notwithstanding the foregoing clauses (ii) and (iii), (a) any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company and (b) the Company may merge with
an Affiliate incorporated for the purpose of reincorporating the Company in
another jurisdiction.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company defaults in any payment of inter est on any Security
when the same becomes due and payable, whether or not such payment shall
be prohib ited by Article 10, and such default continues for a period of
30 days;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity,
upon redemption, upon required repurchase, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article 10;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11, 4.12 or 4.13 (other than a failure to purchase
Securities) and such failure continues for 30 days after the notice
specified below;
(5) the Company or any Subsidiary Guarantor fails to comply with any
of its agreements in the Securities or this Indenture (other than those
referred to in (1), (2), (3) or (4) above) and such failure continues for
60 days after the notice specified below;
(6) Indebtedness of the Company or any Significant
Subsidiary is not paid within any applicable grace
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58
period after final maturity or the acceleration by the holders thereof
because of a default and the total amount of such Indebtedness unpaid or
accelerated exceeds $5,000,000 or its foreign currency equivalent at the
time;
(7) the Company or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custo dian of it or for
any substantial part of its property;
(D) makes a general assignment for the bene fit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of
$5,000,000 or its foreign currency equivalent at the time is entered
against the Company or any Significant Subsidiary and is not discharged,
waived or stayed and either (A) an enforcement proceeding has been
commenced by any creditor upon such judgment or decree and is not promtly
stayed or (B) there is a period of 60 days following the entry of such
judgment or decree during which such judgment or decree is not discharged,
waived or the execution thereof stayed; or
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(10) any Subsidiary Guarantee shall cease to be in full force and
effect (except as contemplated by the terms thereof) or any Subsidiary
Guarantor or person acting by or on behalf of such Guarantor shall deny or
disaffirm its obligations under this Indenture or any Subsidiary Guarantee
and such Default continues for 10 days (in each case other than by reason
of release of such Subsidiary Guarantee in accordance with this
Indenture).
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, UNITED STATES CODE, or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4) or (5) of this Section 6.01 is not an
Event of Default until the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities notify the Company of the Default and the
Company does not cure such Default within the time specified in clauses (iv) and
(v) hereof after receipt of such notice. Such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (4),
(5) or (9), its status and what action the Company is taking or proposes to take
with respect thereto.
SECTION 6.02. ACCELERATION. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities by notice to the Company, may
declare the principal of and accrued but unpaid interest on all the Securities
to be due and payable. Upon such a declaration, such principal and interest
shall be due and payable immediately. If an Event of Default specified in
Section 6.01(7) or (8) with respect to the Company occurs, the principal of and
interest on all the Securities shall become immediately due and payable without
any declaration or other act on the part of the
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Trustee or any Securityholders. The Holders of a majority in principal amount of
the Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquies cence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceed ing for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of any Securityholder or would involve the Trustee in per sonal
liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemni fication
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
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SECTION 6.06. LIMITATION ON SUITS. A Security
holder may not pursue any remedy with respect to this Inden
ture or the Securities unless:
(1) the Holder gives to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal
amount of the Securities make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee
reasonable security or indemnity against any loss,
liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding
any other provision of this Inden ture, the right of any Holder to receive
payment of princi pal of and Additional Interest and interest on the Securities
held by such Holder, on or after the respective due dates expressed in the
Securities, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, any Subsidiary or
Subsidiary Guarantor, their creditors or their property and, unless prohibited
by law or applicable regulations, may vote on behalf of the Holders in any
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62
election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disburse ments and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. PRIORITIES. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent required by
Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, and any Additional
Interest without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal, any Additional
Interest and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Securityholder and the Company a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement
of any right or remedy under this Inden ture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including rea sonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
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63
SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. Neither the Company
nor any Subsidiary Guarantor (to the extent it may lawfully do so) shall at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company and each Subsidiary Guarantor (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the require ments of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabil ity for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer
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64
unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE. Subject to Section 7.01: (a) The
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opin ion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
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(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it here under
in good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority in principal amount of the Securities
at the time outstanding, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled, upon reasonable notice to the Company, to
examine the books, records and premises of the Company, personally or by agent
or attorney.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Secur ities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within the earlier of 90 days after it
occurs or 30 days after it is known to a Trust Officer or written notice of it
is received by the Trustee. Except in the case of a Default in payment of
principal of or interest on any Security (including payments pursuant to the
mandatory redemption provisions of such Security, if any), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with Section 313(a) of the TIA. The Trustee shall also comply with
Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reim burse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company and each Subsidiary Guarantor, jointly and severally, shall
indemnify the Trustee against any and all loss, liability or expense (including
reasonable attorneys' fees) incurred by them without negligence or bad faith on
their part in connection with the administration of this trust and the
performance of their duties hereunder. The Trustee shall notify the Company of
any claim for which it may seek indemnity promptly upon obtaining actual
knowledge thereof; PROVIDED that any failure so to notify the Company shall not
relieve the Company or any Subsidiary Guarantor of its indemnity obligations
hereunder except to the extent that the Company or such Subsidiary Guarantor
shall have been adversely affected thereby. The Company shall defend the claim
and the indemnified party shall provide reasonable cooperation at the Company's
expense in the defense. Such indemnified parties may have separate counsel and
the Company shall pay the fees and expenses of such counsel; PROVIDED that the
Company shall not be required to pay such fees and expenses if it assumes such
indemnified parties' defense and, in such indemnified parties' reasonable
judgment, there is no conflict of interest between the Company and such parties
in connection with such defense. The Company need not pay for any settlement
made without its written consent. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by an indemnified
party through such party's own wilful misconduct, negligence or bad faith.
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To secure the Company's and each Subsidiary Guarantor's payment
obligations in this Section, the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee other than
money or property held in trust to pay principal of and interest and any
Additonal Interest on particular Securities.
The Company's and each Subsidiary Guarantor's payment obligations
pursuant to this Section shall survive the satisfaction or discharge of this
Indenture, any rejection or termination of this Indenture under any bankruptcy
law or the resignation or removal of the Trustee. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.01(7) or (8)
with respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders
of a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appoint ment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust busi ness or assets (including the trust created by this
Indenture) to, another corporation or banking association, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
out standing if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with TIA
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ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A
Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to
the extent indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE. (a)
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof and
the Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time
may terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13, 5.01(iii) and 5.01(iv) and the
operation of Section 6.01(4), 6.01(6), 6.01(7) (with respect to Subsidiaries of
the Company only), 6.01(8) (with respect to Subsidiaries of the Company only)
and 6.01(9) ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(4),
6.01(6), 6.01(7) (with respect to Subsidiaries of the Company only), 6.01(8)
(with respect to Subsidiaries of the Company only) and 6.01(9) or because of the
failure of the Company to comply with (iii) and (iv) of Section 5.01.
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Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE. The
Company may exercise its legal defeasance option or its
covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations for
the payment of principal, premium (if any) and interest
on the Securities to maturity or redemption, as the
case may be;
(2) the Company delivers to the Trustee a cer tificate from a
nationally recognized firm of indepen dent accountants expressing their
opinion that the pay ments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obliga tions plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the
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applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Security holders will not recognize income, gain or loss for federal
income tax purposes as a result of such cove nant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such covenant defeasance
had not occurred; and
(8) the Company delivers to the Trustee an Offi cers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities as contemplated by this
Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in
trust money or U.S. Government Obliga tions deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. Money and securities
so held in trust are not subject to Article 10.
SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or
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72
assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restrain ing or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; PROVIDED, HOWEVER, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The
Company and the Trustee may amend this Indenture or the
Securities without notice to or consent of any Security
holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; PROVIDED, HOWEVER, that the
uncertificated Securities are issued in registered form for purposes of
Sec tion 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 or Article 12 that would limit
or terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under Article 10 or Article 12,
respectively;
(5) to add further Guarantees with respect to the
Securities or to secure the Securities;
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(6) to add to the covenants of the Company for the
benefit of the Holders or to surrender any right or
power herein conferred upon the Company;
(7) to make any change that does not adversely
affect the rights of any Securityholder;
(8) to provide for the issuance and authorization of the Exchange
Securities, which shall have terms substantially identical in all material
respects to the Initial Securities (except that the transfer restrictions
contained in the Initial Securities shall be modified or eliminated, as
appropriate), and which shall be treated, together with any outstanding
Initial Securities, as a single issue of securities; or
(9) to comply with any requirements of the SEC in
connection with qualifying this Indenture under the
TIA;
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 or Article 12 of any holder of
Senior Indebtedness of the Company or any Subsidiary Guarantor then outstanding
unless the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities. However, without the
consent of each affected Securityholder, an amendment may not:
(1) reduce the amount of Securities whose Holders
must consent to an amendment;
(2) reduce the rate of or extend the time for
payment of interest or any Additional Interest on any
Security;
(3) reduce the principal of or extend the Stated
Maturity of any Security;
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(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance
with Article 3;
(5) make any Security payable in money other than
that stated in the Security;
(6) make any change in Article 10 or Article 12 that adversely
affects the rights of any Securityholder under Article 10 or Article 12,
respectively;
(7) make any change in Section 6.04 or 6.07 or the
second sentence of this Section; or
(8) modify or affect in any manner adverse to the Holders the terms
and conditions of the obligation of any Subsidiary Guarantor for the due
and punctual payment of the principal of, or any Additional Interest or
interest on, Securities.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 or Article 12 of any holder of
Senior Indebtedness of the Company or any Subsidiary Guarantor then outstanding
unless the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subse quent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subse quent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the
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75
amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Security holder. An amendment or waiver becomes
effective once the requisite number of consents are received by the Company or
the Trustee.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In sign ing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permit ted by this Indenture that such amendment is
the legal, valid and binding obligation of the Company and the Subsidiary
Guarantors enforceable against them in accordance with its terms, subject to
customary exceptions, and complies with the provisions hereof (including Section
9.03).
SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment
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76
of any of the terms or provisions of this Indenture or the Securities unless
such consideration is offered to be paid to all Holders that so consent, waive
or agree to amend in the time frame set forth in solicitation documents relating
to such consent, waiver or agreement.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE. The Company agrees, and
each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article 10, to the prior payment in full in
cash of all Senior Indebtedness and that the subordination is for the benefit of
and enforceable by the holders of Senior Indebtedness. The Securities shall in
all respects rank PARI PASSU with all other Senior Subordinated Indebtedness of
the Company and only Indebtedness of the Company that is Senior Indebtedness
shall rank senior to the Securities in accordance with the provisions set forth
herein. For purposes of these subordination provisions, the Indebtedness
evidenced by the Securities is deemed to include Additional Interest. All
provisions of this Article 10 shall be subject to Section 10.12.
SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liqui dation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of the Senior Indebtedness before Securityholders
shall be entitled to receive any payment of principal of or interest on
the Securities; and
(2) until the Senior Indebtedness is paid in full in cash, any
payment or distribution to which Securityholders would be entitled but for
this Article 10 shall be made to holders of Senior Indebtedness as their
interests may appear.
SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS. The Company may not
pay the principal of, premium (if any) or interest (including Additional
Interest) on, the Securities or make any deposit pursuant to Section 8.01 and
may not repurchase, redeem or otherwise retire any Securities (collectively,
"pay the Securities") if (i) any
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Senior Indebtedness is not paid when due in cash or (ii) any other default on
Senior Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, the default has
been cured or waived and any such acceleration has been rescinded in writing or
such Senior Indebtedness has been paid in full in cash; PROVIDED, HOWEVER, that
the Company may pay the Securities without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the
Representative of the Senior Indebtedness with respect to which either of the
events in clause (i) or (ii) of this sentence has occurred and is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Company may not pay the Securities for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice (a "Blockage Notice") of such default from the Representative of
the Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) by
repayment in full in cash of such Designated Senior Indebtedness or (iii)
because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Securities after such Payment Blockage Period. Not more than one Blockage
Notice may be given in any consecutive 360-day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness during such
period; PROVIDED, HOWEVER, that if any Blockage Notice within such 360-day
period is given by or on behalf of any holders of Designated Senior
Indebtedness, other than the Bank Indebtedness and the Senior Note Indebtedness,
the Representative of the Bank Indebtedness and the Senior Note Indebtedness may
give another Blockage Notice within such period; PROVIDED FURTHER, HOWEVER, that
in no event may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period.
SECTION 10.04. ACCELERATION OF PAYMENT OF SECURITIES. If payment of
the Securities is accelerated
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because of an Event of Default, the Company or the Trustee shall promptly notify
the holders of the Designated Senior Indebtedness (or their Representative) of
the acceleration. If any Designated Senior Indebtedness is outstanding, the
Company may not pay the Securities until five Business Days after such holders
or the Representative of the Designated Senior Indebtedness receive notice of
such acceleration and, thereafter, may pay the Securities only if this Article
10 otherwise permits payment at that time.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a
distribution is made to Securityholders that because of this Article 10 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and pay it over to
them as their interests may appear.
SECTION 10.06. SUBROGATION. After all Senior Indebtedness is paid in
full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under this
Article 10 to holders of Senior Indebtedness which otherwise would have been
made to Securityholders is not, as between the Company and Securityholders, a
payment by the Company on Senior Indebtedness.
SECTION 10.07. RELATIVE RIGHTS. This Article 10 defines the relative
rights of Securityholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, sub ject to the rights of holders of
Senior Indebtedness to receive distributions otherwise payable to
Securityholders.
SECTION 10.08. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No
right of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Indenture.
SECTION 10.09. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
Section 10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and
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79
shall not be charged with knowledge of the existence of facts that would
prohibit the making of any such payments unless, not less than two Business Days
prior to the date of such payment, a Trust Officer of the Trustee receives
notice satisfactory to it that payments may not be made under this Article 10.
The Company, the Registrar or co-registrar, the Paying Agent, a Representative
or a holder of Senior Indebtedness may give the notice; PROVIDED, HOWEVER, that,
if an issue of Senior Indebtedness has a Representative, only the Representative
may give the notice. The Trustee shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself or itself to be a holder of
any Senior Indebtedness (or a Representative of such holder) to establish that
such notice has been given by a holder of such Senior Indebtedness or
Representative thereof.
The Trustee in its individual or any other capa city may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 10 with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 10 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
SECTION 10.11. ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO ACCELERATE. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article 10 shall not be construed as pre venting
the occurrence of a Default. Nothing in this Article 10 shall have any effect on
the right of the Secu rityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness or subject to the
restrictions set forth in this Article 10, and none of the Securityholders shall
be obligated to pay over any such amount to the Company or any
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holder of Senior Indebtedness of the Company or any other creditor of the
Company.
SECTION 10.13. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
juris diction in which any proceedings of the nature referred to in Section
10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Security holders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 10, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article 10, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 10.
SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknow ledge or
effectuate the subordination between the Security holders and the holders of
Senior Indebtedness as provided in this Article 10 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article 10 or otherwise.
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SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
SUBORDINATION PROVISIONS. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
SECTION 10.17. TRUSTEE'S COMPENSATION NOT PREJUDICED. Nothing in
this Article shall apply to amounts due to the Trustee pursuant to other
sections of this Indenture.
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEES. Each Subsidiary Guarantor
hereby jointly and severally unconditionally and irrevocably Guarantees, as a
primary obligor and not merely as a surety, on an unsecured senior subordinated
basis to each Holder and to the Trustee and its successors and assigns (a) the
full and punctual payment of principal of, premium (if any) and interest
(including Additional Interest and interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture (including obligations
to the Trustee) and the Securities and (b) the full and punctual performance
within applicable grace periods of all other obligations of the Company whether
for fees, costs, expenses, indemnities or otherwise under this Indenture, the
Exchange and Registration Rights Agreement, the Purchase Agreement and the
Securities (all the foregoing being hereinafter collectively called the
"Obligations"). Each Subsidiary Guarantor further agrees that the Obligations
may be extended or renewed, in whole or in part, without notice or further
assent from each such Subsidiary Guarantor, and that each such Subsidiary
Guarantor shall remain bound under this Article 11 notwithstanding any extension
or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for
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nonpayment. Each Subsidiary Guarantor waives notice of any default under the
Securities or the Obligations. The obligations of each Subsidiary Guarantor
hereunder shall not be affected by (a) the failure of any Holder or the Trustee
to assert any claim or demand or to enforce any right or remedy against the
Company or any other Person under this Indenture, the Exchange and Registration
Rights Agreement, the Purchase Agreement, the Securities or any other agreement
or otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Exchange and Registration Rights Agreement, the Purchase
Agreement, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder or Trustee to exercise any right or remedy against
any other Guarantor of the Obligations; or (f) any change in the ownership of
such Subsidiary Guarantor, except as provided in Section 11.02(b).
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein constitutes a Guarantee of payment, performance and compliance
when due (and not a Guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
The Subsidiary Guarantee of each Subsidiary Guarantor is, to the
extent and in the manner set forth in Article 12, subordinated and subject in
right of payment to the prior payment in full in cash of the principal of and
premium, if any, and interest on all Senior Indebtedness of the relevant
Subsidiary Guarantor and is made subject to such provisions of this Indenture.
The obligations of each Subsidiary Guarantor hereunder shall not to
the extent permitted by law be subject to any reduction, limitation, impairment
or termination for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Subsidiary Guarantor herein shall not be discharged or impaired or otherwise
affected by the failure of any Holder or the Trustee to assert any claim or
demand or to enforce any remedy under this Indenture, the Securities or any
other agreement, by any waiver or modification of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Obligations,
or by any other act or thing or omission or delay to do any other act or thing
which may
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83
or might in any manner or to any extent vary the risk of any Subsidiary
Guarantor or would otherwise operate as a discharge of any Subsidiary Guarantor
as a matter of law or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal of or interest
on any Obligation is rescinded, invalidated, or must otherwise be restored by
any Holder or the Trustee upon the bankruptcy or reorganization of the Company,
the Subsidiary Guarantor (to the extent permitted by applicable law) or
otherwise.
In furtherance of the foregoing and not in limitation of any other
right that any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Subsidiary Guarantor hereby
promises to and shall, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid principal amount of such Obligations, (ii) accrued
and unpaid interest on such Obligations (but only to the extent not prohibited
by law) and (iii) all other monetary Obligations of the Company to the Holders
and the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
Obligations Guaranteed hereby until payment in full of all Obligations. Each
Subsidiary Guarantor further agrees that, as between it, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations Guaranteed hereby may be accelerated as provided in Article 6 for
the purposes of any Subsidiary Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations Guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article 6, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Subsidiary Guarantor for the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
SECTION 11.02. LIMITATION ON LIABILITY. (a) Any
term or provision of this Indenture to the contrary
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84
notwithstanding, the maximum, aggregate amount of the obligations Guaranteed
hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that
can be hereby Guaranteed without rendering this Indenture, as it relates to any
Subsidiary Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
(b) This Subsidiary Guarantee as to any Subsidiary Guarantor shall
terminate and be of no further force or effect upon the sale or other transfer
(i) by such Subsidiary Guarantor of all or substantially all of its assets or
(ii) by the Company of all of its stock or other equity interests in such
Subsidiary Guarantor, to a Person that is not an Affiliate of the Company;
PROVIDED, HOWEVER, that such sale or transfer shall be deemed to constitute an
Asset Disposition and the Company shall comply with its obligations under
Section 4.06.
SECTION 11.03. SUCCESSORS AND ASSIGNS. This Article 11 shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 11.04. NO WAIVER. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.
SECTION 11.05. MODIFICATION. No modification, amendment or waiver of
any provision of this Article 11, nor the consent to any departure by any
Subsidiary Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Subsidiary Guarantor in any case shall
entitle such Subsidiary Guarantor to any other or further notice or demand in
the same, similar or other circumstances.
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85
SECTION 11.06. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE
GUARANTOR SUBSIDIARIES. Each Subsidiary that is required to become a Subsidiary
Guarantor pursuant to Section 4.11 shall promptly execute and deliver to the
Trustee a supplemental indenture in the form of Exhibit D hereto pursuant to
which such Subsidiary shall become a Subsidiary Guarantor under this Article 11
and shall Guarantee the Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Subsidiary Guarantee of such Subsidiary
Guarantor is a legal, valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms.
ARTICLE 12
SUBORDINATION OF THE SUBSIDIARY GUARANTIES
SECTION 12.01. AGREEMENT TO SUBORDINATE. Each Subsidiary Guarantor
agrees, and each Securityholder by accepting a Security agrees, that the
Obligations of a Subsidiary Guarantor are subordinated in right of payment, to
the extent and in the manner provided in this Article 12, to the prior payment
in full in cash of all Senior Indebtedness of such Subsidiary Guarantor and that
the subordination is for the benefit of and enforceable by the holders of Senior
Indebtedness of such Subsidiary Guarantor. The Obligations with respect to a
Subsidiary Guarantor shall in all respects rank PARI PASSU with all other Senior
Subordinated Indebtedness of such Subsidiary Guarantor, and only Indebtedness of
such Subsidiary Guarantor that is Senior Indebtedness of such Subsidiary
Guarantor shall rank senior to the Obligations of such Subsidiary Guarantor in
accordance with the provisions set forth herein.
SECTION 12.02. LIQUIDATION, DISSOLUTION, BANK RUPTCY. Upon any
payment or distribution of the assets of a Subsidiary Guarantor to creditors
upon a total or partial
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liquidation or a total or partial dissolution of such Subsidiary Guarantor or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to such Subsidiary Guarantor and its properties:
(1) holders of Senior Indebtedness of such Subsidiary Guarantor
shall be entitled to receive payment in full in cash of such Senior
Indebtedness before Securityholders shall be entitled to receive any
payment of any Obligations from such Subsidiary Guarantor; and
(2) until the Senior Indebtedness of such Subsidiary Guarantor is
paid in full in cash, any payment or distribution to which Securityholders
would be entitled but for this Article 12 shall be made to holders of such
Senior Indebtedness as their respective interests may appear.
SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS OF A SUBSIDIARY
GUARANTOR. A Subsidiary Guarantor may not pay the principal of, premium (if any)
or interest (including Additional Interest) on, the Securities or make any
deposit pursuant to Section 8.01 and may not repurchase, redeem or otherwise
retire any Securities (collectively, "pay its Guarantee") if (i) any Senior
Indebtedness of such Subsidiary Guarantor is not paid in full in cash when due
or (ii) any other default on Senior Indebtedness of such Subsidiary Guarantor
occurs and the maturity of such Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, the default has been cured or waived and
any such acceleration has been rescinded in writing or such Senior Indebtedness
has been paid in full; PROVIDED, HOWEVER, that such Subsidiary Guarantor may pay
its Guarantee without regard to the foregoing if such Subsidiary Guarantor and
the Trustee receive written notice approving such payment from the
Representative of the Senior Indebtedness with respect to which either of the
events in clause (i) or (ii) of this sentence has occurred and is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness of a Subsidiary Guarantor pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as may
be required to effect such acceleration) or the expiration of any applica ble
grace periods, such Subsidiary Guarantor may not pay its Guarantee for a period
(a "Subsidiary Guarantor Payment Blockage Period") commencing upon the receipt
by the Trustee (with a copy to such Subsidiary Guarantor and the Company) of
written notice (a "Subsidiary Guarantor Blockage Notice") of such default from
the Representative of the Designated Senior Indebtedness of such Subsidiary
Guarantor specifying an election to effect a Subsidiary Guarantor Payment
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87
Blockage Period and ending 179 days thereafter (or earlier if such Subsidiary
Guarantor Payment Blockage Period is terminated (i) by written notice to the
Trustee (with a copy to such Subsidiary Guarantor and the Company) from the
Person or Persons who gave such Subsidiary Guarantor Blockage Notice, (ii) by
repayment in full in cash of such Designated Senior Indebtedness or (iii)
because the default giving rise to such Subsidiary Guarantor Blockage Notice is
no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, such Subsidiary Guarantor may
resume to pay its Guarantee after such Subsidiary Guarantor Payment Blockage
Period, including any missed payments. Not more than one Subsidiary Guarantor
Blockage Notice may be given with respect to a Subsidiary Guarantor in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of such Subsidiary Guarantor during such
period; PROVIDED, HOWEVER, that if any Subsidiary Guarantor Blockage Notice
within such 360-day period is given by or on behalf of any holders of Designated
Senior Indebtedness of such Subsidiary Guarantor other than the Bank
Indebtedness and the Senior Note Indebtedness, the Representative of the Bank
Indebtedness and the Senior Note Indebtedness may give another Subsidiary
Guarantor Blockage Notice within such period; PROVIDED FURTHER, HOWEVER, that in
no event may the total number of days during which any Subsidiary Guarantor
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any 360 consecutive day period.
SECTION 12.04. DEMAND FOR PAYMENT. If payment of the Securities is
accelerated because of an Event of Default and a demand for payment is made on a
Subsidiary Guarantor pursuant to Article 11 the Trustee shall promptly notify
the holders of the Designated Senior Indebtedness of such Subsidiary Guarantor
(or the Representative of such holders) of such demand. If any Designated Senior
Indebtedness of such Subsidiary Guarantor is outstanding, such Subsidiary
Guarantor may not pay its Guarantee until five Business Days after such holders
or the Representative of the holders of the Designated Senior Indebtedness of
such Subsidiary Guarantor receive notice of such demand and, thereafter, may pay
its Guarantee only if this Article 12 otherwise permits payment at that time.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a payment or
distribution is made to Securityholders that because of this Article 12 should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold such payment or
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distribution in trust for holders of the Senior Indebtedness of the relevant
Subsidiary Guarantor and pay it over to them as their respective interests may
appear.
SECTION 12.06. SUBROGATION. After all Senior Indebtedness of a
Subsidiary Guarantor is paid in full in cash and until the Securities are paid
in full, Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of such Subsidiary Guarantor to receive distributions applicable to
Senior Indebtedness of such Subsidiary Guarantor. A distribution made under this
Article 12 to holders of Senior Indebtedness of such Subsidiary Guarantor which
otherwise would have been made to Securityholders is not, as between such
Subsidiary Guarantor and Securityholders, a payment by such Subsidiary Guarantor
on Senior Indebtedness of such Subsidiary Guarantor.
SECTION 12.07. RELATIVE RIGHTS. This Article 12
defines the relative rights of Securityholders and holders
of Senior Indebtedness of a Subsidiary Guarantor. Nothing
in this Indenture shall:
(1) impair, as between a Subsidiary Guarantor and Securityholders,
the obligation of a Subsidiary Guarantor which is absolute and
unconditional, to pay its Obligations to the extent set forth in Article
11; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by a Subsidiary Guarantor under its
Obligations, subject to the rights of holders of Senior Indebtedness of
such Subsidiary Guarantor to receive distributions otherwise payable to
Securityholders.
SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A SUBSIDIARY
GUARANTOR. No right of any holder of Senior Indebtedness of a Subsidiary
Guarantor to enforce the subordination of the Obligations of such Subsidiary
Guarantor shall be impaired by any act or failure to act by such Subsidiary
Guarantor or by its failure to comply with this Indenture.
SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
Section 12.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article 12. A Subsidiary Guarantor, the Registrar or co-registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness of a Subsidiary
Guarantor may give the
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notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness of a
Subsidiary Guarantor has a Representative, only the Representative may give the
notice. The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of any Senior
Indebtedness of a Subsidiary Guarantor (or a Representative of such holder) to
establish that such notice has been given by a holder of such Senior
Indebtedness or Representative thereof.
The Trustee in its individual or any other capa city may hold Senior
Indebtedness of a Subsidiary Guarantor with the same rights it would have if it
were not Trustee. The Registrar and co-registrar and the Paying Agent may do the
same with like rights. The Trustee shall be entitled to all the rights set forth
in this Article 12 with respect to any Senior Indebtedness of a Subsidiary
Guarantor which may at any time be held by it, to the same extent as any other
holder of Senior Indebtedness of such Subsidiary Guarantor; and nothing in
Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing
in this Article 12 shall apply to claims of, or payments to, the Trustee under
or pursuant to Section 7.07.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRE SENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of a Subsidiary Guarantor, the distribution may be made and the notice given to
their Representative (if any).
SECTION 12.11. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO ACCELERATE. The failure of a Subsidiary Guarantor to make a payment on
any of its Obligations by reason of any provision in this Article 12 shall not
be construed as preventing the occurrence of a default by such Subsidiary
Guarantor under its Obligations. Nothing in this Article 12 shall have any
effect on the right of the Securityholders or the Trustee to make a demand for
payment on a Subsidiary Guarantor pursuant to Article 11.
SECTION 12.12. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
juris diction in which any proceedings of the nature referred to in Section
12.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Security holders or (iii) upon the Representatives for the holders of Senior
Indebtedness of a Subsidiary Guarantor for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
the Senior Indebtedness of a Subsidiary Guarantor and other
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Indebtedness of a Subsidiary Guarantor, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 12. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness of a Subsidiary Guarantor to participate in any
payment or distribution pursuant to this Article 12, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness of such Subsidiary Guarantor held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Arti cle 12, and, if such evidence is not furnished, the Trustee may
defer any payment to such Person pending judicial deter mination as to the right
of such Person to receive such payment. The provisions of Sections 7.01 and 7.02
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 12.
SECTION 12.13. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Securityholder by accepting a Security author izes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of each of the Guarantor Subsidiaries as provided in this
Article 12 and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS OF A SUBSIDIARY GUARANTOR. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness of a Subsidiary
Guarantor and shall not be liable to any such holders if it shall mistakenly pay
over or distribute to Securityholders or the relevant Subsidiary Guarantor or
any other Person, money or assets to which any holders of Senior Indebtedness of
such Subsidiary Guarantor shall be entitled by virtue of this Article 12 or
otherwise.
SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF A
SUBSIDIARY GUARANTOR ON SUBORDINATION PROVISIONS. Each Securityholder by
accepting a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness of a Subsidiary Guarantor, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.
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ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS. If any provision of
this Indenture limits, qualifies or con flicts with another provision which is
required to be included in this Indenture by the TIA, the required provi sion
shall control.
SECTION 13.02. NOTICES. Any notice or communica tion shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
24601 Center Ridge Road
Westlake, OH 44145
Attention of:
Chief Financial Officer
if to the Trustee:
777 Main Street
CTMO/0238
Hartford, CT 06115
Attention of:
Corporate Trust Administration Department
(TravelCenters of America, Inc. 10-1/4%
Senior Subordinated Notes due 2007)
The Company or the Trustee by notice to the other may designate
additional or different addresses for subse quent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a
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notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condi tion;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opin ion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. WHEN SECURITIES DISREGARDED. In determining whether
the Holders of the required principal
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93
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company shall be disregarded and deemed not to be outstanding, except that, for
the purpose of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities which the Trustee knows
are so owned shall be so disregarded. Also, subject to the fore going, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institu tions are not required to be open in a
place of payment or receipt. If a payment date is a Legal Holiday, payment shall
be made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO THE APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD
BE REQUIRED THEREBY.
SECTION 13.10. NO RECOURSE AGAINST OTHERS. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such lia bility. The waiver and release shall be part of the consi deration
for the issue of the Securities.
SECTION 13.11. SUCCESSORS. All agreements of the Company and each
Subsidiary Guarantor in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.12. MULTIPLE ORIGINALS. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
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SECTION 13.13. TABLE OF CONTENTS; HEADINGS. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
TRAVELCENTERS OF AMERICA, INC.
by /s/ James W. George
-----------------------------
Name: James W. George
Title: Senior Vice President and
Assistant Secretary
TA OPERATING CORPORATION
by /s/ James W. George
-----------------------------
Name: James W. George
Title: Senior Vice President and
Assistant Secretary
NATIONAL AUTO/TRUCKSTOPS OF
AMERICA, INC.
by /s/ James W. George
-----------------------------
Name: James W. George
Title: Senior Vice President and
Assistant Secretary
FLEET NATIONAL BANK, as
Trustee
by /s/ Frank McDonald
-----------------------------
Name: Frank McDonald
Title: Vice President
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
TO THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. /1/
[Private Placement Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) IF IT IS AN INITIAL INVESTOR IN THE SECURITIES (1) TO
THE COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT THAT
- --------
/1/ This paragraph should only be added if the Security is issued in global
form.
<PAGE>
2
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (4) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER (IF AVAILABLE), AND
(B) IF IT IS A SUBSEQUENT INVESTOR IN THE SECURITIES, (1) AS SET FORTH IN (A)
ABOVE AND (2) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL
AMOUNT OF $250,000 FOR SUCH SECURITIES FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (A)(4), (A)(5) OR (B)(2) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
TRAVELCENTERS OF AMERICA, INC.
10-1/4% SENIOR SUBORDINATED NOTE DUE 2007
No. [ ] CUSIP No. [ ]
$[ ]
TRAVELCENTERS OF AMERICA, INC., a Delaware corporation, promises to
pay to [ ], or registered assigns, the principal sum of $[ ] on April 1, 2007.
Interest Payment Dates: April 1 and October 1
<PAGE>
3
Record Dates: March 15 and September 15
Additional provisions of this Security are set forth on the other
side of this Security.
Dated: March 27, 1997
TRAVELCENTERS OF AMERICA, INC.
by
-----------------------
Name:
Title:
-----------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
FLEET NATIONAL BANK
as Trustee, certifies [Seal]
that this is one of
the Securities referred
to in the Indenture,
by
---------------------------
Authorized Signatory
<PAGE>
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
10-1/4% Senior Subordinated Note due 2007
1. INTEREST
TravelCenters of America, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
and the Subsidiary Guarantors will use their best efforts to have the Exchange
Offer Registration Statement or, if applicable, the Shelf Registration Statement
(each a "Registration Statement") declared effective by the Commission as
promptly as practicable after the filing thereof. If (i) either an Exchange
Offer Registration Statement or a Shelf Registration Statement under the
Exchange and Registration Rights Agreement is not filed with the Commission on
or prior to 60 days after the Issue Date, (ii) either an Exchange Offer
Registration Statement or a Shelf Registration Statement is not declared
effective within 135 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later than 135 days
after the Issue Date, within 60 days after publication of the change in law or
interpretation) or (iii) the Exchange Offer is not consummated in respect of all
Securities tendered on or prior to 165 days after the Issue Date and no Shelf
Registration Statement has been declared effective or a Shelf Registration
Statement is filed and declared effective within 135 days after the Issue Date
(or in the case of a Shelf Registration Statement required to be filed in
response to a change in law or the applicable interpretations of Commission's
staff, if later than 135 days after the Issue Date, within 60 days after
publication of the change in law or interpretation) but shall thereafter cease
to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 60 days by an additional
or amended Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (iii), a "Registration Default"), the Company
will pay liquidated damages to each holder of Transfer Restricted Securities,
during the period of such Registration Default, in an amount equal to $0.192 per
week per $1,000 principal amount of the
<PAGE>
5
Securities constituting Transfer Restricted Securities held by such holder until
(i) either an Exchange Offer Registration Statement or a Shelf Registration
Statement is filed (in the case of (i) above), (ii) either an Exchange Offer
Registration statement or a Shelf Registration Statement is declared effective
(in the case of (ii) above) or (iii) an Exchange Offer is consummated in respect
of all Securities tendered or a Shelf Registration Statement is declared
effective or again becomes effective, as the case may be (in the case of (iii)
above). Following the cure of all Registration Defaults, the accrual of
liquidated damages will cease. The Trustee shall have no responsibility with
respect to the determination of the amount of any such liquidated damages. For
purposes of the foregoing, "Transfer Restricted Securities" means each Initial
Security until (i) the date on which such Initial Security has been exchanged
for a freely transferable Exchange Security in the Exchange Offer, (ii) the date
on which such Initial Security has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iii) the date on which such Initial Security is distributed to the
public pursuant to Rule 144 under the Securities Act or is saleable pursuant to
Rule 144(k) under the Securities Act.
The Company will pay interest and liquidated damages, if any,
semiannually on April 1 and October 1 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from March 27, 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest (except defaulted interest) on and
liquidated damages, if any, in respect of the Securities to the Persons who are
registered holders of Securities at the close of business on the March 15 or
September 15 next preceding the interest payment date even if Securities are
canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender
<PAGE>
6
for payment of public and private debts. However, the Company may pay principal
and interest by check payable in such money or by wire transfer of federal
funds.
3. PAYING AGENT AND REGISTRAR
Initially, FLEET NATIONAL BANK, a national banking association
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice to the
Holders. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Inden ture dated as of
March 27, 1997 ("Indenture"), among the Company, certain of the Company's
subsidiaries party thereto (collectively, the "Subsidiary Guarantors") and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa- 77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are unsecured senior subordinated obligations of the
Company limited to $125,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the Initial Securities referred to in the Indenture. The Securities include the
Initial Securities and any Exchange Securities issued in exchange for the
Initial Securities pursuant to the Indenture. The Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain restrictions on the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries; the payment of
dividends on, and redemption of, Capital Stock of the Company and its Restricted
Subsidiaries and the redemption of certain Subordinated Obligations of the
Company and its Restricted Subsidiaries; Investments; sales of assets and
Restricted Subsidiary Capital Stock; certain transactions
<PAGE>
7
with Affiliates of the Company; the sale of Capital Stock of the Restricted
Subsidiaries; the creation of Secured Indebtedness; the lines of business in
which the Company and its Restricted Subsidiaries may operate; Sale/Leaseback
Transactions and consolidations, mergers and transfers of all or substantially
all of the Company's assets. In addition, the Indenture prohibits certain
restrictions on distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed the Obligations on a senior subordinated basis
pursuant to the terms of the Indenture.
5. OPTIONAL REDEMPTION
Except as set forth in the next two paragraphs, the Securities may
not be redeemed prior to April 1, 2002. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the date of
redemption), if redeemed during the 12-month period beginning on or after April
1 of the years set forth below:
Redemption
PERIOD PRICE
2002............................................................. 105.125%
2003............................................................. 103.417%
2004............................................................. 101.708%
2005 and thereafter.............................................. 100.000%
Notwithstanding the foregoing, at any time prior to April 1, 2000,
the Company may redeem in the aggregate up to 35% of the original aggregate
principal amount of Securities with the proceeds of one or more Public Equity
Offerings by the Company at a redemption price (expressed as
<PAGE>
8
a percentage of principal amount) of 110.25% plus accrued interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
PROVIDED, HOWEVER, that at least 65% of the original aggregate principal amount
of the Securities must remain outstanding after each such redemption.
At any time prior to April 1, 2002, the Securities may be redeemed,
in whole or in part, at the option of the Company within 180 days after a Change
of Control, at a redemption price equal to the sum of (i) the principal amount
thereof plus (ii) accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption) plus (iii) the Applicable Premium.
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. PUT PROVISIONS
Upon a Change of Control, unless the Company has elected to redeem
the Securities pursuant to paragraph 5, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of
<PAGE>
9
purchase) as provided in, and subject to the terms of, the Indenture.
8. SUBORDINATION
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid in full in cash before the
Securities may be paid. In addition, each Subsidiary Guaranty is subordinated to
Senior Indebtedness of the relevant Subsidiary Guarantor, as defined in the
Indenture. The Company and each Subsidiary Guarantor agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorse ments or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written
<PAGE>
10
request unless an abandoned property law designates another Person. After any
such payment, Holders entitled to the money must look only to the Company and
not to the Trustee for payment.
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provi sion may be waived
with the written consent of the Holders of a majority in principal amount
outstanding of the Securi ties. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to make certain changes
in the subordination provisions, or to add guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company, or to comply with any
request of the SEC in connection with qualifying the Indenture under the Act, or
to make any other change that does not adversely affect the rights of any
Securityholder, or to provide for the issuance and authorization of the Exchange
Securities.
14. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to para graph
5 of the Securities, upon required repurchase, upon declaration or otherwise
whether or not such payment is prohibited by Article 10; (iii) failure by the
Company or any Subsidiary Guarantor to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse of
time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Company if the amount
accelerated (or so unpaid) exceeds $5,000,000; (v) certain events of bankruptcy,
insolvency or reorganization with respect to the Company and the Significant
Subsidiaries; (vi) certain judgments or decrees for the payment of money in
excess of $5,000,000 or its foreign currency equivalent against the Company or a
Significant Subsidiary; and (vii) a Subsidiary Guaranty ceasing to be in full
force and effect (other than in accordance with its terms). If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securi ties unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may with hold from Securityholders notice of any continuing
Default (except a Default in payment of principal, premium, if any, or interest)
if it determines that withholding notice is in the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securi ties and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may other wise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
<PAGE>
11
16. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or a Subsidiary Guarantor under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. GOVERNING LAW
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. AUTHENTICATION
This Security shall not be valid until an author ized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the
<PAGE>
12
accuracy of such numbers either as printed on the Securities or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH HAS IN
IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
TRAVELCENTERS OF AMERICA, INC.
24601 CENTER RIDGE ROAD
WESTLAKE, OH 44145
ATTENTION OF CHIEF FINANCIAL OFFICER
<PAGE>
13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The
agent may substitute another to act for him.
- ------------------------------------------------------------
Date: Your Signature:
---------------- ---------------------
Signature Guarantee:
----------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this
Security.
<PAGE>
14
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $ principal amount of Securities held in
---------
(check applicable space) book-entry or definitive form by the
---- -----
undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such
<PAGE>
15
Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW:
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration
statement under the Securities Act of
1933; or
(3) [ ] inside the United States to a "qualified
institutional buyer" (as defined in
Rule 144A under the Securities Act of
1933) that purchases for its own account
or for the account of a qualified
institutional buyer to whom notice is
given that such transfer is being made
in reliance on Rule 144A, in each case
pursuant to and in compliance with
Rule 144A under the Securities Act of
1933; or
(4) [ ] outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities Act
of 1933; or
(5) [ ] pursuant to another available exemption from
registration provided by Rule 144 under the Securities
Act of 1933.
<PAGE>
16
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; PROVIDED, HOWEVER, that
if box (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
- --------------------- --------------------------
Signature must be guaranteed Signature
- ------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
---------------- ------------------------------
NOTICE: To be executed by
an executive officer
<PAGE>
17
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
</TABLE>
<PAGE>
18
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06 or
4.08 of the Indenture, state the amount: $
Date: Your Signature:
---------------------- --------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
---------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
TO THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. /2/
TRAVELCENTERS OF AMERICA, INC.
10-1/4% SENIOR SUBORDINATED NOTE DUE 2007
No. [ ] Cusip No. [ ]
$[ ]
TRAVELCENTERS OF AMERICA, INC., a Delaware corporation, promises to
pay to [ ], or registered assigns, the principal sum of $ on April 1, 2007.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
- --------
/2/ This paragraph should only be added if the Security is issued in global
form.
<PAGE>
2
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
TRAVELCENTERS OF AMERICA, INC.
by
----------------------
Name:
Title:
----------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
FLEET NATIONAL BANK
as Trustee, certifies [Seal]
that this is one of
the Securities referred
to in the Indenture,
by
-------------------------
Authorized Signatory
<PAGE>
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
10-1/4% Senior Subordinated Note due 2007
1. INTEREST
TravelCenters of America, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on April 1 and October 1 of each year. Interest
on the Securities will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from March 27, 1997. Interest will
be computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities plus
1% per annum, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the March 15 or September 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal and interest by
check payable in such money or by wire transfer of federal funds.
3. PAYING AGENT AND REGISTRAR
Initially, FLEET NATIONAL BANK, a national banking association
("Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice to the
Holders. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of
March 27, 1997 ("Indenture"), among the Company,
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4
certain of the Company's subsidiaries party thereto (collectively, the
"Subsidiary Guarantors") and the Trustee. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect
on the date of the Indenture (the "Act"). Terms defined in the Indenture and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.
The Securities are unsecured senior subordinated obligations of the
Company limited to $125,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the Exchange Securities referred to in the Indenture. The Securities include the
Initial Securities and any Exchange Securities issued in exchange for the
Initial Securities pursuant to the Indenture. The Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain restrictions on the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries; the payment of
dividends on, and redemption of, Capital Stock of the Company and its Restricted
Subsidiaries and the redemption of certain Subordinated Obligations of the
Company and its Restricted Subsidiaries; Investments; sales of assets and
Restricted Subsidiary Capital Stock; certain transactions with Affiliates of the
Company; the sale of Capital Stock of the Restricted Subsidiaries; the creation
of Secured Indebtedness; the lines of business in which the Company and its
Restricted Subsidiaries may operate; Sale/Leaseback Transactions and
consolidations, mergers and transfers of all or substantially all of the
Company's assets. In addition, the Indenture prohibits certain restrictions on
distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed the Obligations on a senior subordinated basis
pursuant to the terms of the Indenture.
5. OPTIONAL REDEMPTION
Except as set forth in the next two paragraphs, the Securities may
not be redeemed prior to April 1, 2002. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal
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5
amount), plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption), if redeemed during the 12-month period beginning on
or after April 1 of the years set forth below:
Redemption
PERIOD PRICE
2002........................................................... 105.125%
2003........................................................... 103.417%
2004........................................................... 101.708%
2005 and thereafter............................................ 100.000%
Notwithstanding the foregoing, at any time prior to April 1, 2000, the
Company may redeem in the aggregate up to 35% of the original aggregate
principal amount of Securities with the proceeds of one or more Public Equity
Offerings at a redemption price (expressed as a percentage of principal amount
thereof) of 110.25% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption); PROVIDED, HOWEVER, that at least 65% of the original
aggregate principal amount of the Securities must remain outstanding after each
such redemption.
At any time prior to April 1, 2002, the Securities may be redeemed,
in whole or in part, at the option of the Company within 180 days after a Change
of Control, at a redemption price equal to the sum of (i) the principal amount
thereof plus (ii) accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption) plus (iii) the Applicable Premium.
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
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6
7. PUT PROVISIONS
Upon a Change of Control, unless the Company has elected to redeem
the Securities pursuant to paragraph 5, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to purchase all or any part of the Securities of such Holder at a
repurchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
8. SUBORDINATION
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid in full in cash before the
Securities may be paid. In addition, each Subsidiary Guaranty is subordinated to
Senior Indebtedness of the relevant Subsidiary Guarantor, as defined in the
Indenture. The Company and each Subsidiary Guarantor agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner
of it for all purposes.
<PAGE>
7
11. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision may be waived with
the written consent of the Holders of a majority in principal amount outstanding
of the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company, the Subsidiary
Guarantors and the Trustee may amend the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to make certain changes in the
subordination provisions, or to add guarantees with respect to the Securities or
to secure the Securities, or to add additional covenants or surrender rights and
powers conferred on the Company, or to comply with any request of the SEC in
connection with qualifying the Indenture under the Act, or to make certain
changes in the subordination provisions, or to make any change that does not
adversely affect the rights of any Securityholder.
14. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon required repurchase, upon declaration or otherwise
whether or not such payment is prohibited by Article 10; (iii) failure by the
Company or any Subsidiary
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8
Guarantor to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$5,000,000; (v) certain events of bankruptcy, insolvency or reorganization with
respect to the Company and the Significant Subsidiaries; (vi) certain judgments
or decrees for the payment of money in excess of $5,000,000 or its foreign
currency equivalent against the Company or a Significant Subsidiary; and (vii) a
Subsidiary Guaranty ceasing to be in full force and effect (other than in
accordance with its terms). If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities may
declare all the Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal, premium, if any, or interest) if it
determines that withholding notice is in the interest of the Holders.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or a Subsidiary Guarantor under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
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17. GOVERNING LAW
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. AUTHENTICATION
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT
THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
TRAVELCENTERS OF AMERICA, INC.
24601 CENTER RIDGE ROAD
WESTLAKE, OH 44145
ATTENTION OF CHIEF FINANCIAL OFFICER
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
- ------------------------------------------------------------
Date: Your Signature:
---------------- ---------------------
Signature Guarantee:
----------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this
Security.
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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
</TABLE>
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06 or
4.08 of the Indenture, state the amount: $
Date: Your Signature:
---------------------- ----------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
-----------------------------------------------------
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE>
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EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO NON-QIB
INSTITUTIONAL ACCREDITED INVESTORS]
Transferee Letter of Representation
TravelCenters of America, Inc.
c/o Fleet National Bank
777 Main Street
CTMO/0238
Hartford, CT 06115
Attention of: Corporation Trust
Administration Department
Dear Ladies and Gentlemen:
This certificate is delivered to request a transfer of $ principal
amount of the 10-1/4% Senior Subordinated Notes due 2007 (the "Securities") of
TravelCenters
of America, Inc. (the "Company").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:
-----------------------------------
Address:
--------------------------------
Taxpayer ID Number:
---------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act
or other applicable securities laws. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Securities and invest in or purchase securities
similar to the Securities in the normal course of our business. We and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.
<PAGE>
2
2. We understand that the Securities have not been registered under
the Securities Act or any other applicable securities law and, unless so
registered, may not be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we are
purchasing Securities not to offer, sell or otherwise transfer such Securities
prior to the date which is two years after the later of the date of original
issue and the last date on which the Company or any affiliate of the Company was
the owner of such Securities (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (i) if it is an initial investor in the
Securities (a) to the Company, (b) pursuant to a registration statement which
has been declared effective under the Securities Act, (c) in a transaction
complying with the requirements of Rule 144A under the Securities Act, to a
person we reasonably believe is a qualified institutional buyer under Rule 144A
(a "QIB") that purchases for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act or (e) pursuant to an exemption
from registration under the Securities Act provided by Rule 144A thereunder (if
available), and (ii) if it is a subsequent investor in the Securities, (a) as
set forth in (i) above or (b) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor", in each case in a transaction involving a minimum
principal amount of Securities of $250,000 or (f) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to clause
(ii)(b) above prior to the Resale Restriction Termination Date, the transferor
shall deliver a letter from the transferee substantially in the form of this
letter to the Company and the Trustee, which shall provide, among other things,
that the transferee is an institutional "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is
acquiring such Securities for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or
<PAGE>
3
other transfer of the Securities pursuant to clauses (i)(d), (i)(e), or (ii)(b)
above prior to the Resale Restriction Termination Date to require the delivery
of an opinion of counsel, certifications or other information satisfactory to
the Company and the Trustee.
2. We are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise sole
investment discretion.
3. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
----------------------------
By: (Name of Purchaser)
Date:
Upon transfer the Securities would be registered in the name of the new
beneficial owner as follows:
TAXPAYER ID
NAME ADDRESS NUMBER:
- ---- ------- -------
<PAGE>
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"),
dated as of , among [NEW SUBSIDIARY GUARANTOR] (the "New
Subsidiary Guarantor"), a subsidiary of TravelCenters of
America, Inc. (or its successor), a Delaware corporation (the
"Company"), THE COMPANY, on behalf of itself and the
Subsidiary Guarantors (the "Existing Subsidiary Guarantors")
under the Indenture referred to below, and FLEET NATIONAL
BANK, a national banking association, as trustee under the
indenture referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company has heretofore executed and delivered to the
Trustee an Indenture (the "Indenture"), dated as of March 27, 1997, providing
for the issuance of an aggregate principal amount of $125,000,000 of 10-1/4%
Senior Subordinated Notes due 2007 (the "Securities");
WHEREAS Section 4.11 of the Indenture provides that under certain
circumstances the Company is required to cause the New Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Subsidiary Guarantor shall unconditionally guarantee all of the
Company's obligations under the Securities pursuant to a Subsidiary Guaranty on
the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and Existing Subsidiary Guarantors are authorized to execute and deliver
this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the
Trustee
<PAGE>
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mutually covenant and agree for the equal and ratable benefit of the holders of
the Securities as follows:
1. DEFINITIONS. (a) Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplement, except as otherwise herein
expressly provided or unless the context otherwise requires: (i) the terms and
expressions used herein shall have the same meanings as corresponding terms and
expressions used in the Indenture; and (ii) the words "herein," "hereof" and
"hereby" and other words of similar import used in this Supplement refer to this
Supplement as a whole and not to any particular section hereof.
2. AGREEMENT TO GUARANTEE. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to Guarantee
the Company's obligations under the Securities on the term and subject to the
conditions set forth in Article 11 of the Indenture and to be bound by all other
applicable provisions of the Indenture.
3. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF
INDENTURE. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
4. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
6. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall
<PAGE>
3
be an original, but all of them together represent the same agreement.
7. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR],
by
-----------------------------
Name:
Title:
TRAVELCENTERS OF AMERICA, INC. on
behalf of itself and the Existing
Subsidiary Guarantors,
by
-----------------------------
Name:
Title:
FLEET NATIONAL BANK
as Trustee,
by
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT E
[FORM OF CERTIFICATE TO BE DELIVERED
UPON TERMINATION OF RESTRICTED PERIOD]
On or after May 5, 1997
TravelCenters of America, Inc.
c/o Fleet National Bank
777 Main Street
CTMO/0238
Hartford, CT 06115
Attention: Corporate Trust Administration Department
Re: TravelCenters of America, Inc. (the
"Company") 10-1/4% Senior Subordinated Notes
due 2007 (the "Initial Securities") and
Series B Senior Subordinated Notes due 2007
(the "Exchange Securities" and, together with
THE INITIAL SECURITIES, THE "SECURITIES")
Ladies and Gentlemen:
This letter relates to Securities represented by a temporary global
note certificate (the "Temporary Certificate"). Pursuant to Section 2.01 of the
Indenture dated as of March 27, 1997 relating to the Securities (the
"Indenture"), we hereby certify that (1) we are the beneficial owner of $[ ]
principal amount of Initial Securities represented by the Temporary Certificate
and (2) we are a person outside the United States to whom the Initial Securities
could be transferred in accordance with Rule 904 of Regulation S promulgated
under the Securities Act of 1933, as amended. Accordingly, you are hereby
requested to issue a Certificated Note representing the undersigned's interest
in the principal amount of Initial Securities represented by the Temporary
Certificate, all in the manner provided by the Indenture.
<PAGE>
2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
-------------------------------------------
Authorized Signature
<PAGE>
EXHIBIT F
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
Fleet National Bank
777 Main Street
CTMO/0238
Hartford, CT 06115
Attention: Corporate Trust Administration
Department
[date]
Re: TravelCenters of America, Inc. (the
"Company") 10-1/4% Senior Subordinated Notes
due 2007 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate principal
-------
amount at maturity of the Securities, we hereby certify that such transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, we hereby further certify that the Securities are being transferred
to a person that we reasonably believe is purchasing the Securities for its own
account, or for one or more accounts with respect to which such person exercises
sole investment discretion, and such person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Securities are being transferred
in compliance with any applicable blue sky securities laws of any state of the
United States.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter
<PAGE>
4
or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.
Very truly yours,
------------------------------
[Name of Transferor]
By:
------------------------------
Authorized Signature
<PAGE>
EXHIBIT G
[Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S]
[date]
Fleet National Bank
777 Main Street
CTMO/0238
Hartford, CT 06115
Attention: Corporate Trust Administration Department
Re: TravelCenters of America, Inc. (the
"Company") 10-1/4% Senior Subordinated Notes
due 2007 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $ aggregate
--------
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a
person in the United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
<PAGE>
2
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------
Authorized Signature
EXHIBIT 4.2
Execution Copy
TRAVELCENTERS OF AMERICA, INC.
$125,000,000
10-1/4% Senior Subordinated Notes due 2007
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
March 27, 1997
CHASE SECURITIES INC.
270 Park Avenue, 4th Floor
New York, New York 10017
Ladies and Gentlemen:
TravelCenters of America, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to you (the "INITIAL PURCHASER"), upon
the terms and subject to the conditions set forth in a purchase agreement dated
March 24, 1997 (the "PURCHASE AGREEMENT"), $125,000,000 aggregate principal
amount of its 10-1/4% Senior Subordinated Notes due 2007 (the "SECURITIES") to
be unconditionally guaranteed on a senior subordinated basis by its principal
operating subsidiaries, TA Operating Corporation ("TA") and National
Auto/Truckstops, Inc. ("National"), each a Delaware corporation (together, the
"Subsidiary Guarantors"). Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
As an inducement to the Initial Purchaser to enter into the Purchase
Agreement and in satisfaction of a condition to your obligations thereunder, the
Company and each of the Subsidiary Guarantors agree with you, for the benefit of
the holders of the Securities (including the Initial Purchaser) (the "HOLDERS"),
as follows:
1. REGISTERED EXCHANGE OFFER. The Company and the Subsidiary
Guarantors shall (i) prepare and, not later than 60 days following the date of
original issuance of the Securities (the "ISSUE DATE"), file with the Commission
a registration statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") on an
appropriate form under the Securities Act
<PAGE>
2
with respect to a proposed offer to the Holders (the "REGISTERED EXCHANGE
OFFER") to issue and deliver to such Holders, in exchange for the Securities, a
like aggregate principal amount of debt securities of the Company (the "EXCHANGE
SECURITIES") identical in all material respects to the Securities, except for
the transfer restrictions relating to the Securities, (ii) use their reasonable
best efforts to cause the Exchange Offer Registration Statement to become
effective under the Securities Act no later than 135 days after the Issue Date
and the Registered Exchange Offer to be consummated in respect of all Securities
tendered no later than 165 days after the Issue Date, and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date that notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"EXCHANGE OFFER REGISTRATION PERIOD"). The Exchange Securities will be issued
under the Indenture or an indenture (the "EXCHANGE SECURITIES INDENTURE") among
the Company, the Subsidiary Guarantors and the Trustee or such other bank or
trust company reasonably satisfactory to you, as trustee (the "EXCHANGE
SECURITIES TRUSTEE"), such indenture to be identical in all material respects to
the Indenture except for the transfer restrictions relating to the Securities
(as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company and each of the Subsidiary Guarantors shall commence the Registered
Exchange Offer as promptly as practicable, it being the objective of such
Registered Exchange Offer to enable each Holder electing to exchange Securities
for Exchange Securities (assuming that such Holder (a) is not an affiliate of
the Company or a Subsidiary Guarantor or an Exchanging Dealer (as defined below)
not complying with the requirements of the next sentence, (b) acquires the
Exchange Securities in the ordinary course of such Holder's business and (c) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Company, each of the Subsidiary
Guarantors and the Initial Purchaser and each Exchanging Dealer acknowledge
that, pursuant to current interpretations by the Commission's staff of Section 5
of the Securities Act, (i) each Holder which is a broker-dealer electing to
<PAGE>
3
exchange Securities, acquired for its own account as a result of market making
activities or other trading activities, for Exchange Securities (an "EXCHANGING
DEALER"), is required to deliver a prospectus containing the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of such prospectus in connection
with a sale of any such Exchange Securities received by such Exchanging Dealer
pursuant to the Registered Exchange Offer and (ii) if the Initial Purchaser
elects to sell Exchange Securities acquired in exchange for Securities
constituting any portion of an unsold allotment, it is required to deliver a
prospectus containing the information required by Items 507 or 508 of Regulation
S-K under the Securities Act and the Exchange Act ("REGULATION S-K"), as
applicable, in connection with such a sale.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30
days after the date that notice of the Registered Exchange Offer is mailed
to the Holders (or longer if required by applicable law);
(c) utilize the services of a Depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all
laws applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
<PAGE>
4
(a) accept for exchange all Securities tendered
and not validly withdrawn pursuant to the Registered
Exchange Offer;
(b) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities, Exchange Securities equal in principal amount to the
Securities of such Holder so accepted for exchange.
The Company shall make available, for a period of 180 days after the
consummation of the Registered Exchange Offer, a copy of the prospectus forming
part of the Exchange Offer Registration Statement to any broker-dealer for use
in connection with any resale of any Exchange Securities.
Interest on each Exchange Security issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date on which interest
was paid on the Securities surrendered in exchange therefor or, if no interest
has been paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of the Company or
the Subsidiary Guarantors or, if it is such an affiliate, it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable.
Notwithstanding any other provisions hereof, the Company and each of
the Subsidiary Guarantors will ensure that (i) any Exchange Offer Registration
Statement and any amendment thereto and any prospectus forming part thereof and
any supplement thereto complies in all material respects with the Securities Act
and the rules and regulations of the Commission thereunder, (ii) any Exchange
Offer Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material
<PAGE>
5
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any prospectus forming
part of any Exchange Offer Registration Statement, and any supplement to such
prospectus, does not include, as of the consummation of the Registered Exchange
Offer, an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
2. SHELF REGISTRATION. If (i) because of any change in law or
applicable interpretations of the Commission's staff the Company and the
Subsidiary Guarantors determine that they are not permitted to effect the
Registered Exchange Offer as contemplated by Section 1 hereof, or (ii) for any
other reason the Registered Exchange Offer is not consummated within 165 days
after the Issue Date, or (iii) any Initial Purchaser so requests with respect to
Securities not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer and held by it following the consummation of the
Registered Exchange Offer, or (iv) any applicable law or interpretations do not
permit any Holder to participate in the Registered Exchange Offer, or (v) any
Holder that participates in the Registered Exchange Offer does not receive
freely transferable Exchange Securities in exchange for tendered Securities, or
(vi) the Company so elects, then the following provisions shall apply:
(a) The Company and each of the Subsidiary Guarantors shall use
their reasonable best efforts to file as promptly as practicable with the
Commission, and thereafter shall use their reasonable best efforts to cause to
be declared effective, a shelf registration statement on an appropriate form
under the Securities Act relating to the offer and sale of the Transfer
Restricted Securities (as defined below) by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such registration statement (hereafter, a "SHELF REGISTRATION
STATEMENT" and, together with any Exchange Offer Registration Statement, a
"REGISTRATION STATEMENT").
(b) The Company and each of the Subsidiary Guarantors shall use
their reasonable best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the prospectus forming part thereof to
be used by Holders for a period of two years from the Issue Date or such shorter
period that will terminate when all the
<PAGE>
6
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement or pursuant to Rule 144 under the Securities
Act (in any such case, such period being called the "SHELF REGISTRATION
PERIOD").
(c) Notwithstanding any other provisions hereof, the Company and the
Subsidiary Guarantors will ensure that (i) any Shelf Registration Statement and
any amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Shelf Registration
Statement and any amendment thereto (in either case, other than with respect to
information included therein in reliance upon or in conformity with written
information furnished to the Company by or on behalf of any Holder specifically
for use therein (the "HOLDERS' INFORMATION")) does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus (in either case,
other than with respect to Holders' Information), does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
3. LIQUIDATED DAMAGES. (a) The parties hereto agree that the Holders
of Securities will suffer damages if the Company and the Subsidiary Guarantors
fail to fulfill their obligations under Section 1 or Section 2, as applicable,
and that it would not be feasible to ascertain the extent of such damages.
Accordingly, if (i) either an Exchange Offer Registration Statement or a Shelf
Registration Statement is not filed with the Commission on or prior to 60 days
after the Issue Date, (ii) either an Exchange Offer Registration Statement or a
Shelf Registration Statement is not declared effective within 135 days after the
Issue Date (or in the case of a Shelf Registration Statement required to be
filed in response to a change in law or the applicable interpretations of
Commission's staff, if later than 135 days after the Issue Date, within 60 days
after publication of the change in law or interpretation) or (iii) the
Registered Exchange Offer is not consummated in respect of all Securities
tendered on or prior to 165 days after the Issue Date and no Shelf
<PAGE>
7
Registration Statement has been declared effective or a Shelf Registration
Statement is filed and declared effective within 135 days after the Issue Date
(or in the case of a Shelf Registration Statement required to be filed in
response to a change in law or the applicable interpretations of Commission's
staff, if later than 135 days after the Issue Date, within 60 days after
publication of the change in law or interpretation) but shall thereafter cease
to be effective (at any time that the Company and the Subsidiary Guarantors are
obligated to maintain the effectiveness thereof) without being succeeded within
60 days by an additional or amended Registration Statement filed and declared
effective (each such event referred to in clauses (i) through (iii), a
"REGISTRATION DEFAULT"), the Company and each of the Subsidiary Guarantors will
be obligated jointly and severally to pay liquidated damages to each holder of
Transfer Restricted Securities, during the period of one or more such
Registration Defaults, in an amount equal to $ 0.192 per week per $1,000
principal amount of the Securities constituting Transfer Restricted Securities
held by such Holder until (i) either an Exchange Offer Registration Statement of
a Shelf Registration Statement is filed (in the case of (i) above), (ii) either
an Exchange Offer Registration Statement or a Shelf Registration Statement is
declared effective (in the case of (ii) above) or (iii) an Exchange Offer is
consummated in respect of all Securities tendered or a Shelf Registration
Statement is declared effective or again becomes effective, as the case may be
(in the case of (iii) above). Following the cure of all Registration Defaults,
the accrual of liquidated damages will cease. As used herein, the term "TRANSFER
RESTRICTED SECURITIES" means each Security until (i) the date on which such
Security has been exchanged for a freely transferable Exchange Security in the
Registered Exchange Offer, (ii) the date on which such Security has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) the date on which such Security
is distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act. Notwithstanding
anything to the contrary in this Section 3(a), the Company and the Subsidiary
Guarantors shall not be required to pay liquidated damages to the holder of
Transfer Restricted Securities if such holder failed to comply with its
obligations to make the representations set forth in the second to last
paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
<PAGE>
8
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company and/or the Subsidiary Guarantors, as the case may be, shall
pay the liquidated damages due on the Transfer Restricted Securities by
depositing with the Paying Agent (which may not be the Company or any of its
Subsidiaries for these purposes), in trust, for the benefit of the holders
thereof, prior to 10:00 a.m., New York City time, on the next interest payment
date specified by the Indenture and the Securities, sums sufficient to pay the
liquidated damages then due. The liquidated damages due shall be payable on each
interest payment date specified by the Indenture and the Securities to the
record holder entitled to receive the interest payment to be made on such date.
Each obligation to pay liquidated damages shall be deemed to accrue from and
including the date of the applicable Registration Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to be declared effective or to remain effective or
(iii) the Exchange Offer Registration Statement to be declared effective and the
Registered Exchange Offer to be consummated, in each case to the extent required
by this Agreement.
4. REGISTRATION PROCEDURES. In connection with
any Registration Statement, the following provisions shall
apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that the Initial Purchaser (with respect to any
portion of an unsold allotment from the original offering) is participating in
the Registered Exchange Offer or the Shelf Registration, shall use reasonable
efforts to reflect in each such document, when so filed with the Commission,
such comments as you reasonably may propose; (ii) with respect to an Exchange
Offer Registration Statement include the information set forth in Annex A hereto
on the cover, in Annex B hereto in the "Exchange Offer Procedures" section
<PAGE>
9
and the "Purpose of the Exchange Offer" section and in Annex C hereto in the
"Plan of Distribution" section of the prospectus forming a part of the Exchange
Offer Registration Statement, and include the information set forth in Annex D
hereto in the Letter of Transmittal delivered pursuant to the Registered
Exchange Offer; and (iii) if requested by the Initial Purchaser, include the
information required by Items 507 or 508 of Regulation S-K, as applicable, in
the prospectus forming a part of the Exchange Offer Registration Statement.
(b) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders and, if requested by you or any such Holder,
confirm such advice in writing (which advice pursuant to clauses (ii) through
(v) hereof shall be accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made):
(i) when the Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of the request by the Commission for
amendments or supplements to any Registration Statement
or the prospectus included therein or for additional
information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that
purpose;
(iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities or the Exchange
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included therein
so that, as of such date, the statements therein are not misleading and do
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
<PAGE>
10
(c) The Company and the Subsidiary Guarantors will use reasonable
efforts to obtain the withdrawal of any order suspending the effectiveness of
any Registration Statement at the earliest possible time.
(d) The Company will furnish to each holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(e) The Company will, during the Shelf Registration Period, deliver
to each holder of Transfer Restricted Securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use of such prospectus
or any amendment or supplement thereto by each of the selling holders of
Transfer Restricted Securities in connection with the offer and sale of the
Transfer Restricted Securities covered by such prospectus or any amendment or
supplement thereto.
(f) The Company will furnish to each Exchanging Dealer or the
Initial Purchaser, as applicable, upon such person's request in writing ,
without charge, at least one copy of the Exchange Offer Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules and, if the Exchanging Dealer or the Initial Purchaser, as applicable,
so requests in writing, all exhibits (including those incorporated by
reference).
(g) The Company will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to each
Exchanging Dealer or the Initial Purchaser, as applicable, without charge, as
many copies of the prospectus included within the coverage of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as applicable, and
any amendment or supplement thereto as such Exchanging Dealer or the Initial
Purchaser, as applicable, may reasonably request for delivery by (i) such
Exchanging Dealer in connection with a sale of Exchange Securities received by
it pursuant to the
<PAGE>
11
Registered Exchange Offer or (ii) the Initial Purchaser in connection with a
sale of Exchange Securities received by it in exchange for Securities
constituting any portion of an unsold allotment; and the Company consents to the
use of such prospectus or any amendment or supplement thereto by any such
Exchanging Dealer or the Initial Purchaser, as applicable, as aforesaid.
(h) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company will use its
reasonable best efforts to register or qualify, or cooperate with the Holders of
Securities included therein and their respective counsel in connection with the
registration or qualification of, such Securities or Exchange Securities for
offer and sale under the securities or blue sky laws of such jurisdictions as
any such Holder reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such jurisdictions
of the Securities or Exchange Securities covered by such Registration Statement;
PROVIDED that neither Company, or any subsidiary or affiliate of the Company
will be required to qualify generally to do business in any jurisdiction where
it is not then so qualified or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction where it is
not then so subject.
(i) The Company and the Subsidiary Guarantors will cooperate with
the Holders of Securities or Exchange Securities to facilitate the timely
preparation and delivery of certificates representing Securities or Exchange
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
Holders may request in writing prior to sales of Securities or Exchange
Securities pursuant to such Registration Statement.
(j) If any event contemplated by paragraphs (b)(ii) through (v)
above occurs during the period for which the Company and the Subsidiary
Guarantors are required to maintain an effective Registration Statement, the
Company will promptly prepare a post-effective amendment to the Registration
Statement or a supplement to the related prospectus or file any other required
document so that, as so amended or supplemented, the prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
<PAGE>
12
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities or
Exchange Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Securities or Exchange Securities, as the case may
be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company and the Subsidiary Guarantors will comply with all
applicable rules and regulations of the Commission and will make generally
available to the Company's security holders not later than 90 days after the end
of the 12 month period beginning at the end of the fiscal quarter in which the
applicable Registration Statement first became effective under the Securities
Act, an earnings statement (which need not be audited) satisfying the provisions
of Section 11(a) of the Securities Act.
(m) The Company and the Subsidiary Guarantors will cause the
Indenture or the Exchange Securities Indenture, as the case may be, to be
qualified under the Trust Indenture Act as required by applicable law in a
timely manner.
(n) The Company and the Subsidiary Guarantors may require each
Holder of Securities to be sold pursuant to any Shelf Registration Statement to
furnish to the Company and the Subsidiary Guarantors such information concerning
the Holder and the distribution of such Securities as the Company may from time
to time reasonably require for inclusion in such Registration Statement, and the
Company may exclude from such registration the Securities of any Holder that
fails to furnish such information within a reasonable time after receiving such
request.
(o) In the case of a Shelf Registration Statement, each Holder of
Securities agrees by acquisition of such Securities that, upon receipt of any
notice of the Company or a Subsidiary Guarantor pursuant to Section 4(b)(ii)
through (v) hereof, such Holder will discontinue disposition of such Securities
covered by such Registration Statement until such Holder's receipt of copies of
the supplemental or amended prospectus contemplated by Section 4(j) hereof or
until advised in writing (the "ADVICE") by the Company that the use of the
applicable prospectus may be resumed. If the Company or a Subsidiary Guarantor
shall give any notice under Section 4(b)(ii) through (v) during the period that
the Company is required to maintain an effective Registration Statement (the
"EFFECTIVENESS
<PAGE>
13
PERIOD"), such Effectiveness Period shall be extended by the number of days
during such period from and including the date of the giving of such notice to
and including the date when each seller of Securities covered by such
Registration Statement shall have received (x) the copies of the supplemental or
amended prospectus contemplated by Section 4(j) (if an amended or supplemental
prospectus is required) or (y) the Advice (if no amended or supplemental
prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company and
each of the Subsidiary Guarantors shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form) and take
all such other action, if any, as Holders of a majority in aggregate principal
amount of the Securities or Exchange Securities being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate any
disposition of Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company and
each of the Subsidiary Guarantors shall (i) make reasonably available for
inspection by a representative of, and Special Counsel (as defined below) acting
for, Holders of a majority in aggregate principal amount of the Securities or
Exchange Securities (if any) being sold and any underwriter participating in any
disposition of Securities or Exchange Securities (if any) pursuant to such Shelf
Registration Statement, all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries and (ii)
use reasonable efforts to have their officers, directors, employees, accountants
and counsel supply all relevant information reasonably requested by such
representative, Special Counsel (as defined below) or any such underwriter (an
"INSPECTOR") in connection with such Shelf Registration Statement as is
customary for similar due diligence examinations, subject to executing a
reasonable confidentiality undertaking in customary form with respect to
confidential or proprietary information of the Company or such Subsidiary
Guarantor.
(r) In the case of a Shelf Registration Statement, the Company and
each of the Subsidiary Guarantors shall, if requested by Holders of a majority
in aggregate principal amount of the Securities or Exchange Securities (if any)
being sold, their Special Counsel or the managing underwriters (if any) in
connection with such Shelf
<PAGE>
14
Registration Statement, use their reasonable efforts to cause (i) the Company's
counsel to deliver an opinion relating to the Shelf Registration Statement and
the Securities or Exchange Securities, as applicable, in customary form, (ii)
the Company's officers to execute and deliver all customary documents and
certificates requested by Holders of a majority in aggregate principal amount of
the Securities or Exchange Securities being sold, their Special Counsel or the
managing underwriters (if any) and (iii) the Company's independent public
accountants to provide a comfort letter in customary form, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
5. REGISTRATION EXPENSES. The Company and the Subsidiary Guarantors
will jointly and severally bear all expenses incurred in connection with the
performance of their obligations under Sections 1, 2, 3 and 4 and the Company
and the Subsidiary Guarantors, as the case may be, will reimburse the Initial
Purchaser and the Holders for the reasonable fees and disbursements of one firm
of attorneys (in addition to any appropriate local counsel) chosen by the
Holders of a majority in aggregate principal amount of the Securities and the
Exchange Securities to be sold pursuant to each Registration Statement (the
"SPECIAL COUNSEL") acting for the Initial Purchaser or Holders in connection
therewith.
6. INDEMNIFICATION. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or the Initial Purchaser,
as applicable, the Company and each of the Subsidiary Guarantors shall indemnify
and hold harmless each Holder, its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls such Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively referred to for purposes of this
Section 6 and Section 7 as a Holder) from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of Securities or Exchange Securities), to which that Holder
may become subject, whether commenced or threatened, under the Securities Act,
the Exchange Act, any other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim,
<PAGE>
15
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder for any
legal or other expenses reasonably incurred by that Holder (upon presentation of
a statement or statements therefor in reasonable detail) in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Holders' Information; and
PROVIDED, FURTHER, that with respect to any such untrue statement in or omission
from any related preliminary prospectus, the indemnity agreement contained in
this Section 6(a) shall not inure to the benefit of any Holder from whom the
person asserting any such loss, claim, damage, liability or action received
Securities or Exchange Securities to the extent that such loss, claim, damage,
liability or action of or with respect to such Holder results from the fact that
both (A) a copy of the final prospectus was not sent or given to such person at
or prior to the written confirmation of the sale of such Securities or Exchange
Securities to such person and (B) the untrue statement in or omission from the
related preliminary prospectus was corrected in the final prospectus unless, in
either case, such failure to deliver the final prospectus was a result of
non-compliance by the Company with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
shall indemnify and hold harmless the Company, its subsidiaries and affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls the Company, its subsidiaries or its
affiliates within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 6(b) and Section 7 as the
Company), from and against any loss, claim, damage or liability, joint or
several, or any action in respect
<PAGE>
16
thereof, to which the Company may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with any Holders' Information
furnished to the Company by such Holder, and shall reimburse the Company for any
legal or other expenses reasonably incurred by the Company (upon presentation of
a statement or statements thereof in reasonable detail) in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Securities or Exchange
Securities pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; PROVIDED,
HOWEVER, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced by such failure; and PROVIDED, FURTHER,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 6. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense
<PAGE>
17
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall not be
liable to the indemnified party under this Section 6 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than the reasonable costs of investigation; PROVIDED,
HOWEVER, that an indemnified party shall have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may reasonably be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict exists (based upon
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties,
or for fees or expenses that are not reasonable. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any appropriate local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 6(a) and 6(b), shall use its
reasonable best efforts to cooperate with the indemnifying party in the defense
of any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by
<PAGE>
18
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party(which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could reasonably have
been a party and indemnity could reasonably have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
7. CONTRIBUTION. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party on the
other with respect to the actions, statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact, has been taken or made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7 were
to be determined by PRO RATA allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 7 shall be deemed to include, for purposes of this Section 7, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 7, an
indemnifying party that is a holder of Transfer Restricted Securities or
Exchange
<PAGE>
19
Securities shall not be required to contribute any amount in excess of the
amount by which the total price at which the Transfer Restricted Securities or
Exchange Securities sold by such indemnifying party to any purchaser exceeds the
amount of any damages which such indemnifying party has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission to state a material fact. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. RULES 144 AND 144A. The Company shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the written request of any holder
of Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of their securities pursuant to Rules 144 and
144A. The Company and each of the Subsidiary Guarantors covenant that they will
take such further action as any holder of Transfer Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Transfer Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon
the written request of any holder of Transfer Restricted Securities, the
Company, as applicable, shall deliver to such holder a written statement as to
whether it or they have complied with such requirements. Notwithstanding the
foregoing, nothing in this Section 8 shall be deemed to require the Company to
register any of its securities pursuant to the Exchange Act.
9. UNDERWRITTEN REGISTRATIONS. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Company (which shall
not be unreasonably withheld or delayed), and such holders shall be responsible
for all
<PAGE>
20
underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities and the Exchange Securities, taken as a
single class. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of the Holders of Securities or Exchange Securities whose Securities or
Exchange Securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of a majority in aggregate principal amount of the Securities or
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(i) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to Chase Securities Inc.;
(ii) if to you, initially at your respective
addresses set forth in the Purchase Agreement; and
<PAGE>
21
(iii) if to the Company, or either Subsidiary
Guarantor initially at the address of the Company set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) SUCCESSORS AND ASSIGNS. This Agreement
shall be binding upon the Company and its successors and
assigns.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) DEFINITION OF TERMS. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) HEADINGS. The headings in this Agreement
are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
<PAGE>
22
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(h) REMEDIES. In the event of a breach by the Company, by either of
the Subsidiary Guarantors or by any holder of Transfer Restricted Securities, of
any of their obligations under this Agreement, each holder of Transfer
Restricted Securities or the Company or the Subsidiary Guarantors, as the case
may be, in addition to being entitled to exercise all rights granted by law,
including recovery of damages (other than the recovery of damages for a breach
by the Company or a Subsidiary Guarantor of its obligations under Sections 1 or
2 hereof for which liquidated damages have been paid pursuant to Section 3
hereof), will be entitled to specific performance of its rights under this
Agreement. The Company, the Subsidiary Guarantors and each holder of Transfer
Restricted Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agree that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(i) NO INCONSISTENT AGREEMENTS. The Company and each of the
Subsidiary Guarantors represent, warrant and agree that (i) they have not
entered into and shall not, on or after the date of this Agreement, enter into
any agreement that is inconsistent with the rights granted to the holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof, (ii) they have not previously entered into any agreement
which remains in effect granting any registration rights with respect to any of
the Company's debt securities to any person and (iii) without limiting the
generality of the foregoing, without the written consent of the Holders of a
majority in aggregate principal amount of the then outstanding Transfer
Restricted Securities, they shall not grant to any person the right to request
the Company to register any debt securities of the Company under the Securities
Act unless the rights so granted are not in conflict or inconsistent with the
provisions of this Agreement.
(j) NO PIGGYBACK ON REGISTRATIONS. Neither the
Company nor any of its security holders (other than the
holders of Transfer Restricted Securities in such capacity)
<PAGE>
23
shall have the right to include any securities of the Company in any Shelf
Registration or Registered Exchange Offer other than Transfer Restricted
Securities.
(k) SEVERABILITY. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
<PAGE>
24
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Subsidiary Guarantors and you.
Very truly yours,
TRAVELCENTERS OF AMERICA, INC.
By /s/ Michael H. Hinderliter
------------------------------
Name: Michael H. Hinderliter
Title: Senior Vice President
TA OPERATING CORPORATION
By /s/ Michael H. Hinderliter
------------------------------
Name: Michael H. Hinderliter
Title: Senior Vice President
NATIONAL AUTO/TRUCKSTOPS, INC.
By /s/ Michael H. Hinderliter
------------------------------
Name: Michael H. Hinderliter
Title: Senior Vice President
Accepted:
CHASE SECURITIES INC.
By /s/ James C. Neary
----------------------------------
Authorized Signatory
James C. Neary
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until ,
---------------
199 , all dealers effecting transactions in the Exchange Securities may be
-
required to deliver a prospectus. /1/
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that
- --------
/1/ In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Registered Exchange Offer prospectus.
<PAGE>
it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:
---------------------------------------
Address:
------------------------------------
---------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Exhibit 5
[LETTERHEAD OF PWRW&G]
May 5, 1997
TravelCenters of America, Inc.
24601 Center Ridge Road, Suite 300
Westlake, OH 44145
TA Operating Corporation
24601 Center Ridge Road, Suite 300
Westlake, OH 44145
National Auto/Truckstops, Inc.
3100 West End Avenue, Suite 300
Nashville, TN 37203
Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by TravelCenters of America, Inc., a Delaware
corporation (the "Company"), TA Operating Corporation, a Delaware corporation,
and National Auto/Truckstops, Inc., a Delaware corporation (together, the
<PAGE>
TravelCenters of America, Inc. 2
TA Operating Corporation
National Auto/Truckstops, Inc.
"Subsidiary Guarantors"), with the Securities and Exchange Commission (the
"SEC") on the date hereof, pursuant to the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations promulgated thereunder, we have been
requested to render our opinion as to the legality of the securities being
registered thereunder. The Registration Statement relates to the registration
under the Act of the Company's 10 1/4% Senior Subordinated Notes due 2007 (the
"New Notes") and the guarantees of the New Notes by the Subsidiary Guarantors
(the "Subsidiary Guarantees"). The New Notes are to be offered in exchange for
the 10 1/4% Senior Notes due 2007 (the "Existing Notes") issued and sold by the
Company on March 27, 1997 in an offering exempt from registration under the Act.
The New Notes will be issued by the Company pursuant to the terms of the
Indenture (the "Indenture"), dated as of March 27, 1997, among the Company, the
Subsidiary Guarantors and Fleet National Bank, as trustee (the "Trustee").
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed thereto in the Registration Statement.
In connection with this opinion, we have examined originals,
conformed copies or photocopies, certified or otherwise identified to our
satisfaction, of the following documents:
(i) the Registration Statement (including the exhibits thereto);
<PAGE>
TravelCenters of America, Inc. 3
TA Operating Corporation
National Auto/Truckstops, Inc.
(ii) the Indenture included as Exhibit 4.1 to the Registration
Statement (including the Subsidiary Guarantees set forth therein); and
(iii) the proposed form of the New Notes included as Exhibit 4.4 to
the Registration Statement.
In addition, we have examined: (i) such corporate records of the
Company and the Subsidiary Guarantors as we have considered appropriate,
including copies of their certificates of incorporation, as amended, and
by-laws, as amended, in each case, as in effect on the date hereof, and
certified copies of resolutions of the boards of directors of the Company and
the Subsidiary Guarantors; and (ii) such other certificates, agreements and
documents as we deemed relevant and necessary as a basis for the opinions
hereinafter expressed.
In our examination of the aforesaid documents, we have assumed,
without independent investigation, the genuineness of all signatures, the
enforceability of the documents against each party thereto other than the
Company and the Subsidiary Guarantors, the authenticity of all documents
submitted to us as originals, the conformity to the original documents of all
documents submitted to us as certified, photostatic, reproduced or conformed
copies of validly existing agreements or other documents, the authenticity of
all such latter documents and the legal capacity of all individuals who have
executed any of the documents which we examined.
<PAGE>
TravelCenters of America, Inc. 4
TA Operating Corporation
National Auto/Truckstops, Inc.
In expressing the opinion set forth herein, we have relied upon the
factual matters contained in the representations and warranties of the Company
and the Subsidiary Guarantors made in such documents and upon certificates of
public officials and officers of the Company and the Subsidiary Guarantors, and
we have assumed that the New Notes will be issued as described in the
Registration Statement.
Based on the foregoing, and subject to the assumptions, exceptions
and qualifications set forth herein, we are of the opinion that:
1. The Indenture (including the Subsidiary Guarantees set forth
therein) represents a valid and binding obligation of the Company and each of
the Subsidiary Guarantors enforceable against the Company and each of the
Subsidiary Guarantors in accordance with its terms, except as such
enforceability may be subject to (a) bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (b) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
2. When issued, authenticated and delivered in accordance with the
terms of the Indenture, the New Notes will be legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization, moratorium and
other similar laws affecting
<PAGE>
TravelCenters of America, Inc. 5
TA Operating Corporation
National Auto/Truckstops, Inc.
creditors' rights generally and (b) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
Our opinions expressed above are limited to the laws of the State of
New York and the federal laws of the United States. Our opinions are rendered
only with respect to the laws, and the rules, regulations and orders thereunder,
that are currently in effect.
We hereby consent to the use of our name in the Registration
Statement and in the prospectus therein as the same appears in the caption
"Legal Matters" and to the use of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required by the Act or by the rules and
regulations promulgated thereunder.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
EXHIBIT 9.1
================================================================================
VOTING TRUST AGREEMENT
dated as of April 14, 1993
by and among
NATIONAL AUTO/TRUCKSTOPS HOLDINGS CORPORATION,
UNITED STATES TRUST COMPANY OF NEW YORK
in its capacity as the Voting Trustee
and
THE OPERATOR STOCKHOLDERS NAMED HEREIN
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................. 2
ARTICLE II ISSUANCE OF SHARES....................................... 6
ARTICLE III VOTING RIGHTS AND POWERS................................. 7
ARTICLE IV RECEIPT OF ADDITIONAL STOCK CERTIFICATES................. 16
ARTICLE V DIVIDENDS AND DISTRIBUTIONS.............................. 17
ARTICLE VI SUBSCRIPTION FOR ADDITIONAL
SECURITIES OF THE COMPANY................................ 18
ARTICLE VII TRANSFER................................................. 19
ARTICLE VIII COMPENSATION; EXPENSES................................... 23
ARTICLE IX EXCULPATION; INDEMNIFICATION OF
VOTING TRUSTEE........................................... 23
ARTICLE X APPOINTMENT OF CUSTODIAN; SUCCESSOR
VOTING TRUSTEE; QUALIFICATIONS OF
VOTING TRUSTEE........................................... 24
ARTICLE XI TERMINATION.............................................. 27
ARTICLE XII PERMITTED AND NON-OPERATOR TRANSFEREES................... 29
ARTICLE XIII POWER OF ATTORNEY........................................ 30
ARTICLE XIV MISCELLANEOUS............................................ 31
14.1 Lost, Stolen or Destroyed Certificates................... 31
14.2 Filing of Agreement with the Company; Avail-
ability for Inspection by Operator
Stockholders............................................. 32
14.3 Transfer Restrictions in Stockholders'
Agreement................................................ 32
14.4 Compliance with Securities Laws.......................... 32
14.5 Notice................................................... 33
14.6 Amendment................................................ 34
14.7 Waiver................................................... 35
i
<PAGE>
14.8 Benefit and Binding Effect............................... 36
14.9 Entire Agreement......................................... 36
14.10 Severability............................................. 36
14.11 Governing Law............................................ 37
14.12 Variations of Pronouns................................... 37
14.13 Counterparts............................................. 37
14.14 Third-Party Beneficiaries.................................37
ii
<PAGE>
VOTING TRUST AGREEMENT
----------------------
VOTING TRUST AGREEMENT, dated as of April 14, 1993, by and among
NATIONAL AUTO/TRUCKSTOPS HOLDINGS CORPORATION, a Delaware corporation (the
"Company"), UNITED STATES TRUST COMPANY OF NEW YORK, a New York Corporation, in
its capacity as the voting trustee (the "Voting Trustee"), and each of the
holders of shares of the Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), of the Company listed on Schedule I attached hereto
(each an "Operator Stockholder" and, collectively and together with the
Permitted Transferees and Non-Operator Transferees (as these terms are
hereinafter defined), the "Operator Stockholders").
W I T N E S S E T H:
WHEREAS, each Operator Stockholder as of the date hereof is the
record and beneficial owner of the number of shares of Class A Common Stock
appearing opposite his name on Schedule I; and
WHEREAS, the Company and the Operator Stockholders deem it necessary
and advisable that the Voting Trustee be the record owner of the shares on the
terms and conditions set forth herein in order to assure that, among other
things, the Operator Stockholders vote with a single voice with respect to all
matters submitted to the vote of the
<PAGE>
2
stockholders of the Company, other than the election of
directors.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 As used in this Agreement, the following terms have the
following meanings:
"BY-LAWS" shall mean the By-laws of the
Company.
"CERTIFICATE OF INCORPORATION" shall mean the Restated
Certificate of Incorporation of the Company.
"CLOSING" means the closing of the offering of the Shares
pursuant to the Private Placement Memorandum.
"CONTROL," with respect to any person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the owner ship of voting securities, by contract or otherwise.
"INDEPENDENT OPERATOR DIRECTOR" means that director of the
Company elected by the Operator Stockholders in accordance with this Agreement,
the Certificate of Incorporation and the Stockholders' Agreement who is added to
the Board pursuant to Section 5.4 of the Certificate of Incorporation, and any
successor thereto.
<PAGE>
3
"NON-OPERATOR TRANSFEREE" means any transferee of Class A
Common Stock pursuant to a transaction permitted under Section 7.2(b) of this
Agreement.
"OPERATOR" means an independent operator of an auto/truckstop
facility who is an Operator Stockholder or any person who owns or, concurrently
with the purchase of Shares acquires, either (x) a 20% or greater interest in an
auto/truckstop facility having a Franchise or Lease Agreement (as those terms
are defined in the Certificate of Incorporation) with the Company or a
subsidiary of the Company or (y) in the case of an interest in an auto/truckstop
facility held by the transferring Operator Stockholder which, as of the date of
this Agreement, is less than a 20% interest, the whole of such interest.
"OPERATOR AFFILIATE" means, with respect to any Person who is
or was an Operator, (i) any person directly or indirectly controlling,
controlled by or under common control with, such Person who is or was an
Operator, (ii) a person owning or controlling more than 50% of the outstanding
voting securities of such Person who is or was an Operator and (iii) any parent,
spouse, ex-spouse or child (or any trust for the benefit of any parent, spouse,
ex-spouse or child) of any of the foregoing.
"OPERATOR DIRECTORS" means those directors of the Company
elected by the Operator Stockholders in
<PAGE>
4
accordance with this Agreement, the Certificate of Incorporation and the
Stockholders' Agreement, but excluding the Specified Director (as defined in the
Certificate of Incorporation) and the Independent Operator Director.
"PERMITTED TRANSFEREE" means any transferee of Shares or
Voting Trust Certificates pursuant to a trans action permitted under Section
7.2(a) of this Agreement.
"PERSON" means any individual, partnership, corporation, joint
venture, association, joint-stock com pany, trust, unincorporated organization,
union, business association, firm, government or agency or political subdi
vision thereof, or other entity.
"PRIVATE PLACEMENT MEMORANDUM" means the Confidential Private
Placement Memorandum, dated December 12, 1992, as amended, supplemented and
restated, pursuant to which the Company offered the Shares to the Operator
Stockholders.
"RESELLER STOCKHOLDER" means an Operator Stockholder (i) that
beneficially owns or operates or is an Operator Affiliate of a person that owns
or operates an independent marketer/reseller auto/truckstop facility and (ii)
that does not lease and operate or is not an Operator Affiliate of a person that
leases and operates an operator auto/truckstop facility.
<PAGE>
5
"SHARES" means (i) the shares of Class A Common Stock
originally issued to and held by the Voting Trustee hereunder and (ii) all
additional shares of the capital stock of the Company or any successor of the
Company issued to and held by the Voting Trustee pursuant to Arti cle IV or
Article VI.
"STOCKHOLDERS' AGREEMENT" means the Stock holders' Agreement,
dated as of April 14, 1993, as amended, by and among the Company and each of the
stockholders of the Company, substantially in the form attached hereto as
Exhibit A.
"SUBSCRIPTION AGREEMENT" means the subscription agreement
accompanying the Private Placement Memorandum pursuant to which Operator
Stockholders subscribed for the Shares.
1.2 The words "HEREOF," "HEREUNDER" and "HEREIN" and words of like
import, refer to this Agreement as a whole and not solely to any particular
Article or Section hereof. References herein to any "ARTICLE," "EXHIBIT,"
"SCHEDULE" or "SECTION" refer to such article or section of or Exhibit or
Schedule to this Agreement.
<PAGE>
6
1.3 The following terms are defined in the following Sections of
this Agreement:
TERM SECTION
---- -------
Class A Common Stock Recitals
Company Recitals
Director Ballot Section 3.2(b)
Director Determination Date Section 3.2(d)
Director Election Section 3.2(a)
Director Election Notice Section 3.2(b)
Operator Stockholder Recitals
Proposal Section 3.1(a)
Proposal Ballot Section 3.1(c)
Proposal Determination Date Section 3.1(c)
Proposal Notice Section 3.2(c)
Qualified Candidate Section 3.2(c)
Securities Act Section 14.4
Voting Trust Certificate Section 2.2
Voting Trustee Recitals
ARTICLE II
ISSUANCE OF SHARES
2.1 Each of the Operator Stockholders agrees that the Company shall
issue and deliver to the Voting Trustee a certificate or certificates
representing the shares of Class A Common Stock for which such Operator
Stockholder was issued by the Company in connection with that Operator
Stockholder's subscription pursuant to his Subscription Agreement. Such
certificate or certificates shall be issued to and held by the Voting Trustee in
the name of United States Trust Company of New York, as Voting Trustee. Upon
receipt by the Voting Trustee of such certificate or certi ficates, the Voting
Trustee shall hold the Shares, as
<PAGE>
7
stockholder of record, subject to the terms and conditions of this Agreement.
2.2 Promptly after the Closing, the Voting Trustee shall issue or
cause to be issued to each Operator Stockholder, in exchange for the Shares
delivered to the Voting Trustee pursuant to Section 2.1, a Voting Trust
Certificate, substantially in the form of Exhibit B (the "Voting Trust
Certificate"), representing in the aggregate the number of Shares that the
respective Operator Stockholder was issued by the Company in connection with
that Operator Stockholder's subscription pursuant to his Subscription Agreement.
Except as otherwise provided herein (including, without limitation, Article
III), all options, rights of purchase and other powers and privileges affecting
the Shares represented by the Voting Trust Certificates (including, without
limitation, those provided for in the Stockholders' Agreement) shall attach to
the Voting Trust Certificates that represent the Shares.
ARTICLE III
VOTING RIGHTS AND POWERS
3.1 (a) In accordance and only in accordance with the terms of this
Section 3.1, the Operator Stockholders hereby grant the Voting Trustee and the
Voting Trustee shall have full power and authority to vote in person or by proxy
all of the Shares at all meetings of the
<PAGE>
8
stockholders of the Company or to give written consents in lieu of voting such
Shares in respect of any and all matters on which the stockholders of the
Company are entitled or required by statute or otherwise to vote or consent,
other than the election and removal of directors (each, a "Proposal").
(b) Without limiting the generality of Section 3.1(a), the
Voting Trustee shall vote such Shares in accordance and only in accordance with
this Section 3.1 for, or in ratification of, or against, any amendment to the
Amended and Restated Certificate of Incorporation or By-laws of the Company, any
recapitalization, reorganization, increase or reduction of capital or shares,
merger, consolidation, partial or total liquidation, dissolution or any sale or
mortgage of assets, in whole or in part, of the Company.
(c) Upon receipt of notice of any Proposal, the Voting Trustee
shall notify promptly each of the Operator Stockholders of such Proposal (the
"Proposal Notice"). The Proposal Notices shall be prepared by the Company or, in
the case that the Company has not approved the Proposal, by the stockholder
making such Proposal and shall include the text of each Proposal and a ballot
(each, a "Proposal Ballot" and collectively, the "Proposal Ballots"), which
shall also be prepared by the Company, on
<PAGE>
9
which each Operator Stockholder may indicate whether he votes to approve or
disapprove each Proposal. Each Operator Stockholder shall be entitled to that
number of votes on each Proposal as the number of votes to which the Shares
beneficially owned by such Operator Stockholder are entitled. The Proposal
Notice shall request each Operator Stockholder to return the Proposal Ballot to
the Voting Trustee promptly, but in any event such that the Ballot shall be
received not later than twenty days following the date of mailing of the
Proposal Notice (the "Proposal Determination Date").
(d) Within two business days following the Proposal
Determination Date, the Voting Trustee shall review the Proposal Ballots and
tabulate the number of Shares voted to approve or disapprove each Proposal. If
the number of votes to approve a Proposal is greater than fifty percent (50%) of
the total number of possible votes represented by all Shares, then the Voting
Trustee shall vote ALL of the Shares in favor of such Proposal. If the number of
Shares voted to approve a Proposal is less than or equal to fifty percent (50%)
of the total number of Shares, then the Voting Trustee shall vote ALL of the
Shares against such Proposal.
3.2 (a) In accordance and only in accordance with the terms of this
Section 3.2, the Operator Stockholders hereby grant the Voting Trustee and the
Voting
<PAGE>
10
Trustee shall have full power and authority to vote in person or by proxy all of
the Shares at all meetings of the stockholders of the Company or to give written
consents in lieu of voting such Shares in respect of the election of the
Operator Directors or the Independent Operator Director of the Company (the
"Director Election").
(b) Upon receipt of notice of any Director Election, the
Voting Trustee shall notify promptly each of the Operator Stockholders of such
Director Election (the "Director Election Notice"). The Director Election
Notices, which shall be prepared by the Company, shall include a ballot (the
"Director Ballot"), which shall also be prepared by the Company and which shall
contain, among other things, (i) the name of the person nominated by the
existing Operator Directors to fill each Operator Director (or Independent
Operator Director) position to be elected at such meeting or pursuant to such
process, (ii) certain biographical information with respect to each such nominee
provided to the Company by such nominee for the inclusion therein and (iii)
additional space for each Operator Stockholder to write in the name of a person,
other than such nominee, that such Operator Stockholder desires to elect to fill
each such Operator Director (or Independent Operator Director) position.
<PAGE>
11
(c) Any nominee to serve as Operator Director must be an
Operator Stockholder and beneficially own not less than 6,250 shares of Class A
Common Stock (a "Qualified Candidate" with respect to any Operator Director
position) and any nominee to serve as an Independent Operator Director must be a
person who is not (i) an independent auto/truckstop operator which owns its
facilities or which leases or subleases its facilities from the Subsidiary (as
defined in the By-laws of the Company) and who is a party to a Franchise
Agreement, Lease Agreement or a Motor Fuel Purchase Agreement (as such terms are
defined in the By-laws of the Corporation), (ii) an Operator Affiliate or
employee of any such operator, (iii) any person who had previously been an
Operator Director, (iv) an employee of the Corporation or any of its
subsidiaries, or (v) an Affiliate (as defined in the Stockholders' Agreement) of
any of the foregoing (each a "Qualified Candidate" with respect to any
Independent Operator Director position). In addition, if with respect to any
record date for the election of directors one of the director positions to be
filled is that of the "Reseller Director" (who shall be initially Hugh D.
Schmieder and, thereafter, any Operator Director nominated and elected in
accordance with this sentence), and the Reseller Stockholders beneficially own
in the aggregate at least twenty-five percent (25%) of the
<PAGE>
12
Shares, then the Operator Directors will designate a Reseller Stockholder as one
of the individuals nominated and recommended by the Board of Directors to be an
Operator Director and only a Reseller Director shall be a Qualified Candidate
with respect to that position.
(d) Each Operator Stockholder shall be entitled to one vote
for each vacancy on the Board of Directors to be filled in the election for each
vote to which the Shares beneficially owned by such Operator Stockholder are
entitled (but shall not be entitled to cumulative voting). The Director Election
Notice shall request each Operator Stockholder to return the Director Ballot to
the Voting Trustee promptly, but in any event so that the Ballot shall not be
received by the Voting Trustee later than twenty days following the date of
mailing of the Director Election Notice (the "Director Determination Date").
Immediately following the Director Determination Date, the Voting Trustee shall
aggregate the number of votes for each person on the Director Ballots and vote
all Shares in such number and for such persons as indicated on the Director
Ballots so that the Qualified Candidate (or if more than one position is to be
filled at such election, the Qualified Candidates) who receive the most votes
constituting more than 50% of the total votes cast by all Shares voted shall be
elected to the Board of Directors;
<PAGE>
13
provided that if the number of Qualified Candidates receiving over 50% of the
vote is less than the number of Operator Director or Independent Operator
Director positions to be filled in the election, the Voting Trustee shall hold a
run-off between the two Qualified Candidates who receive the most votes under
50% for each position remaining open. The Company shall prepare and deliver to
the Voting Trustee all notices, ballots and other documentation required in
connection with such run-off election.
3.2 (e) Notwithstanding any other provision contained in this
Agreement (and provided, in each case, that the Voting Trustee is first
furnished with security in such amount and kind as it may deem necessary to be
paid for its costs and expenses relating to the actions taken in this Section
3.2(e), including the costs and expenses of its counsel) the Voting Trustee
shall not distribute a Director Election Notice or a Director Election Ballot
and, without further consultation with the Operator Stockholders, (i) upon any
vote held to determine the election or removal of the Specified Director, the
Voting Trustee shall vote all Shares to elect as the Specified Director the
person appointed by the Board of Directors of the Company as Chief Executive
Officer ("CEO") or to remove the Specified Director in the case the Board of
Directors removes such person as CEO, (ii) at the 1994, 1995 and 1996 annual
<PAGE>
14
meetings to reelect the initial Operator Directors, the Voting Trustee shall
vote all Shares represented by the Voting Trust Certificates to reelect Hugh D.
Schmieder at the 1994 annual meeting for one additional one-year term, Bruce D.
Dorbeck at the 1994 and 1995 annual meeting for two additional one-year terms
and Jene Quirin and Ted J. Crew at the 1994, 1995 and 1996 annual meeting for
three additional one-year terms and (iii) in the case of any person elected as
an Operator Director pursuant to Section 3.2(a)-(d) above (except in the case of
an Independent Operator Director), the Voting Trustee shall vote all Shares
represented by the Voting Trust Certificates for the Operator Director's
reelection at each of the next two annual meetings of shareholders of the
Company; PROVIDED, HOWEVER, that notwithstanding clause (ii) and (iii) above,
the Voting Trustee shall act pursuant to Sections 3.2(a)-(d) if any Operator
Director has requested in writing the Voting Trustee not to reelect him or if
that person has resigned, been removed or died or if he is not then a Qualified
Candidate.
3.3 Upon the receipt of written notice signed by the beneficial
holders of a majority of the Shares repre sented by the then outstanding Voting
Trust Certificates to remove, with or without cause, any Operator Director as a
director of the Company, the Voting Trustee shall take any
<PAGE>
15
and all action necessary to remove such Operator Director as a director of the
Company, provided that the Voting Trustee is first furnished with security in
such amount and kind as it may deem necessary to be paid for its costs and
expenses relating thereto, including the costs and expenses of its counsel.
Absent such notice, the Voting Trustee shall not have the power or authority to
remove, with or without cause, any Operator Director as a director of the
Company. In the event of any vacancy of any Operator Director or any Independent
Operator Director, as a result of a removal, resignation or otherwise, the
Voting Trustee shall take any and all action necessary in accordance with this
Agreement to elect a person to fill such position pursuant to Section 3.2(a)-(d)
for the remainder of the term (including the remainder additional terms pursuant
to Section 3.2(e)) of the Operator Director or Independent Operator Director
being replaced.
3.4 Each Operator Stockholder shall be bound by any vote or consent
of the Voting Trustee made in accordance with this Agreement as if made by such
Operator Stockholder directly.
3.5 The Voting Trustee's power to vote the Shares and give consents
in respect thereof pursuant to this Agreement shall be irrevocable for the term
of this Agree ment. The Voting Trustee may exercise any power or perform
<PAGE>
16
any act hereunder by an agent or attorney duly authorized and appointed by it.
3.6 Any record date that shall be fixed by the Company for any
purpose shall be deemed to be the record date fixed by the Voting Trustee as the
record date for the purpose of determining which holders of Voting Trust Certi
ficates are entitled to take any action or receive any right, payment or
dividend pursuant to this Agreement.
ARTICLE IV
RECEIPT OF ADDITIONAL STOCK CERTIFICATES
4.1 In the event that the Voting Trustee shall receive any shares of
the capital stock having voting rights or securities convertible or exchangeable
for voting stock or warrants to purchase voting stock (such shares, securities
and warrants collectively referred to as "Shares") of the Company or any
successor of the Company issued by way of dividend, split-up, recapitalization,
reorganization, merger, consolidation or any other change or adjustment in
respect of the Shares held by it pursuant to this Agreement, the Voting Trustee
shall hold the certificates representing such Shares, subject to the terms of
this Agreement and shall issue, or cause to be issued, Voting Trust Certificates
representing such Shares to the respective registered holders of each Voting
Trust Certificate outstanding at the close of business on the
<PAGE>
17
record date fixed for determining the persons entitled to any such Shares in
proportion to their respective interests.
4.2 Any stock or securities of the Company or any successor of the
Company issued to the Voting Trustee that are not Shares shall be delivered to
the respective registered holders of each Voting Trust Certificate outstanding
at the close of business on the record date fixed for determining the persons
entitled to any such shares in proportion to their respective interests.
ARTICLE V
DIVIDENDS AND DISTRIBUTIONS
5.1 All dividends and other distributions paid in cash or property
(other than Shares) on any Shares, less the amount of any taxes or other
governmental charges that are borne by the Voting Trustee in connection
therewith, shall be paid by the Voting Trustee to the registered holders of
Voting Trust Certificates in proportion to their respective interests.
5.2 The Voting Trustee may in its discretion, from time to time,
instead of receiving and distributing such dividends and distributions described
in Section 4.2 and 5.1 of this Agreement, authorize the Company (or, if the
Voting Trustee at any time holds hereunder any stock other than capital stock of
the Company, it may authorize the corporation declaring such dividends or
distributions) to
<PAGE>
18
make payment thereof directly to the registered holders of Voting Trust
Certificates, as if such registered holders were owners of record of the Shares
represented by their Voting Trust Certificates.
ARTICLE VI
SUBSCRIPTION FOR ADDITIONAL SECURITIES OF THE COMPANY
6.1 In case any shares or other securities of the Company are
offered for subscription to the Voting Trustee as the record owner of the
Shares, promptly upon receipt of notice of such offer, the Company shall prepare
the notices of such offer to the holders of the Voting Trust Certificates and
the Voting Trustee shall deliver such notice to each holder of Voting Trust
Certificates. Upon receipt by the Voting Trustee, but not later than two
business days prior to the last day fixed by the Company for subscription and
payment, of a request so to subscribe from such holder accompanied by the
requisite sum of money and appropriate form required to subscribe for such
shares or securities, the Voting Trustee shall deliver, or cause to be
delivered, such subscription and payment. If any of the shares or other
securities are not subscribed to by any holder of a Voting Trust Certificate,
the Voting Trustee shall, upon request from one or more other holders of a
Voting Trust Certificate accompanied by the requisite amount of money and
appropriate form, deliver or cause to be
<PAGE>
19
delivered the subscription and payment in the name of such other holders;
PROVIDED that, if the other holders shall have requested to subscribe to more
than the numbers of shares or securities that were not subscribed to by the
original offerees, such requests shall be allocated and filled PRO RATA in
proportion to the number of Shares owned by the requesting holder.
6.2 If the shares or other securities subscribed for pursuant to
Section 6.1 are Shares of the Company, the certificates therefor shall be issued
to and held by the Voting Trustee, as stockholder of record, subject to the
terms and conditions of this Agreement, and the Voting Trustee shall issue or
cause to be issued to the subscribing holder a Voting Trust Certificate in
respect thereof. If the Shares or other securities so subscribed for are not
Shares of the Company, the certificates therefor shall be issued to the
subscribing holder and the Voting Trustee shall mail or deliver such
certificates, or cause them to be mailed and delivered, to such holder.
ARTICLE VII
TRANSFER
7.1 The right, title and interest in and to any Voting Trust
Certificate issued hereunder and the Shares represented thereby shall be
transferable only (i) as provided in this Article and in Section 14.4 hereof and
<PAGE>
20
(ii) on the register of the Voting Trustee, to be kept at the offices of the
Voting Trustee, upon surrender of any such Voting Trust Certificate properly
endorsed and stamped for transfer, in accordance with rules and regulations that
the Voting Trustee may from time to time make, by the registered holder thereof
in person or by attorney duly authorized. The Voting Trustee shall not be
obligated to recognize any person as the owner of any Voting Trust Certificate
issued hereunder other than the person in whose name such certificate shall be
registered on the register of the Voting Trustee.
7.2 Neither the Voting Trust Certificates nor the Shares represented
by the Voting Trust Certificates shall, either directly or indirectly, be
transferred, sold, assigned, mortgaged, hypothecated, pledged, encumbered,
given, placed in trust, or otherwise voluntarily or involuntarily disposed of
(such action collectively referred to in this section by the verb "transfer" in
its appropriate form) by the Operator Stockholder holding such Voting Trust
Certificates or Shares except that:
(a) subject to Section 7.3 hereof, any Operator Stockholder may,
directly or indirectly, transfer his Voting Trust Certificates
(and his interest in Shares represented thereby) to (i) any
Operator Affiliate thereof or (ii) any other Operator or
Operator Affiliate which does not (and immediately following
the transfer will not), together with its affiliates, own more
than a percentage equal to a fraction, the numerator of which
is
<PAGE>
21
62,500 and the denominator of which is the aggregate number of
shares of Class A Common Stock outstanding on the date hereof
of the outstanding shares of the Company on a fully diluted
basis (each such transferee a "Permitted Transferee");
(b) subject to Section 7.3 hereof, any Operator Stockholder as of
the date of this Agreement (together with his Operator
Affiliates) may, directly or indirectly, transfer his Voting
Trust Certificates (and his interest in Shares represented
thereby) to any person other than a Permitted Transferee
provided (i) that person does not (and immediately following
the transfer will not), together with its affiliates,
beneficially own more than a percentage equal to a fraction,
the numerator of which is 62,500 and the denominator of which
is the aggregate number of shares of Class A Common Stock
outstanding on the date hereof of the outstanding shares of
the Company on a fully diluted basis and (ii) such Operator
Stockholder (collectively with his Operator Affiliates) has
not, in one or more transactions, whether or not related,
transferred a number of shares of Class A Common Stock in
excess of 35% of the number of Class A Common Stock held by
such Operator Shareholder as of the date of this Agreement to
transferees who are not Permitted Transferees (each such
transferee a "Non- Operator Transferee"); PROVIDED, HOWEVER,
that no transfers may be made to a Non- Operator Transferee
if, as a result thereof, there would be a Specified Reduction
(as defined in the Certificate of Incorporation); and
(c) notwithstanding anything contained in Section 7.3 hereof,
Voting Trust Certificates and Shares held by Non-Operator
Transferees may be transferred without regard for the
restrictions contained in Section 7.2(b)(ii).
The Voting Trustee shall not be required to give effect to any
transfer of the Voting Trust Certificates or the Shares unless it receives a
certificate (a copy of which
<PAGE>
22
certificate the transferor of Voting Trust Certificates shall forward to the
Company) and upon which certificate the Voting Trustee is entitled to rely,
signed by the transferee certifying (i) the name and address of the transferee,
(ii) whether such transferee is a Permitted Transferee or a Non-Operator
Transferee and an explanation of how the transferee falls within the definition
of Permitted Transferee or Non-Operator Transferee, (iii) whether or not such
transferee is a Reseller Stockholder and (iv) whether the transferor is an
Operator or former Operator.
7.3 As a condition to any transfer permitted pursuant to this
Article, each transferee that is not a party hereto shall, prior to such
transfer, agree in writing to be bound by all of the provisions of this
Agreement applicable to the transferor (except as provided in Section 7.2(c))
and no such transferee shall be permitted to make any transfer other than in
accordance with the terms of this Agreement. Except as otherwise provided
herein, each transferee shall be entitled to the rights and privileges provided
hereunder applicable to the transferred Voting Trust Certificates or Shares
represented thereby, as the case may be, including the right to transfer such
Voting Rights Certificates or Shares represented thereby, as the case may be,
and shall be subject to all of the obligations with respect to such Voting Trust
Certificates or Shares
<PAGE>
23
represented thereby, as the case may be, to the extent of the original
transferor under this Agreement.
7.4 Notwithstanding anything else contained in this Agreement, any
transfer is void and of no effect unless made in compliance with this Article 7.
ARTICLE VIII
COMPENSATION; EXPENSES
Compensation for the services of the Voting Trustee shall be paid by
the Company, and the Voting Trustee shall be entitled to reimbursement by the
Company for reasonable expenses and charges that may be incurred as Voting
Trustee, including but not limited to, the employment of such agents, attorneys
and counsel as the Voting Trustee may deem necessary and proper for the carrying
out of this Agreement, and all taxes or other governmental charges incurred in
connection with the initial transfer or issuance of any Shares or Voting Trust
Certificates to the Operator Stockholders who are Operator Stockholders as of
the date hereof.
ARTICLE IX
EXCULPATION; INDEMNIFICATION OF VOTING TRUSTEE
The Voting Trustee shall not be liable by reason of any matter
arising out of or in relation to this Agree ment, except for such loss or damage
as the holders of the
<PAGE>
24
Voting Trust Certificates may suffer by reason of the Voting Trustee's gross
negligence or willful misconduct. The Voting Trustee shall be entitled to rely
on information and documents furnished to it by the Company and on certificates
furnished by Operating Stockholders, prospective transferees and candidates for
election as director, as to their qualifications, status or actions hereunder.
The Voting Trustee shall be indemnified and held harmless by the Company from
and against any and all liabilities, costs, claims, suits and proceedings
(including reasonable attorneys' fees) (collectively, "Expense") arising out of
any accusation, allegation, complaint, claim, demand, investigation, cause of
action made or brought against the Voting Trustee or any compulsory process to
which the Voting Trustee is subject in connection with the Voting Trustee's
actions or inaction under this Agreement, except for any Expense resulting from
or arising out of such Voting Trustee's gross negligence or willful misconduct.
ARTICLE X
APPOINTMENT OF CUSTODIAN; SUCCESSOR VOTING TRUSTEE;
QUALIFICATIONS OF VOTING TRUSTEE
10.1 The Voting Trustee may designate a custodian to act for and on
behalf of the Voting Trustee hereunder. If a custodian is designated by the
Voting Trustee, such person shall be empowered, at the direction of the Voting
<PAGE>
25
Trustee acting in any manner consistent with this Agreement, to deal with the
Shares and the Voting Trust Certificates on the Voting Trustee's behalf as if
the custodian were the Voting Trustee, and the custodian's actions taken in
accor dance with the Voting Trustee's instructions consistent with this
Agreement shall be deemed to be those of the Voting Trustee.
10.2 In the event that the Voting Trustee, for any reason, shall be
removed by a vote of the beneficial holders of a majority of the votes
represented by all of the Shares or shall fail or be unable to continue to serve
as voting trustee, whether by reason of its resignation or otherwise, a
successor voting trustee shall be elected by the beneficial holders of a
majority vote of the Shares represented by the then outstanding Voting Trust
Certificates, or in the event such holders are unable to agree on a successor
voting trustee, by majority vote of the Operating Directors or, if they are
unable to agree, by the Chief Executive Officer of the Company; PROVIDED,
HOWEVER, that no vote to remove a Voting Trust shall be effective until a new
Voting Trustee has been elected and no resignation shall be effective until the
earlier of (x) the election of a new Voting Trustee or (y) 30 days after the
resigning Voting Trustee gives notice of such resignation. The rights, powers,
privileges and obligations of the Voting
<PAGE>
26
Trustee named hereunder shall be possessed by any successor voting trustee with
the same effect as though such successor had originally been a party to this
Agreement. The words "Voting Trustee" as used in this Agreement shall mean the
Voting Trustee or any successor voting trustee acting hereunder.
10.3 Nothing herein contained shall disqualify the Voting Trustee or
successor voting trustee from serving in such capacity if it does any of the
following, nor shall anyone serving in such capacity be incapacitated from doing
any of the following: (i) dealing or contracting with the Company or any of its
affiliates, either as a franchisee, vendor, purchaser or otherwise, nor shall
any transaction or contract be affected or invalidated by reason of the fact
that the Voting Trustee or any person affiliated with the Voting Trustee is in
any way interested in such transaction or contract; nor shall the Voting Trustee
be liable to account to the Company or to any stockholder thereof for any
profits realized by, from or through any transaction or contract by reason of
the fact that the Voting Trustee or any firm or corporation affiliated with the
Voting Trustee is interested in such transaction or contract; or (ii) ser ving
the Company or any of its affiliates as an officer or director, or in any other
capacity, and receiving compensa tion therefor.
<PAGE>
27
10.4 The Voting Trustee may be a party to this Agreement as an
Operator Stockholder, and, to the extent of the Shares of which it is the
beneficial owner, the Voting Trustee shall in all respects be entitled to the
same rights and benefits hereunder as other Operator Stockholders that are
parties hereto. The Voting Trustee shall be entitled to be a holder of capital
stock or other securities of the Company or otherwise interested in the purchase
or sale of such stock or other securities or any property owned by the Company
or in which the Company has or may have any inter est.
ARTICLE XI
TERMINATION
11.1 This Agreement and the voting trust created hereby shall be
effective and remain in full force and effect until the occurrence of the
earliest of the following events:
(a) the tenth anniversary of the date of this Agreement
PROVIDED, HOWEVER, that prior to such tenth anniversary, Operator Stockholders,
other than Non-Operator Transferees, owning in the aggregate at least 65% of the
Shares may agree (together with, if one or more Non-Operator Transferees so
elects, Non-Operator Transferees) in a supplement to this Agreement to extend
this Agreement and the Voting Trust for an additional period of not more than
<PAGE>
28
ten years, in which event this Agreement and the Voting Trust shall not then
terminate, but any Shares as to which the owner has not agreed to remain subject
to this Agreement shall be deemed not to be subject to such extended Agreement
and, upon surrender to the Voting Trustee of the Voting Trust Certificates, such
Voting Trust Certificates shall be cancelled and the certificates representing
such Shares shall be delivered to such owners; or
(b) upon the vote of the Operator Stock holders who
beneficially own more than seventy-five percent (75%) of the total number of
votes represented by all outstanding Shares.
11.2 Upon the termination of this Agreement, the Voting Trustee
shall (a) promptly cause any and all certifi cates for Shares and other Shares
issued to the Voting Trustee to be canceled and (b) in exchange for, and upon
the surrender of, the Voting Trust Certificates representing such Shares or
other Shares, deliver or cause to be delivered stock certificates to the holder
of such Voting Trust Certificates in accordance with the instructions of the
registered holders of such Voting Trust Certificates.
11.3 The death, disability or incompetency of a holder of a Voting
Trust Certificate during the term of this Agreement shall in no way affect the
validity or enforce ability of this Agreement or the Voting Trust Certificates
<PAGE>
29
issued pursuant hereto, which shall remain in full force and effect.
11.4 If the Company shall acquire any Voting Trust Certificates, the
Company may thereupon, at its option, deliver such Voting Trust Certificates to
the Voting Trustee and shall receive in exchange the Class A Common Stock or
other securities represented by such Voting Trust Certificates. Upon such
exchange the Voting Trust Certifi cates so delivered shall be canceled. Any
Voting Trust Certificates held by the Company shall not be deemed to be
outstanding.
ARTICLE XII
PERMITTED AND NON-OPERATOR TRANSFEREES
The parties hereto agree that upon execution of a counterpart of
this Agreement, a Permitted Transferee or a Non-Operator Transferee shall become
a party hereto and be deemed to be an Operator Stockholder for all purposes
herein as if such Permitted Transferee or Non-Operator Transferee had originally
executed this Agreement, and this Agreement shall continue to remain in full
force and effect.
<PAGE>
30
ARTICLE XIII
POWER OF ATTORNEY
13.1 Each of the Operator Stockholders hereby irrevocably
constitutes and appoints the Voting Trustee, singly and with full power of
substitution, his true and lawful attorney-in-fact, and empowers and authorizes
such attorney in his name, place and stead to make, execute and deliver,
acknowledge, swear to, file and record in all necessary or appropriate places
(a) the Stockholders' Agree ment substantially in the form attached hereto and
any amendments thereto, (b) any amendments to this Agreement adopted in
accordance with the terms hereof (including, but not limited to, the admission
of Permitted Transferees and Non-Operator Transferees as parties to this
Agreement and the Stockholders' Agreement) and (c) such documents as may be
necessary or appropriate to carry out the intent and purposes of this Agreement
and the Stockholders' Agreement.
13.2 The foregoing grant of authority (a) is a special power of
attorney coupled with an interest in favor of the Voting Trustee and as such
shall be irrevocable and shall survive an Operator Stockholder's death,
incompetence or incapacity (or, if the Operator Stockholder is a cor poration,
association, partnership, joint venture or trust, shall survive the merger,
dissolution or other termination of the existence of the Operator Stockholder);
(b) may be
<PAGE>
31
exercised for an Operator Stockholder by a facsimile signa ture of the Voting
Trustee or by listing all of the Operator Stockholders and executing any
instrument with a single signature of the Voting Trustee acting as
attorney-in-fact for all of them; and (c) shall survive the assignment by any
Operator Stockholder of the whole or any portion of his interest in the Shares
or the Voting Trust Certificates representing such Shares.
13.3 Each Operator Stockholder hereby agrees to be bound by all of
the actions and representations of the Voting Trustee as attorney-in-fact and to
waive any and all defenses that may be available to him to contest, negate or
disaffirm the actions of any of the Voting Trustee or its successors under this
power of attorney, and each Operator Stockholder hereby ratifies and confirms
all acts that such attorney-in-fact may take as attorney-in-fact hereunder in
all respects as though performed by such Operator Stock holder.
ARTICLE XIV
MISCELLANEOUS
14.1 LOST, STOLEN OR DESTROYED CERTIFICATES. Upon notice by the
holder of any Voting Trust Certificate of any loss, theft or destruction of such
certificate, the Voting Trustee may, in its discretion, cause a new certifi cate
or certificates to be issued to such holder in respect
<PAGE>
32
of the same number of Shares, upon satisfactory proof of such loss, theft or
destruction, and, in the discretion of the Voting Trustee, upon the deposit of a
bond in such form, content and amount and with sureties as the Voting Trustee
may require.
14.2 FILING OF AGREEMENT WITH THE COMPANY; AVAIL ABILITY FOR
INSPECTION BY OPERATOR STOCKHOLDERS. Executed copies of this Agreement, as
amended or supplemented, shall be filed by the Company in the principal office
of the Company and in the registered office of the Company in the State of
Delaware and shall be open to the reasonable inspection of any Operator
Stockholder or beneficiary of the trust under this Agreement, during daily
business hours, in accordance with the provisions of the General Corporation Law
of the State of Delaware.
14.3 TRANSFER RESTRICTIONS IN STOCKHOLDERS' AGREEMENT. Each Operator
Stockholder hereby acknowledges and agrees that the transfer of both the Shares
and the Voting Trust Certificates is restricted by the terms of this Agreement
and the Stockholders' Agreement.
14.4 COMPLIANCE WITH SECURITIES LAWS. The Voting Trustee and each
Operator Stockholder hereby acknowledges and agrees that the Voting Trust
Certificates have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any applicable state securities laws
<PAGE>
33
and, therefore, cannot be sold unless subsequently regis tered under the
Securities Act and any applicable state securities laws or unless an exemption
from such registra tion is available. Notwithstanding anything to the contrary
contained herein, the Company or the Voting Trustee or both of them may require,
as a condition precedent to any transfer of Voting Trust Certificates permitted
pursuant to this Agreement and the Stockholders' Agreement, the delivery by the
transferor of an opinion of counsel, reasonably satisfactory to the Company or
the Voting Trustee, as the case may be, to the effect that such transfer is
permitted under the Securities Act and any applicable state securities laws.
14.5 NOTICE. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be made by
hand delivery, first-class mail (registered or certified, return receipt
requested), telex, telecopier, or overnight air courier guaranteeing next day
delivery: (a) in the case of the Company, to National Auto/Truckstops Holdings
Corporation, 1650 East Golf Road, Schaumburg, Illinois 60196-1088 (Atten tion:
Chief Financial Officer), (b) in the case of the Voting Trustee, to 114 West
47th Street, New York, NY 10036 (Attention: Corporate Trust), and (c) in the
case of any Operator Stockholder, to the address designated for corre spondence
in such Operator Stockholder's Subscription Agree ment (or to such other address
as may be designated by such party by notice to the Company and the Voting
Trustee pursuant to this Section 14.5). Except as otherwise provided in this
Agreement, each such notice shall be deemed given at the time delivered by hand,
if personally deliv ered; five business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next business day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
14.6 AMENDMENT. No amendment of any provision of this Agreement
shall be valid unless (a) signed in writing signed by the Voting Trustee and (b)
upon the vote of (i) the Operator Stockholders who beneficially own more than
fifty percent (50%) of the votes represented by the then outstanding Shares;
PROVIDED, HOWEVER, that no amendment, modification or waiver of any material
provision of this Agreement shall be valid or effective except upon a vote
approving such amendment by the holders of preferred stock of the Company (and
the holders of the Class B Common Stock of the Company issued upon conversion of
such preferred stock) who beneficially own more than 50% of such outstanding
shares of stock. For purposes of the foregoing, (i) material provisions of this
Agreement shall include, but
<PAGE>
34
shall not be limited to, the provisions of Sections 2.1, 3.1 (other than any
reduction of the 20-day period referred to therein), 3.2(a), 3.4, 3.5, 4.1, 6.2,
Article VIII, Article IX, Article XIII, Section 14.6 and Section 14.14 (and the
related definitions contained in Article I) and (ii) the provisions of Article
VII shall not be deemed to be a material provision of the Agreement.
Notwithstanding the foregoing, in no case will the consent of the Company be
required and no consent of any party hereto will be required in connection with
any amendment hereof to add any person as an Operator Stockholder.
14.7 WAIVER. No failure or delay on the part of the Voting Trustee
or the Operator Stockholders or any of them in exercising any right, power or
privilege hereunder, and no course of dealing among the Company, the Voting
Trustee and the Operator Stockholders or any of them shall operate as a waiver
thereof nor shall any single or partial exercise of any right, power or
privilege hereunder preclude the simultaneous or later exercise of any other
right, power or privilege. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights and remedies that the Voting Trustee
or the Operator Stock holders or any of them would otherwise have. No notice to
or demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar
<PAGE>
35
or other circumstances or constitute a waiver of the rights of the Voting
Trustee or the Operator Stockholders or any of them to take any other or further
action in any circum stances without notice or demand.
14.8 BENEFIT AND BINDING EFFECT. This Agreement shall be binding
upon and shall inure to the benefit of the Company, the Voting Trustee and their
respective successors and assigns, and each of the Operator Stockholders, and
their respective executors, administrators and personal representatives and
heirs and assigns. The acceptance by any Operator Stockholder of a Voting Trust
Certificate shall bind him and his representatives and assigns as a party to
this Agreement to the same extent as if such representatives and assigns had
executed a copy of this Agreement as one of the original Operator Stockholders,
and, if at any time requested by the Voting Trustee, any such representative or
assign shall execute a copy of this Agreement.
14.9 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect of the subject matter hereof
and supersedes all prior agree ments, discussions and understandings.
14.10 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited
<PAGE>
36
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
14.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
14.12 VARIATIONS OF PRONOUNS. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, single or plural, as the
context may require.
14.13 COUNTERPARTS. This Agreement may be exe cuted in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
14.14 THIRD-PARTY BENEFICIARIES. Nothing in this Agreement shall be
deemed to cause any right in any party not a person hereto and this instrument
shall not be construed in any respect to be a contract in whole or in part for
the benefit of any third party, except that the holders of the Class B Common
Stock, the Convertible Preferred Stock, Series I and the Convertible Preferred
Stock, Series II of the Company shall be considered third-party beneficiaries of
this Agreement and shall be able to enforce the same as if parties hereto.
<PAGE>
37
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.
NATIONAL AUTO/TRUCKSTOPS HOLDINGS
CORPORATION
By: /s/ James Bauchiero
--------------------------------
Name: James Bauchiero
Title: Assistant Secretary
UNITED STATES TRUST COMPANY
OF NEW YORK, as Voting Trustee
By: /s/ Robert E. Patterson III
--------------------------------
Name: Robert E. Patterson III
Title: Assistant Vice President
EXHIBIT 9.2
AMENDMENT NO. 1 TO THE
VOTING TRUST AGREEMENT
----------------------
Amendment No. 1, dated as of November 29, 1993, to the Voting Trust
Agreement, dated as of April 14, 1993 (the "Voting Trust Agreement"), by and
among National Auto/ Truckstops Holdings Corporation (the "Company"), United
States Trust Company of New York in its capacity as the Voting Trustee (the
"Voting Trustee") and the Operator Stockholders who are parties thereto (the
"Operator Stockholders," and each an "Operator Stockholder"). Capitalized terms
used herein but not otherwise defined have the respective meanings ascribed to
such terms in the Voting Trust Agreement.
WHEREAS, pursuant to Section 14.6 of the Voting Trust Agreement, the
Company, the Voting Trustee and the Operator Stockholders who are parties hereto
and who benefi cially own in the aggregate more than 50% of the votes
represented by the outstanding Shares desire to amend the Voting Trust Agreement
as set forth herein; and
WHEREAS, the beneficial owners of more than 50% of the outstanding
shares of the preferred stock of the Company (and the holders of the Class B
Common Stock, if any, issued upon conversion of such preferred stock), have
consented to this Amendment No. 1 pursuant to the proviso to the first sentence
of such Section 14.6.
NOW, THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
2
1. AMENDMENT OF SECTION 3.1(C).
Section 3.1(c) of the Voting Trust Agreement is hereby amended by
deleting in its entirety the last sentence of Section 3.1(c) and substituting in
lieu thereof the following:
Except as otherwise provided in paragraph (e) of this Section
3.1, the Proposal Notice shall request each Operator Stockholder to return
the Proposal Ballot to the Voting Trustee promptly, but in any event such
that the Ballot shall be received not later than twenty days (such time
period being hereinafter referred to as the "Response Period") following
the date of mailing of the Proposal Notice (the date by which Ballots are
required to be received by the Voting Trustee herein after referred to as
"Proposal Determination Date").
2. AMENDMENT OF SECTION 3.1.
Section 3.1 of the Voting Trust Agreement is hereby amended by
inserting after paragraph (d) thereof the following new paragraph (e) of Section
3.1:
(e) Subject to the next sentence, the Proposal Determination
Date with respect to the Revised TA Proposal (as such term is defined in
the Consent Solicitation of the Company dated November 23, 1993, as
amended from time to time (the "Consent Solicitation")) made by the
Company in connection with the TA Acquisition (as such term is defined in
the Consent Solicitation), shall be November 30, 1993. The Board of
Directors of the Company may, from time to time, by a document signed in
writing by the Requisite Directors (as hereafter defined), determine the
Response Period (which may be more or less than twenty days) and the
corresponding Proposal Determination Date with respect to any Proposal or
amendment or supplement thereof relating to the TA Acquisition. "Requisite
Directors" means directors of the Company consisting of both a two-thirds
majority of the Board of Directors of the Company and a majority of the
Operator Directors.
<PAGE>
3
3. AMENDMENT OF SECTION 14.6.
Section 14.6 of the Voting Trust Agreement is hereby amended
by deleting the first sentence of Section 14.6 and replacing it with the
following:
No amendment of any provision of this Agreement shall be valid
unless (a) signed in writing by the Voting Trustee and (b) upon the
consent of the Operator Stockholders who beneficially own more than 50
percent (50%) of the votes represented by the then outstanding Shares;
PROVIDED, HOWEVER, that no amendment, modification or waiver of any
material provision of this Agreement shall be valid or effective except
upon a consent approving such amendment by the holders of Convertible
Preferred Stock, Series I, par value $.01 per share ("Series I Convertible
Preferred Stock"), of the Company (and the holders of the Class B Common
Stock of the Company issued upon conversion of the Series I Convertible
Preferred Stock) who beneficially own more than 50 percent (50%) of such
outstanding shares of stock.
4. COUNTERPARTS.
This Amendment No. 1 may be executed in counter parts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
4
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 as of the day and year first above-written.
NATIONAL AUTO/TRUCKSTOPS HOLDINGS
CORPORATION
By:
--------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW
YORK, AS VOTING TRUSTEE
By: /s/ Robert E. Patterson
--------------------------------
Name: Robert E. Patterson
Title: Assistant Vice President
EXHIBIT 9.3
AMENDMENT NO. 2 TO VOTING TRUST AGREEMENT
Amendment No. 2 dated as of March 6, 1997 (the "Amendment") to the
Voting Trust Agreement, dated as of April 14, 1993, as amended by Amendment No.
1 dated as of November 29, 1993 (the "Voting Trust Agreement"), by and among
Travel Centers of America, Inc., formerly National Auto/Truckstops Holdings
Corporation, a Delaware corporation (the "Company"), United States Trust Company
of New York in its capacity as the voting Trustee (the "Voting Trustee") and the
Operator Stockholders who are parties thereto (the "Operator Stockholders," and
each an "Operator Stockholder"). Capitalized terms used herein but not otherwise
defined have the respective meanings ascribed to such terms in the Voting Trust
Agreement.
WHEREAS, pursuant to Section 14.6 of the Voting Trust Agreement, the
Company, the Voting Trustee and the Operator Stockholders who are parties hereto
and who beneficially own in the aggregate more than 50% of the votes represented
by the outstanding Shares desire to amend the Voting Trust Agreement as set
forth herein;
WHEREAS, the beneficial owners of more than 50% of the outstanding
shares of the Convertible Preferred Stock, Series I of the Company (and the
holders of the Class B Common Stock, if any, issued upon conversion of such
preferred stock), have consented to this Amendment No. 2 pursuant to the proviso
to the first sentence of such Section 14.6; and
WHEREAS, the Board of Directors of the Company, subject to
stockholder approval, has declared it beneficial and advisable that the Company
effect certain changes to its capital structure and governance set forth in
resolutions enacted by the Board of Directors of the Company on January 20 and
21, 1997 including changing the Company's name from National Auto/Truckstops
Holdings Corporation to TravelCenters of America, Inc. and the conversion and
reclassification of Class A Common Stock and Class B Common Stock into "Common
Stock";
NOW, THEREFORE, the parties hereto agree as follows:
1. RECLASSIFICATION.
All references in the Voting Trust Agreement to Class A Common
Stock or Class B Common Stock are hereby amended to refer to "Common Stock."
2. AMENDMENT OF ARTICLE I.
(a) Article I of the Voting Trust Agreement is hereby amended by
inserting, before the definition of "control," the following:
"Common Stock" means shares of Common Stock of the Company,
par value $.01 per share.
<PAGE>
(b) The definition of "Shares" is hereby amended by deleting such
definition and substituting in lieu thereof the following:
"Shares" means (i) the shares of Class A Common Stock
originally issued to and held by the Voting Trustee hereunder and
(ii) all additional shares of the capital stock of the Company or
any successor of the Company issued to and held by the Voting
Trustee pursuant to Article IV or Article VI, including, without
limitation, shares of Common Stock.
(c) All defined terms that are no longer referred to after giving
effect to this Amendment are hereby deleted.
3. AMENDMENT OF SECTION 3.1.
Section 3.1(a) of the Voting Trust Agreement, is hereby amended by
deleting such section in its entirety and substituting in lieu thereof the
following:
3.1 (a) In accordance and only in accordance with the
terms of this Section 3.1, the Operator Stockholders hereby grant
the Voting Trustee, and the Voting Trustee shall have, full power
and authority to vote in person or by proxy all of the Shares at all
meetings of the stockholders of the Company or to give written
consents in lieu of voting such Shares in respect of any and all
matters on which the stockholders of the Company are entitled or
required by statute or otherwise to vote or consent and to approve,
as necessary, all actions under or relating to the Stockholders'
Agreement which the Voting Trustee is authorized to take pursuant to
the power of attorney set forth in Article XIII of this Agreement
(each, a "Proposal").
4. DELETION OF SECTION 3.2.
Section 3.2, detailing procedures for the election of directors, is
hereby deleted in its entirety, and the number of such section reserved.
5. AMENDMENT OF SECTION 3.3.
Section 3.3 of the Voting Trust Agreement, authorizing the Operator
Stockholders to instruct the Voting Trustee to remove a director or fill a
directorship for a partial term, is hereby amended by changing all references to
"Operator Director" to "Director," eliminating the phrases "or any Independent
Operator Director" and "or Independent Operator Director," changing the
reference to "Section 3.2(a)-(d)" to "Section 3.1." and eliminating the
parenthetical reference to section 3.2(e).
6. ADDITION OF SECTION 4.3.
The following is hereby inserted as Section 4.3 of the Voting Trust
Agreement:
The parties acknowledge that the shares of Common Stock
issuable upon the reclassification of the Class A Common Stock
<PAGE>
into Common Stock constitute "Shares" for all purposes of this
Agreement, including, without limitation, Section 4.1.
7. AMENDMENT OF SECTION 7.1.
Section 7.1 of the Voting Trust Agreement is hereby amended by
adding the following to the end thereof:
Nothing in this Agreement shall restrict any transfer of Voting
Trust Certificates or Shares to the Company or its subsidiaries, or
the redemption or repurchase of Shares by the Company, and the
Company shall retire or hold as treasury stock all Shares
represented by each Voting Trust Certificate that has been or shall
hereafter be repurchased or redeemed by the Company, and such Voting
Trust Certificates repurchased or redeemed by the Company shall be
canceled.
8. AMENDMENT OF SECTION 11.1(B).
Section 11.1(b) of the Voting Trust Agreement, describing conditions
for the termination of the Voting Trust Agreement, is hereby amended by adding
to the end thereof the following: "; provided, however, that the Company
consents to termination of this Agreement in this manner."
9. AMENDMENT OF SECTION 14.6.
The first sentence of Section 14.6 of the Voting Trust Agreement, is
hereby amended to read as follows:
No amendment of any provision of this Agreement shall be valid
unless (a) signed in writing by the Voting Trustee and (b) upon the
vote of (i) the Operator Stockholders who beneficially own more than
fifty percent (50%) of the votes represented by the then outstanding
Shares; PROVIDED, HOWEVER, that no amendment, modification or waiver
of any material provision of this Agreement shall be valid or
effective except upon a vote approving such amendment by the holders
of Convertible Preferred Stock, Series I ("Series I Preferred
Stock") of the Company (and the holders of Common Stock of the
Company issued upon conversions of the Series I Preferred Stock) who
beneficially own more than 50% of such outstanding shares of stock;
FURTHER PROVIDED, that no amendment to any provision of this
Agreement may be made respecting transfer of Voting Trust
Certificates without the consent of the Company.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.
TRAVELCENTERS OF AMERICA, INC.
By: /s/ James W. George
------------------------------
Name: James W. George
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
UNITED STATES TRUST COMPANY
OF NEW YORK, as Voting Trustee
By: /s/ Margaret M. Ciesmelewski
------------------------------
Name: Margaret M. Ciesmelewski
Title: Assistant Vice President
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
dated as of
November 23, 1992
between
NATIONAL AUTO/TRUCKSTOPS, INC.
and
UNION OIL COMPANY OF CALIFORNIA
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................... 1
1.1 Definitions............................................... 1
ARTICLE II TRANSFER OF ASSETS....................................... 7
2.2 Excluded Assets........................................... 11
2.3 Assumption of Liabilities................................. 12
2.4 Assignment of Contracts and Rights........................ 14
2.5 Purchase Price for Acquisition Assets..................... 15
2.6 Closing................................................... 15
2.7 Allocation of Purchase Price.............................. 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER................ 16
3.1 Corporate Existence and Power............................. 16
3.2 Corporate Authorization................................... 16
3.3 Governmental Authorization................................ 17
3.4 Non-Contravention......................................... 17
3.5 Financial Statements...................................... 18
3.6 No Undisclosed Liabilities................................ 19
3.7 Absence of Certain Changes................................ 19
3.8 No Brokerage Fees......................................... 21
3.9 Properties; Leases; Tangible Assets....................... 21
3.10 Sufficiency of and Title to the Transferred
Assets............................................... 23
3.11 Affiliates............................................... 24
3.12 Litigation............................................... 24
3.13 Contracts................................................ 25
3.14 Permits; Required Consents............................... 26
3.15 Compliance with Laws..................................... 27
3.16 Employment and Similar Agreements: Obliga
tions Upon Change in Control......................... 27
3.17 Labor and Employment Matters............................. 27
3.18 Employee Benefit Plans................................... 28
3.19 Intellectual Property.................................... 29
3.20 Inventories.............................................. 30
3.21 Customers................................................ 30
3.22 Material Disclosures..................................... 30
3.23 Operator and Reseller Relationships...................... 30
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER............. 31
4.1 Organization and Existence................................ 31
4.2 Corporate Authorization................................... 31
4.3 Governmental Authorization................................ 32
4.4 Non-Contravention......................................... 32
4.5 No Brokerage Fees......................................... 33
4.6 Litigation................................................ 33
4.7 Material Disclosures...................................... 33
ARTICLE V CERTAIN UNDERSTANDINGS AND
AGREEMENTS OF THE PARTIES................................. 33
5.1 Conduct of the Business................................... 33
5.2 Access to Information..................................... 36
5.3 Confidentiality........................................... 37
5.4 Access to Records and Files............................... 37
5.5 Public Announcements...................................... 38
5.6 No Shopping............................................... 38
5.7 Further Assurances........................................ 39
5.8 Cooperation in Litigation................................. 39
5.9 Certain Filings........................................... 39
5.10 Administration of Accounts................................ 40
5.11 Title Insurance; Encumbrances............................. 40
5.12 Employees and Benefits.................................... 41
5.13 Adjustment Certificate.................................... 42
5.14 Cooperation with Respect to Financing..................... 43
5.15 PMPA...................................................... 43
5.16 Properties................................................ 43
5.17 Recent Financial Statements............................... 44
ARTICLE VI CONDITIONS TO CLOSING.................................... 44
6.1 Conditions to Obligations of Each Party................... 44
6.2 Conditions to Obligations of Buyer........................ 44
6.3 Conditions to Obligations of Seller....................... 47
ARTICLE VII INDEMNIFICATION......................................... 48
7.1 Indemnification by Seller................................. 48
7.2 Indemnification by Buyer.................................. 50
7.3 Defense of Claims......................................... 50
7.4 Survival of Representations and Warranties................ 52
7.5 Limitations on Indemnification for Breaches
of Representations and Warranties.................... 52
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ARTICLE VIII TERMINATION............................................ 53
8.1 Grounds for Termination................................... 53
8.2 Effect of Termination..................................... 55
ARTICLE IX MISCELLANEOUS............................................ 55
9.1 Notices................................................... 55
9.2 Amendments; Waivers; Remedies............................. 56
9.3 Expenses.................................................. 57
9.4 Schedules................................................. 57
9.5 Successors and Assigns.................................... 57
9.6 Governing Law............................................. 57
9.7 Counterparts; Effectiveness............................... 57
9.8 Entire Agreement.......................................... 58
9.9 Jurisdiction.............................................. 58
9.10 Captions.................................................. 58
9.11 Severability.............................................. 58
9.12 Construction.............................................. 59
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<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as
of November 23, 1992 by and between Union Oil Company of California, a
California corporation ("Seller"), and National Auto/Truckstops, Inc., a
Delaware corporation (together with its successors and assigns,
"Buyer").
W I T N E S S E T H :
WHEREAS, Seller owns certain assets comprising a national
auto/truckstop network as more fully described in the May 1991 Confidential
Information Memorandum prepared by The First Boston Corporation (the
"Information Memorandum"), as said network has been altered by the changes
contained in Section 1 of the Disclosure Schedule (the "A/TS Network");
WHEREAS, certain of the locations comprising the A/TS Network are
Seller owned and leased to independent operators (the "Operators"), certain of
such locations are both Seller owned and operated, and certain of such locations
are owned and operated by independent marketers/ resellers (the "Resellers");
and
WHEREAS, Seller desires to sell to Buyer the A/TS Network (other
than the Excluded Locations), including sub stantially all of the assets
relating thereto, and Buyer desires to acquire the A/TS Network (other than the
Excluded Locations and the Excluded Assets) and such assets on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
(a) The following terms, as used herein, have the following
meanings:
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or
<PAGE>
under direct or indirect common control with such other Person.
"Ancillary Agreements" means, collectively, (i) a Bill of Sale,
Assignment and Assumption Agreement, (ii) a Non-Competition Agreement, (iii) an
Office Sublease, (iv) a Credit Card Agreement, (v) a Trademark License
Agreement, (vi) a Software License Agreement, (vii) a Services Agree ment and
(viii) a Products Agreement, each in a form to be agreed to by Buyer and Seller.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, regulation,
order, writ, injunction, directive, judgment, decree or other requirement of any
Governmental Authority applicable to such Person or any of its Affiliates or any
of their respective properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person or any
of its Affiliates).
"Assigned California Lease Rights" means the right to receive the
Gallonage Rental and 3% of Products and Services Gross Receipts (as such terms
are defined in Exhibit B of the California Leases).
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in Los Angeles, California are authorized or
required by law to close.
"California Fuel Supply Agreements" means those Fuel Supply
Agreements identified in Section 1.1(a) of the Disclosure Schedule.
"California Leases" means those leases identified in Section 1.1(b)
of the Disclosure Schedule.
"Confidentiality Agreement" means the Confiden tiality Agreement
dated June 12, 1992 between The First Boston Corporation on behalf of Seller and
The Clipper Group, L.P.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, and charges, and amounts paid or payable in
settlement, including (y) interest on cash disbursements in respect of any of
the foregoing at the lesser of Reference
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Rate in effect from time to time and the maximum interest rate permitted by law,
compounded quarterly, from the date each such cash disbursement is made until
the Person incurring the same shall have been indemnified in respect thereof and
(z) reasonable costs, fees and expenses of attorneys, experts, accountants,
appraisers, consultants, witnesses, investigators and any other agents of such
Person.
"Designated Employees" means those employees of Seller who are
listed in Section 1.1(c) of the Disclosure Schedule.
"Disclosure Schedule" means the Disclosure Schedule attached hereto.
"Effective Time" means 1:01 a.m. Eastern Standard Time on the
Closing Date.
"Environment" means navigable waters, waters of the contiguous zone,
ocean waters, natural resources, surface waters, ground water, drinking water
supply, land surface, subsurface strata, ambient air, both inside and outside of
buildings and structures, and plant and animal life on earth.
"Environmental Agreement" means the Environmental Agreement dated as
of the date hereof between Seller and Buyer.
"Environmental Claims" means causes of action or claims of Seller
existing as of the Effective Time against any Person relating to Environmental
Liabilities.
"Environmental Laws" means federal, state, local and foreign laws,
principles of foreign law, regulations and codes, as well as orders, decrees,
judgments or injunctions issued, promulgated, approved or entered thereunder
relating to pollution, protection of the Environment or health or safety.
"Environmental Liabilities" means all Damages, whether direct or
indirect, known or unknown, current or potential, absolute or contingent,
matured or unmatured, past, present or future, imposed by, under or pursuant to
Environmental Laws.
"Excluded California Lease Rights" means all of Seller's rights
(other than the Assigned California Lease Rights) under the California Leases.
3
<PAGE>
"Excluded California Lease Obligations" means any Liability or
obligation of Seller under any of the California Leases including, without
limitation, any obligation for cleaning, maintenance, repairs and replace ments
pursuant to Paragraph 9 and Exhibit C of the California Leases and any Liability
or obligation of Seller for taxes and assessments pursuant to Paragraph 17 of
the California Leases.
"Excluded Causes of Action" means Environmental Claims and any
causes of action to the extent relating to (x) any Excluded Asset or (y) any
Liability set forth in Section 2.3(i) through Section 2.3(xii).
"Excluded Locations" means the auto/truckstops comprising a part of
the A/TS Network located at the following locations: Santa Nella California;
Blythe, California; Buttonwillow, California; Redding, California; Sacramento,
California; and Ontario, California.
"GAAP" means generally accepted accounting prin ciples then in
effect consistently applied.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, charac ter or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliqui
dated, secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise and whether or not
the same is required to be accrued on the financial statements of such Person in
accordance with GAAP.
"Lien" means, with respect to any asset, any mort gage, title defect
or objection, restrictive covenant, adverse claim, lien, pledge, charge,
security interest, hypothecation or encumbrance of any kind in respect of such
asset.
4
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"Material Adverse Effect" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, Liabilities, reserves or any other aspect of the A/TS Network that
results in a material adverse effect on, or a material adverse change in, the
Acquisition Assets taken as a whole, or a material adverse effect on the
business of the A/TS Network taken as a whole.
"Outside Sourced Petroleum Products" means any petroleum or
petroleum derivative products (including, without limitation, gasoline,
distillates, lubricants or grease) acquired or to be acquired from any Person
(other than Seller or any Affiliate of Seller).
"Permitted Liens" means (i) Liens for taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for taxes
the validity of which are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP are being
maintained and set aside; (ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other similar Persons and
other Liens imposed by Applicable Law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith and for
which adequate reserves in accordance with GAAP are being maintained and set
aside; and (iii) Liens relating to deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security.
"Person" means an individual, corporation, part nership,
association, trust, estate or other entity or organization, including a
Governmental Authority.
"PMPA" means the Petroleum Marketing Practices Act.
"Proceeding" means any claim, action, suit, hear ing, inquiry,
arbitration, dispute, proceeding (public or private) or governmental
investigation brought by or against any Governmental Authority or any other
Person.
"Reference Rate" means the per annum rate of interest as published
in the Wall Street Journal as the prime rate (or reference rate). Any change in
the Reference Rate shall take effect at the opening of business on the day such
published quotations change.
5
<PAGE>
"Seller's knowledge" means (i) the actual knowledge of managerial or
professional personnel employed by or on behalf of Seller or any of its
Affiliates (exclud ing any agents and servants who are not and have never been
employees of Seller) and working in Division 61 or having management or
supervisory responsibility for the A/TS Network or (ii) such knowledge as any
such Person could reasonably be expected to have in the exercise of his or her
employment duties.
"WARN Act" means the Worker Adjustment and Retraining Notification
Act (and any applicable similar state law).
(b) Each of the following terms is defined in the section set
forth opposite such term:
TERM SECTION
Acquisition Assets 2.1
Acquisition Proposal 5.6
Adjustment Certificate 5.13
Agreement Recitals
Annual Financial Statements 3.5
A/TS Network Recitals
Assumed Liabilities 2.3
Benefit Arrangements 3.18(b)
Buyer Recitals
Buyer Indemnitees 7.1
Closing 2.6
Closing Date 2.6
Contracts 2.1(iv)
Employee Plans 3.18(a)
Employment Agreements 3.16
Encumbrances 3.9(a)
Equipment 2.1
ERISA 2.3(vi)
ERISA Affiliate 3.18(a)
Excluded Assets 2.2
Excluded Storage Tanks 2.2(xi)
Financial Statements 3.5
Indemnified Party 7.3
Indemnifying Party 7.3
Information Memorandum Recitals
Intellectual Property 3.19
Interim Financial Statements 3.5
Inventory 2.1(iii)
Inventory Amount 5.13
Leased Real Property 3.9(d)
Leases 3.9(d)
6
<PAGE>
Non-Conveyable Properties 5.17
Offering Material 5.15(a)
Operators Recitals
Owned Real Property 3.8(c)
Permits 3.14(a)
Permitted Encumbrances 3.9(a)
Purchase Price 2.5
Real Property 3.9(d)
Resellers Recitals
Required Consents 3.14(b)
Required Contractual Consent 3.14(b)
Required Permit Approval 3.14(b)
Scheduled Contracts 3.13(a)
Seller Recitals
Seller Indemnitees 7.2
Subsequent Material Contract 5.1(a)
Termination Date 8.1(vi)
Uno-Ven Trademark License Agreement 2.2(x)
ARTICLE II
TRANSFER OF ASSETS
2.1 ASSETS TO BE CONVEYED. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein after set forth, Seller shall convey, transfer,
assign, sell and deliver to Buyer, and Buyer shall acquire, accept and purchase
at the Closing, free and clear of all Liens, other than Permitted Encumbrances,
all the assets, properties, rights, interests, licenses, permits, contracts,
causes of action, claims, operations and businesses of every kind and
description as the same shall exist as of the Effective Time (other than the
Excluded Assets), wherever located, whether tangible or intangible, real,
personal or mixed, which are owned by, leased by or in the possession of Seller
whether or not reflected on the books and records of Seller and held or used in
the business or operation of the A/TS Network (the assets, properties, rights,
interests, licenses, permits, contracts, causes of action, claims, operations
and businesses to be transferred to Buyer by Seller pursuant hereto are referred
to collectively as the "Acquisition Assets"), including, without limitation,
except as otherwise specified in Section 2.2 or 5.13, all right, title and
interest of Seller in, to and under:
(i) all real property and leases (whether capitalized
or operating) of, and other inter ests in, real property of Seller held or
used in the
7
<PAGE>
business of the A/TS Network (but only to the extent held or used in the
business of the A/TS Network), including the items listed in Section
3.9(c) of the Disclosure Schedule, in each case together with Seller's
interest in all buildings, fixtures, signage and improvements erected
thereon and appurtenances thereto and all of Seller's rights to real
property adjacent or appurtenant thereto;
(ii) all machinery, equipment, furni ture, office
equipment, communications equipment, computer hardware which is used
exclusively in the business of the A/TS Network (including, without
limitation, computer hardware utilized in connection with the "Access 76"
system), vehicles, storage tanks (other than the Excluded Storage Tanks),
spare and replacement parts and other tangible property (and interests in
any of the foregoing) of Seller held or used in the business of the A/TS
Network (collectively, "Equipment");
(iii) all items of inventory relating to the business of
the A/TS Network notwithstanding how classified in the financial records
of Seller, includ ing all raw materials, work-in-process, finished goods,
supplies, spare parts, samples and stores ("Inven tory"), but excluding
any of the foregoing excluded from the definition of Acquisition Assets
pursuant to Section 5.13;
(iv) subject to Section 2.4 and only to the extent
relating to the business of the A/TS Network, all contracts, agreements,
options, leases, licenses, sales and purchase orders, commitments and
other instruments of any kind, whether written or oral, relating to the
business of the A/TS Network and to which Seller is a party or beneficiary
on the Closing Date or by which any of the Acquisition Assets are then
bound (including, without limitation, the California Fuel Supply
Agreements and the Assigned California Lease Rights) (all of the foregoing
to be assigned to Buyer pursuant hereto or the benefits under which are to
be provided to Buyer pursuant to Section 2.4 hereof are hereinafter
referred to collectively as the "Contracts" and individually as a
"Contract");
(v) to the extent related to the busi ness of the A/TS
Network and utilizable by the Buyer in such business, all prepaid charges
and expenses, deposits and similar assets of Seller, including any
8
<PAGE>
such prepaid charges and expenses with respect to ad valorem taxes, leases
and rentals and utilities;
(vi) except for Excluded Causes of Action, all of
Seller's rights, claims, credits, causes of action or rights of set-off
against third parties relating to the business of the A/TS Network or the
Acquisition Assets, whether liquidated or unliquidated, fixed or
contingent, including all rights of Seller under or pursuant to all
warranties, representations and guarantees made by suppliers,
manufacturers, contractors and other third parties in connection with
products or services purchased by or furnished to Seller or any other
Person for use in the business of the A/TS Network or affecting any of the
Acquisition Assets;
(vii) to the extent that the following are held or used
in the conduct of business of the A/TS Network (but excluding the marks
"Pure" and "Firebird" and any of the following which are (x) to be
licensed to Buyer pursuant to the Trademark License Agreement to be
executed by Buyer and Seller or (y) are not set forth in Section 3.19 of
the Disclosure Schedule), all of Seller's right, title and interest in
each patent and patent application, copyright, copyright applica tion,
publication (including, without limitation, Road King magazine),
trademark, trademark registration, trade name, mark (including, without
limitation, the mark "Road King"), service mark, product mark, logo and
other commercial symbol (in any such case, whether or not registered or to
be registered in the United States of America or elsewhere) applied for,
issued to or otherwise owned by Seller and held or used in the business of
the A/TS Network or with regard to any of the Acquisition Assets;
(viii) each process, invention, trade secret, formula
and documentation owned by Seller or which the Seller has the right to use
and assign to Buyer which is held or used in the business of the A/TS
Network or with regard to any of the Acquisition Assets, but excluding any
of the foregoing which relate to the formulation or blending of the
gasoline, petroleum distillates or other petroleum products sold by the
A/TS Network;
(ix) subject to Section 2.4, all trans ferable
franchises, licenses, permits or other authori zations issued or granted
by any Governmental Authority
9
<PAGE>
that are owned by, granted to or held or used by Seller and utilized in
the business of the A/TS Network, including the items listed in Section
3.14(a) of the Disclosure Schedule;
(x) to the extent reasonably available to Seller,
copies of all books, records, files and papers of Seller, whether in hard
copy or computer format, including books of account, invoices, engineer
ing information, sales and promotional literature, manuals and data, sales
and purchase correspondence, lists of present and former suppliers, lists
of present and former customers, and documentation developed or used for
accounting, marketing, engineering, manu facturing or any other purpose,
but in each such case only to the extent related to the conduct of the
business of the A/TS Network or with regard to any of the Acquisition
Assets at any time prior to the Closing;
(xi) to the extent utilized in the conduct of business
of the A/TS Network, all computer software (other than (i) mainframe
software and (ii) software to be licensed to Buyer pursuant to the
Software License Agreement to be executed by Buyer and Seller) used to
prepare or maintain the books and records of Seller relating to the
business of the A/TS Network, including computer software used in
connection with the credit approval process and accounts receiv able
aging;
(xii) all rights of Seller under insurance policies and
insurance funds of any nature, whether private or governmental, but
exclusive of self-insurance by Seller, in respect of Environmental
Liabilities resulting from occurrences which occur prior to the later of
the Closing Date and completion of the assessment and remediation required
pursuant to the Environmental Agreement, but only to the extent that
Seller is not obligated to indemnify Buyer for such Environmental
Liabilities pursuant to the Environmental Agreement and only after
equitably considering factors such as various layers of insurance and
self-insurance maintained by Seller; and
(xiii) all goodwill associated with the A/TS Network or
the Acquisition Assets, together with the right to represent to third
parties that Buyer is the successor to the business of the A/TS Network.
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2.2 EXCLUDED ASSETS. Notwithstanding anything contained in Section
2.1 to the contrary, Seller is not selling, and Buyer is not purchasing,
pursuant to this Agreement, any of the following, all of which shall be excluded
from the Acquisition Assets (hereinafter referred to collectively as the
"Excluded Assets"):
(i) all of Seller's cash and cash equivalents;
(ii) all accounts, accounts receivable, notes and notes
receivable existing as of the Effective Time whether or not the same arose
out of Seller's operation of the A/TS Network and which are payable to
Seller;
(iii) the real property and all furniture located
thereon at the A/TS Network's Schaumburg, Illinois headquarters office;
(iv) all mainframe software and all software to be
licensed to Buyer pursuant to the Software License Agreement;
(v) all of Seller's patents, patent applications,
copyright, copyright applications, publications, trademarks, trademark
registrations, trade names, marks, service marks, product marks, logos or
other commercial symbols which are not conveyed to Buyer pursuant to
Section 2.1(vii);
(vi) (x) all real property comprising a part of the
Excluded Locations, together with all buildings, fixtures, signage and
improvements erected thereon and appurtenances thereto and all of Seller's
rights to real property adjacent or appurtenant thereto, (y) all tangible
personal property located on or which otherwise relates exclusively to,
the Excluded Locations and (z) the Excluded California Lease Rights;
(vii) to the extent not utilized in the conduct of
business of the A/TS Network, all books, records, correspondence and other
information which relate to assets or Liabilities of Seller to be retained
by it pursuant to the terms hereof; provided, that Seller agrees to
furnish copies of such records to Buyer if requested by Buyer for bona
fide reasons relating to the operation of the A/TS Network from and after
the Closing Date;
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(viii) all Employment Agreements, whether or not
identified in Section 3.16 of the Disclosure Schedule;
(ix) all Employee Plans and Benefit Arrangements,
whether or not identified in Section 3.18 of the Disclosure Schedule;
(x) all rights of Seller under that certain Trademark
License Agreement, dated December 1, 1989, as amended, by and between
Seller and The Uno-Ven Company (the "Uno-Ven Trademark License Agreement);
(xi) all gasoline, petroleum distillate or other petroleum
product storage tanks and associated piping (whether underground or above
ground) and dispensers not located on or under the Owned Real Property (as
hereinafter defined), including any such storage tanks located on or under
any real property comprising a part of the auto/truckstops operated by
Resellers (including, without limitation, the auto/truckstops operated by
Resellers at Ripley, New York, No. Lima, Ohio, Raphine, Virginia and
Shreveport, Louisiana) (all of the foregoing storage tanks, associated
piping and dispensers described or specific ally identified in this
Section 2.2 (xi) are collectively referred to as the "Excluded Storage
Tanks"); and
(xii) Excluded Causes of Action.
2.3 ASSUMPTION OF LIABILITIES. From and after the Closing Date,
Buyer shall assume and agree to pay when due, perform and discharge (a) the
executory Liabilities of Seller under each Contract in effect on the Closing
Date and assigned to Buyer pursuant to Section 2.1, but only to the extent such
Liabilities would not be required to be accrued on a balance sheet of Seller as
of the Closing Date prepared in accordance with GAAP and Buyer has in fact
benefitted from the performance by the other party to such contract from and
after the Closing Date and (b) the liabilities of Seller to be assumed by Buyer
pursuant to Section 2.4 (subject to the rest of this Section 2.3, the
liabilities described in the foregoing clauses (a) and (b) are collectively
referred to as the "Assumed Liabilities"). Notwithstanding the foregoing, the
Buyer is not assuming and shall not be deemed to be assuming any of the
following, all of which shall be excluded from and shall not constitute Assumed
Liabilities:
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(i) any Liability of Seller or any of its Affiliates
to any Person the existence of which constitutes a breach of any covenant,
agreement, repre sentation or warranty of Seller contained in this
Agreement;
(ii) any Liability of Seller or any of its Affiliates
for any federal, state, local or foreign income or excise taxes, franchise
taxes, sales taxes, state or local property taxes or other taxes of any
kind or description (including interest and penalties thereon), including
Seller's pro rata portion of any real and personal property taxes with
respect to its ownership and use of any of the Acquisition Assets before
the Closing Date;
(iii) any Liability of Seller or any of its Affiliates
for any accounts payable or under any other agreement to which Seller or
any of its Affil iates is a party;
(iv) whether or not such agreements are assigned to or
assumed by Buyer hereunder, any Liabil ity of Seller or any of its
Affiliates arising out of or resulting from any breach by Seller or any of
its Affiliates of any Contract or other agreement to which Seller or any
of its Affiliates is a party;
(v) any Liability of Seller or any of its Affiliates
arising out of or resulting from any violation or alleged violation by
Seller or any such Affiliate of any Applicable Law or in connection with
or arising out of the sale by Seller or any such Affiliate of any product
or the provision of any service;
(vi) any Liability of Seller or any of its Affiliates
to any officer, director, employee (including any Designated Employee),
consultant or agent of Seller or any such Affiliate, including, without
limitation, employment agreements between the Seller and any of its
employees (whether or not such employment agreements are set forth on
Schedule 3.16 of the Disclosure Schedule), workers' compensation, union
contracts, medical or sick pay liabilities (including, without limitation,
for continuation coverage mandated by law), pension or profit sharing
liabilities or severance liabilities (including, without limitation, under
the WARN Act) whether or not resulting from the transactions contemplated
herein and any other employee
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benefit offered by Seller or any such Affiliate, including any liability
for contributions or payments to be made under any employee benefit plan
(as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) or other plan or arrangement maintained for
an officer, director, employee, consultant or agent of Seller or any such
Affiliate; except as expressly set forth in Section 5.12 or 7.2 hereof, in
no event shall Buyer incur any obligation for any Liability relating to
any Designated Employee that arises or accrues prior to such time, if any,
as such Designated Employee is employed by Buyer;
(vii) any Liability (including expenses) resulting from
any Proceeding affecting any of the Acquisition Assets or the A/TS Network
existing or arising on or resulting from events which occurred or failed
to occur at or prior to the Effective Time;
(viii) any Liability relating to any of the Excluded
Storage Tanks;
(ix) any Liability of Seller under any Contract which is
required to be disclosed in the Disclosure Schedule and is not so
disclosed;
(x) any Liability of Seller under or relating to the
Uno-Ven Trademark License Agreement;
(xi) any Liability of Seller or any of Seller's
Affiliates under any contract or agreement providing for the purchase by
Seller or any of Seller's Affiliates of Outside Sourced Petroleum
Products; and
(xii) the Excluded California Lease Obligations.
2.4 ASSIGNMENT OF CONTRACTS AND RIGHTS.
(a) Anything in this Agreement to the con trary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Acquisition Asset or any claim or right or any benefit arising thereunder or
resulting there from if an attempted assignment thereof, without the consent of
a third party thereto, would constitute a breach or other contravention thereof,
be ineffective with respect to any party thereto or in any way adversely affect
the rights of Seller or, upon transfer, Buyer thereunder.
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(b) Seller agrees that between the date hereof and the Closing
Date it will use its best efforts (other than paying consideration) to obtain
the necessary consents to the assignment of each Contract or other Acquisition
Asset which by its terms requires the consent of any of the other contracting
parties thereto to an assignment thereof to Buyer. If (y) such consent is not
obtained with respect to any such Contract or other Acquisition Asset and (z)
notwithstanding the provisions of Section 6.2(f), Buyer elects to consummate the
Closing, Seller and Buyer will cooperate in an arrangement reasonably
satisfactory to Buyer and Seller under which Buyer shall obtain, to the extent
practicable, the claims, rights and benefits and assume the corresponding
obligations thereunder in accordance with this Agreement, including
subcontracting, sub-licensing or sub-leasing to Buyer, or under which Seller
shall enforce for the benefit of Buyer, with Buyer assuming Seller's
obligations, any and all claims, rights and benefits of Seller against a third
party thereto. Seller will promptly pay to Buyer when received all monies
received by Seller under any Contract or other Acquisition Asset or any claim,
right or benefit arising thereunder that has been assigned to Buyer or which
Seller has made an arrangement to the satisfaction of Buyer pursuant to this
Section 2.4. Buyer agrees to perform at its sole expense all of the obli gations
of Seller to be performed after the Closing Date under any such Contract or
other Acquisition Asset the bene fits of which Buyer is receiving pursuant to
the provisions of this Section 2.4.
2.5 PURCHASE PRICE FOR ACQUISITION ASSETS. The purchase price for
the Acquisition Assets (the "Purchase Price") shall be in the amount and shall
be payable as follows:
(i) at the Closing, Buyer shall pay to Seller, by wire
transfer of immediately available funds, the sum of $141,000,000;
(ii) at the Closing, Buyer shall assume the Assumed
Liabilities; and
(iii) Buyer shall make a payment to Seller, by wire
transfer of immediately available funds, pursuant to and in accordance
with Section 5.13.
2.6 CLOSING. The Closing of the transactions contemplated by this
Agreement (the "Closing") shall occur at the law offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York at
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10:00 a.m. on the date five (5) Business Days after all conditions to the
Closing set forth in Article VI have been satisfied or waived by the party
entitled to waive the same, or such other time, date or place as is agreed to in
writing by the parties hereto. The date on which the Closing occurs is referred
to herein as the "Closing Date".
2.7 ALLOCATION OF PURCHASE PRICE. Seller and Buyer hereby agree that
(i) the allocation for tax purposes of the Purchase Price shall be as agreed to
by Buyer and Seller prior to the Closing, (ii) each party shall timely file
Internal Revenue Service Form 8594 and (iii) neither the Buyer nor the Seller
shall take a position on any report, return, information return or other
document (including any related or supporting information) filed or required to
be filed with any federal, state or local taxing authority, before any taxing
authority or in any judicial proceeding that is in any way inconsistent with
such allocation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 CORPORATE EXISTENCE AND POWER. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California, and has all corporate power and all governmental licenses,
authori zations, consents and approvals required to carry on the business of the
A/TS Network as now conducted and to own and operate the Acquisition Assets.
Seller is duly qualified to do business as a foreign corporation in each
jurisdiction where the character of the Acquisition Assets or the nature of the
business of the A/TS Network makes such qualification necessary to carry on the
business as now conducted. Seller has heretofore delivered to Buyer true and
complete copies of the certificate of incorporation and bylaws of Seller as
currently in effect.
3.2 CORPORATE AUTHORIZATION. Seller has all requisite corporate
power and authority to enter into this Agreement and all other agreements to be
executed by Seller in connection herewith and to consummate the transactions
contemplated hereby and thereby. This Agreement and all other agreements to be
executed by Seller in connection herewith have been (or upon execution will have
been) duly
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executed and delivered by Seller, have been effectively authorized by all
necessary action, corporate or otherwise, and constitute (or upon execution will
constitute) legal, valid and binding obligations of Seller enforceable in
accordance with their respective terms (i) except as limited by applicable
bankruptcy, insolvency, reorganization, mora torium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
3.3 GOVERNMENTAL AUTHORIZATION.
(a) The execution, delivery and performance by Seller of this
Agreement require no action by, consent or approval of, or filing with, any
Governmental Authority other than:
(i) compliance with any applicable requirements of the
HSR Act;
(ii) compliance with any applicable requirements of the
bulk sales, bulk transfer or similar laws of the states in which the
Acquisition Assets are located;
(iii) the Required Permit Approvals; and
(iv) compliance with any applicable requirements of
the WARN Act.
(b) To Seller's knowledge, there are no facts relating to the
identity or circumstances of Seller that would prevent or materially delay
obtaining any of the authorizations referred to in Sections 3.3, 3.14 or 4.3.
3.4 NON-CONTRAVENTION. The execution, delivery and performance by
Seller of this Agreement and all other agreements to be executed by Seller in
connection herewith does not and will not (a) (i) contravene or conflict with
the certificate of incorporation or bylaws of Seller; (ii) assuming compliance
with the HSR Act, the WARN Act and California Business and Professions Code
Section 20999.25(a) and receipt of the Required Consents and each Required
Permit Approval, contravene or conflict with or constitute a violation of any
provision of any Applicable Law binding upon or applicable to Seller, the A/TS
Network or any of the
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Acquisition Assets; and (iii) assuming compliance with the HSR Act and receipt
of the Required Contractual Consents and each Required Permit Approval,
constitute a default under, conflict with, violate, breach or give rise to any
right of termination, cancellation or acceleration of, or to a loss of any
benefit to which Seller is entitled, under any Contract or any license,
franchise, permit or similar authorization relating to the A/TS Network or
included in any of the Acquisition Assets or by which the business of the A/TS
Network or the Acquisition Assets may be bound, or (b) result in the creation or
imposition of any Lien on any Acquisition Asset.
3.5 FINANCIAL STATEMENTS. Section 3.5 of Disclosure Schedule sets
forth (i) the unaudited Income Statement of the A/TS Network for the calendar
years ended December 31, 1989, 1990 and 1991 (including the addendums thereto
relating to Seller's operating expenses during such periods), the unaudited
Statement of Net Assets of the A/TS Network as of December 31, 1989, 1990 and
1991, the un audited Statement of Cash Flows for the calendar year ended
December 31, 1991, the unaudited Statement of Gallons Sold for the calendar
years ended December 31, 1989, 1990 and 1991 and the unaudited Statement of
Capital Expenditures for the calendar years ended December 31, 1989 and 1990
(collec tively, the "Annual Financial Statements") and (ii) the unaudited Income
Statement of A/TS Network for the nine months ended September 30, 1992, the
Unaudited Statement of Net Assets of the A/TS Network as of September 30, 1992,
the unaudited Statement of Gallons Sold for the nine months ended September 30,
1992 and the unaudited Statement of Cash Flows for the nine months ended
September 30, 1992 (the "Interim Financial Statements" and together with the
Annual Financial Statements, the "Financial Statements"). The Financial
Statements (i) were prepared in accordance with the books and records of Seller
subject to the assumptions, exceptions and limitations described therein; (ii)
were prepared in accordance with GAAP applied on a basis consistent with that of
the preceding periods, subject to the assumptions, exceptions and limitations
described therein; (iii) fairly present the financial condition and the results
of operations of the A/TS Network as at the relevant dates thereof and for the
periods covered thereby in accordance with GAAP applied on a basis consistent
with that of the preceding periods, subject to the assumptions, exceptions and
limitations described therein; (iv) fairly present the revenues, cost of goods
sold and direct operating expenses actually incurred by the A/TS Network during
the periods covered thereby in accordance with GAAP applied on a basis
consistent with that of the preceding
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periods, subject to the assumptions, exceptions and limitations described
therein; (v) do not contain any items of special or nonrecurring income or any
other income not earned in the ordinary course of business except as otherwise
stated therein; and (vi) set forth therein all material assumptions upon which
the Financial Statements are based. No improper accounting practices have been
used for the purpose of not reflecting or incorrectly reflecting in the
Financial Statements or the books or records of Seller any material properties,
assets, revenues or expenses. Upon the delivery of any financial statements by
Seller to Buyer pursuant to Section 5.17 hereof, the definitions Annual
Financial Statements, Interim Financial Statements and Financial Statements
shall be deemed to include, as appropriate, the financial statements delivered
to Buyer by Seller pursuant to Section 5.17 and the representations made by
Seller in this Section 3.5 shall encompass the financial statements delivered
pursuant to Section 5.17.
3.6 NO UNDISCLOSED LIABILITIES. Since Septem ber 30, 1992, except
for (i) the transactions specifically contemplated by this Agreement and (ii) as
set forth in Section 3.6 to the Disclosure Schedule, Seller has not incurred any
material Liability, other than Liabilities incurred in the ordinary course of
business that would properly be reflected or reserved against in a balance sheet
prepared in conformity with generally accepted accounting principles applied on
a basis consistent with that used in the preparation of the Unaudited Statement
of Net Assets of the A/TS Network as at September 30, 1992 referred to in
Section 3.5.
3.7 ABSENCE OF CERTAIN CHANGES. Since Septem ber 30, 1992, the
business of the A/TS Network has been conducted in the ordinary course, and
there has not been:
(a) except as set forth in Section 3.7(a) of the Disclosure
Schedule, any event, occurrence, development or state of circumstances or facts
or change in the Acqui sition Assets or the business of the A/TS Network
(including any damage, destruction or other casualty loss) affecting the
business of the A/TS Network or any Acquisition Asset which has had or which may
be reasonably expected to have, either alone or together with all such events,
occurrences, developments, states of circumstances or facts or changes, a
Material Adverse Effect;
(b) except as set forth in Section 3.7(b) of the Disclosure
Schedule, any material transaction or commit ment made, or any Contract entered
into, by Seller relating
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to the business of the A/TS Network or any Acquisition Asset (including the
acquisition or disposition of any Acquisition Assets), or any waiver, amendment,
termination or cancella tion of any Contract or Permit by Seller, or any
relinquish ment of any rights thereunder by Seller, or of any other right or
debt owed to Seller relating to the business of the A/TS Network or the
Acquisition Assets, other than in each such case actions (i) taken in the
ordinary course of business or (ii) otherwise permitted by this Agreement;
(c) except as set forth in Section 3.7(c) of the Disclosure
Schedule, any material change (i) in the compensation, benefits, title or
responsibilities of any Designated Employee or (ii) the termination or
re-assignment of any Designated Employee with significant A/TS Network
managerial responsibilities.
(d) any change by Seller in the accounting principles or
methods or practices applied to the A/TS Network or in the manner it keeps the
books and records of the A/TS Network;
(e) any labor dispute (other than routine individual
grievances), lockouts, strikes, slowdowns, work stoppages or threats thereof by
or with respect to any such employees or, to Seller's knowledge, any activity or
proceeding by a labor union or representative thereof to organize any employees
of Seller involved in the business of the A/TS Network;
(f) except as set forth in Section 3.7(f) of the Disclosure
Schedule, any payment, discharge or satis faction of any Liabilities of Seller
related to the business of the A/TS Network, other than payments, discharges or
satisfactions in the ordinary course of business;
(g) except as set forth in Section 3.7(g) of the Disclosure
Schedule, any material waiver or material amendment or any termination or
cancellation of any auto/ truckstop lease agreement, motor fuel contract (or
other commitment or arrangement whether written or oral) between Seller and any
Operator or Reseller, or any material relinquishment, amendment or modification
of any rights thereunder by Seller; or
(h) except as set forth in Section 3.7(h) of the Disclosure
Schedule, as of the date hereof, any change in Approved Products or Approved
Services (as such terms are defined in the Trademark License Agreement).
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3.8 NO BROKERAGE FEES. No broker or finder, other than The First
Boston Corporation, has acted for Seller or any of Seller's Affiliates in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder, other than The First Boston Corporation, is entitled to any
brokerage or finders' fees in respect of such transactions based in any way on
agreements, arrange ments or understandings made by or on behalf of Seller or
any of Seller's Affiliates.
3.9 PROPERTIES; LEASES; TANGIBLE ASSETS.
(a) Seller owns and has good and marketable title to or, in
the case of leased properties, a good and marketable leasehold interest in, all
of the Acquisition Assets, including all such assets (real, personal or mixed,
tangible or intangible) reflected in the Statement of Net Assets as of December
31, 1991 or acquired thereafter, except those assets disposed of in the ordinary
course of business after such date. Seller holds title to each such property and
asset free and clear of all Liens, adverse claims, easements, rights of way,
servitudes, zoning or building restrictions, or any other rights of others or
other adverse interests or title or survey defects of any kind, including
leases, chattel mortgages, conditional sales contracts, rights of first refusal,
options to purchase, collateral security arrangements and other title or
interest retention arrangements (collectively, "Encumbrances"), except for (i)
Permitted Liens, (ii) Encumbrances set forth on Section 3.9(a) of the Disclosure
Schedule and (iii) with respect to each parcel of Real Property, Encumbrances
that, individually or in the aggregate, do not and will not (A) materially
interfere with the use, occupancy or operation of such parcel as currently used,
occupied and operated, (B) materially reduce the fair market value of such
parcel below the fair market value such parcel would have had but for such
Encumbrances or (C) result in any material increase in the cost of operating,
occupying or owning (or leasing) such parcel. The Encumbrances described by
clauses (i), (ii) and (iii) of the foregoing sentence are collectively referred
to herein as the "Permitted Encumbrances."
(b) Except as disclosed in Section 3.9(b) of the Disclosure
Schedule, all tangible properties and assets included in the Acquisition Assets
are structurally sound and free of any material defects and are in good
operating condition and repair and are adequate for the uses to which they are
put, and no properties or assets necessary for the conduct of the business of
the A/TS Network in substantially
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the same manner as such business has heretofore been conducted are in need of
material replacement, maintenance or repair, except, in the case of each
auto/truckstop leased to an Operator, for regularly scheduled, routine
maintenance and repair required under the applicable auto/truckstop lease
agreement.
(c) Section 3.9(c) of the Disclosure Sched ule sets forth a
true and complete list of all Acquisition Assets that constitute real property
owned by Seller (such property, together with all recorded easements and
licenses benefiting such property, collectively referred to here inafter as the
"Owned Real Property"), such list setting forth the location of each parcel of
Owned Real Property, the record owner thereof, the approximate acreage and a
brief description of the nature of the activities of Seller on such Owned Real
Property.
(d) Section 3.9(d)(i) of the Disclosure Schedule sets forth
(by date and the parties thereto) all personal property leases and all real
property leases relating to real property used by the Seller as lessee (such
property, together with all recorded easements and licenses benefiting such
property, collectively referred to here inafter as the "Leased Real Property";
the Leased Real Property and Owned Real Property being collectively referred to
as the "Real Property") or to which Seller is a party or by which Seller is
bound as lessor (including all cases in which Seller is both the lessor or
lessee of such personal property or real property) which were entered into in
connection with the business of the A/TS Network (the "Leases"), and indicating
where appropriate those leases which have been recorded for tax, protection of
title or interest, or other purposes. With respect to the Leases (including,
without limitation, Exhibit C thereto), there exist no defaults by Seller and no
events have occurred and no condition exists which, with the giving of notice or
lapse of time or both, would constitute such a default, and, to Seller's
knowledge, there exists no default or threatened default by any third party
thereunder, that has affected or could reasonably be expected to affect the
rights and priv ileges thereunder of Seller and no events have occurred and no
condition exists which, with the giving of notice or lapse of time or both,
would constitute such a default. Except as disclosed in Section 3.9(d)(ii) of
the Disclosure Schedule and except for regularly scheduled, routine maintenance
and repair, Seller has performed all of its cleaning, maintenance and
replacement responsibilities set forth in Exhibit C to the Leases, and, to
Seller's knowledge, each third party to such Leases has performed all
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of its cleaning, maintenance and replacement responsibi lities set forth in such
Exhibit C. Except as disclosed in Section 3.9(d)(iii) of the Disclosure
Schedule, all Leases to which Seller is a party or by which it is bound may be
assigned, transferred and conveyed to Buyer without default,
penalty or modification thereof.
(e) To Seller's knowledge, except as disclosed in Section
3.9(e) of the Disclosure Schedule, with respect to any Real Property, there
exists no (i) applicable restrictive covenant, zoning ordinance, building code,
use or occupancy restriction, land use restriction, fire, subdivision, health or
other law applicable to real property, or any violation of any such ordinance,
code, restriction or law, or any condemnation action or proceeding of any
Governmental Authority, that detracts or can reasonably be expected to detract
in any material respect from the use or value of such property in the business
of the A/TS Network or will interfere with the transferability thereof to Buyer
pursuant hereto or (ii) non-conforming uses or zoning or code exceptions that
currently permit the non-conforming use of such Real Property.
(f) No condemnation proceeding is pending, or to Seller's
knowledge threatened, which would preclude or impair the use of any Real
Property for the uses for which it is currently being used or is anticipated by
Seller to be used. Except as set forth in Section 3.9(f) of the Dis closure
Schedule, to Seller's knowledge there is no existing or proposed plan to widen,
modify or realign any street or highway contiguous to any of the Real Property
which would materially reduce the size or value of any of the Real Property.
(g) Section 3.9(g) of the Disclosure Sched ule sets forth a
true and complete list of all computer hardware used exclusively in the business
of A/TS Network.
(h) Each parcel of Real Property has direct access to a public
street or highway and such access is ade quate for the use of such parcel in the
business of the A/TS Network. No Real Property is dependent for its access,
operation or utility on any land, building or other improve ment not included in
the Real Property. Notwithstanding the foregoing, Seller makes no representation
that title insurance policies with so-called "access endorsements" are
obtainable with respect to any parcel of Real Property.
3.10 SUFFICIENCY OF AND TITLE TO THE TRANSFERRED ASSETS. Upon
consummation of the transactions contemplated
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by this Agreement, Seller will have assigned, transferred and conveyed to Buyer,
free and clear of all Liens and Encumbrances (other than Permitted
Encumbrances), all of the Acquisition Assets, exclusive of the Excluded Assets
and assets transferred prior to Closing in the ordinary course of business or
otherwise transferred as permitted hereunder. The business of the A/TS Network
is a going concern and the transfer of the Acquisition Assets to Buyer pursuant
to this Agreement (together with sufficient working capital supplied by Buyer,
adequate arrangements for the supply of motor fuel and other petroleum products
not provided pursuant to the Products Agreement, and the rights of Buyer under
the Office Sublease, the Credit Card Agreement, the Trademark License Agreement,
the Software License Agreement, the Services Agreement and the Products
Agreement) will enable Buyer to operate such business as Seller operated it
immediately prior to the Closing with all operations of such business unimpaired
in any material respect immediately after the Closing, subject to the exclusion
of the Excluded Locations.
3.11 AFFILIATES. The business and operation of the A/TS Network is
conducted exclusively and solely by Seller and not by any of its Affiliates and
no assets or properties used in the business of the A/TS Network are owned or
leased by any of Seller's Affiliates.
3.12 LITIGATION.
(a) Except as disclosed in Section 3.12(a) of the Disclosure
Schedule: (i) there are no Proceedings pending or, to Seller's knowledge,
threatened, against or affecting the business of the A/TS Network or any of the
Acquisition Assets; (ii) there are no existing judgments affecting in any
respect any of the Acquisition Assets or the business of the A/TS Network; or
(iii) there are no existing orders or decrees of any Governmental Authority
specifically applicable to any of the Acquisition Assets or the business of the
A/TS Network.
(b) Except as set forth in Section 3.12(b) of the Disclosure
Schedule, there are no Proceedings pending or, to Seller's knowledge,
threatened, against Seller, the A/TS Network or the Acquisition Assets which
seek to enjoin or rescind the transactions contemplated by this Agreement or
otherwise prevent Seller from complying with the terms and provisions of this
Agreement.
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3.13 CONTRACTS.
(a) Section 3.13(a) of the Disclosure Sched ule, together with
Sections 3.9, 3.16 and 3.18 of the Dis closure Schedule, sets forth an accurate
and complete list (by date of execution, expiration date (if applicable) and the
parties thereto, and to the extent applicable, by common form of agreement) of
all contracts, commitments and obli gations (whether written or oral) of Seller
which relate to the business of the A/TS Network or any of the Acquisition
Assets, except for (i) purchase orders of Seller entered into in the ordinary
course of business for materials, goods or services requiring payments by Seller
to any third party of not more than $100,000 for any single purchase order or
$250,000 for two or more such purchase orders and (ii) sales acknowledgments and
invoices of Seller for goods or services requiring payments to Seller by any
third party of not more than $100,000 for any single sales acknowledgement or
invoice or $250,000 for two or more such sales acknowledge ments or invoices
(the contracts, commitments and obliga tions of Seller set forth in Sections
3.9, 3.13, 3.16 and 3.18 of the Disclosure Schedule sometimes being hereinafter
referred to collectively as the "Scheduled Contracts").
(b) Except as disclosed in Section 3.13(b) of the Disclosure
Schedule, each Scheduled Contract and each other Contract relating to the
business or any of the Acqui sition Assets is a legal, valid and binding
obligation of Seller and, to Seller's knowledge, each other party thereto,
enforceable against Seller and, to Seller's knowledge, each such other party, in
accordance with its terms (except as limited by applicable bankruptcy,
insolvency, reorganiza tion, moratorium or other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers, and subject to the limitations imposed by general
equitable principles regardless of whether such enforceability is considered in
a proceeding at law or in equity). With respect to the Contracts, there exists
no default by Seller and no events have occurred and no conditions exist which,
with the giving of notice or the lapse of time or both, would constitute such a
default, and to Seller's knowledge, there exists no default by any third party
thereunder, that has affected or could reasonably be expected to affect the
rights and privileges thereunder of Seller. Except as disclosed in Section
3.14(b)(ii) of the Disclosure Schedule, all Contracts to which Seller is a party
or by which it is bound may be assigned, transferred and conveyed to Buyer
without default, penalty or modification thereof. Complete
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and correct copies of each Scheduled Contract have been made available to Buyer.
3.14 PERMITS; REQUIRED CONSENTS.
(a) Section 3.14(a) of the Disclosure Sched ule sets forth all
material approvals, registrations, authorizations, certificates, certificates of
occupancy, consents, licenses, orders and permits or other similar
authorizations of or with any Governmental Authority (and all other Persons)
necessary for the operation of the Acquisition Assets or the business of the
A/TS Network in substantially the same manner as currently operated by Seller,
or affecting or relating in any way to the business of the A/TS Network (the
"Permits"), including (i) all such permits and approvals relating to the
transportation, storage or sale of any petroleum product or the discharge of
by-products or waste material into a public waste discharge system and (ii) all
registrations, approvals and exemptions required under any state or federal
franchise, business opportunity or similar law.
(b) Section 3.14(b)(i) of the Disclosure Schedule lists each
governmental or other registration, filing, application, notice, transfer,
consent, approval, order, qualification and waiver (each, a "Required Permit
Approval") required under Applicable Law to be obtained by Seller or Buyer by
virtue of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby to avoid the loss of any Permit. Section
3.14(b)(ii) of the Disclosure Schedule lists each Contract with respect to which
the consent of the other party or parties thereto must be obtained by Seller by
virtue of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby to avoid the invalidity of the transfer of
such Contract, the termination thereof, a breach or default thereunder or any
other change or modification to the terms thereof (each, a "Required Contractual
Consent" and collectively with the Required Permit Approvals, the "Required
Consents"). Except as set forth in Section 3.14(b)(i) of the Disclosure
Schedule, each Permit is valid and in full force and effect in all material
respects and, assuming the related Required Permit Approvals have been obtained
prior to the Closing Date, are, or will be, transferable by Seller, and none of
the Permits will, assuming the related Required Permit Approvals have been
obtained prior to the Closing Date, be terminated or become terminable or
impaired in any respect as a result of the transactions contemplated hereby.
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3.15 COMPLIANCE WITH LAWS. Except as set forth in Section 3.15 of
the Disclosure Schedule, the ownership and operation of the A/TS Network and the
ownership, use and condition of the Acquisition Assets have not violated or
infringed, and do not violate or infringe, any Applicable Law, or any order,
writ, injunction or decree of any Govern mental Authority in any material
respect. Seller has not received, and has no knowledge of, any notification from
any Governmental Authority having jurisdiction over the business of the A/TS
Network or the Acquisition Assets affecting or purporting to restrict the
operation of the business of the A/TS Network or the use of the Acquisition
Assets or alleging any violation of Applicable Law relating to the foregoing.
3.16 EMPLOYMENT AND SIMILAR AGREEMENTS: OBLIGA TIONS UPON CHANGE IN
CONTROL. Except as set forth in Section 3.16 or 3.18 of the Disclosure Schedule,
there is no employment, consulting, severance pay, continuation pay, termination
pay, indemnification agreement or other agreement not subject to ERISA with
Seller (or any of its Affiliates) and any Designated Employee and, except as set
forth in Section 3.16 of the Disclosure Schedule, no such scheduled agreement
provides for an increase in such Designated Employee's compensation, benefits or
rights in excess of his compensation, benefits and rights provided on the date
hereof if such Designated Employee were to accept or refuse an employment offer
from Buyer. Seller has provided Buyer with complete and correct copies of all
such agreements.
3.17 LABOR AND EMPLOYMENT MATTERS. Except as set forth in Section
3.16, 3.17 and/or 3.18 of the Disclosure Schedule, in connection with the A/TS
Network or with respect to any Designated Employee: (a) Seller has not, and to
Seller's knowledge none of its Affiliates have engaged in any unfair labor
practice; (b) there is no labor strike, dispute, slowdown or stoppage pending
or, to Seller's knowledge, threatened against or directly affecting Seller or
any of its Affiliates; (c) no union representation question or, to Seller's
knowledge, union or other organi zational activity that would be subject to the
National Labor Relations Act (29 U.S.C. Sections 151 ET SEQ.) exists respecting
any employees of Seller or any of its Affiliates; (d) no collective bargaining
agreement exists which is bind ing on Seller or any of its Affiliates; (e)
neither Seller nor any of its Affiliates has experienced any material work
stoppage or other material labor difficulties; (f) neither Seller nor any of its
Affiliates is delinquent in any material respect in payments to any of the
Designated
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Employees; (g) neither Seller nor any of its Affiliates has received any notice
or has any knowledge of any threatened labor, employment, civil rights dispute
or grievance or any other unfair labor practice proceeding with respect to
claims of, or obligations to, any Designated Employee.
3.18 EMPLOYEE BENEFIT PLANS.
(a) Section 3.18(a) of the Disclosure Schedule lists each
"employee benefit plan," as such term is defined in Section 3(3) of ERISA, which
(i) is subject to any provision of ERISA; and (ii) currently covers any
Designated Employee (hereinafter referred to collectively as the "ERISA Plans").
With respect to each ERISA Plan, Seller has furnished to Buyer a current summary
plan description of such plan and such ERISA Plan's most recent annual report.
(b) Section 3.18(b) of the Disclosure Schedule lists each
written or oral plan or arrangement providing for health, medical, life or other
welfare benefit coverage (including insured, self-insured or other arrange
ment), disability benefits, severance pay, termination pay, supplemental
unemployment benefits, vacation benefits, retirement benefits or providing for
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits and any other employee benefit plan,
program, agreement, policy or arrangement under which Seller or any of its
Affiliates has directly or indirectly (through any Affiliate) any present or
contingent obligation or liability which (i) is not disclosed pursuant to
Section 3.18(a) above, (ii) is or has been entered into, maintained,
administered or contributed to, as the case may be, by Seller or any of its
Affiliates and (iii) currently covers any Designated Employee. Such plans and
arrangements as are described above, copies and/or descriptions of which have
been furnished by the Company, are hereinafter referred to as the "Benefit
Arrangements." For purposes of this Section 3.18 the term "ERISA Affiliate"
means, with respect to any Person, which, together with such Person was or is
required to be treated as a single employer under Section 414 of the Internal
Revenue Code.
(c) Except as set forth in Section 3.18(c) of the Disclosure
Schedule, no ERISA Plan or Benefit Arrangement is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA) or provides post-retirement
medical benefits (other than the Unocal Medical Plan) and/or life insurance
benefits (other than the Unocal Life Insurance Plan).
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(d) Section 3.18(d) of the Disclosure Schedule sets forth a
list of each state in which any Designated Employee is covered by any workers'
compensation laws.
3.19 INTELLECTUAL PROPERTY.
There is listed in Section 3.19 of the Disclosure Schedule (i) an
identification of each copyright, copyright registration, copyright application,
patent, patent regis tration, patent application, invention disclosure, trade
mark, trademark registration, trademark application, trade name, mark, service
mark, publication, logo and other commercial symbol held (together with the
federal or state offices, if any, in which any of the foregoing are regis tered)
or employed by Seller in the business of the A/TS Network other than any of the
foregoing relating exclusively to the formulation or blending of the gasoline,
petroleum distillates or other petroleum products sold by the A/TS Network
("Intellectual Property") and (ii) a true and complete list of all licenses or
similar agreement or arrangements to which Seller is a party either as licensee
or licensor for each such item of Intellectual Property. Except as indicated in
Section 3.19 of the Disclosure Schedule:
(a) there have not been any Proceedings involving Seller
concerning the infringement or misappro priation of any intellectual property
rights of any third person or any Proceedings otherwise concerning Seller's
ownership interest in any of such items of Intellectual Property, nor to
Seller's knowledge, is any such Proceeding threatened;
(b) Seller has the right and authority to use said items of
Intellectual Property in connection with the conduct of the A/TS Network in the
manner presently conducted and to convey such right and authority to Buyer, and
such use does not conflict with, infringe upon or vio late any intellectual
property rights, including any patent, copyright, trademark or trade name, of
any other Person;
(c) there are no outstanding, or to Seller's knowledge any
threatened, disputes or disagreements with respect to any licenses or similar
agreements or arrange ments described in Section 3.19 of the Disclosure
Schedule; and
(d) pursuant to this Agreement and the Trademark License
Agreement, concurrently with the Closing,
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Buyer will be vested with all rights, title and interest and authority to use
all of the Intellectual Property of the A/TS Network so as to operate the A/TS
Network and use the Acquisition Assets in the same manner as Seller immediately
prior to the Closing.
3.20 INVENTORIES. All Inventories of Seller per taining to the
business of the A/TS Network: (a) have been acquired or manufactured in the
ordinary course of business, in accordance with Seller's normal inventory
practices; (b) are of a quality usable and salable in the ordinary course of
business, free of any material defect or defi ciency; and (c) are in
merchantable and undamaged condition and are not obsolete.
3.21 CUSTOMERS. Except as disclosed in Sec tion 3.21 of the
Disclosure Schedule, during the calendar year ended December 31, 1991, not more
than five percent (5%) of the total revenues of the A/TS Network was
attributable to any single Operator or Reseller.
3.22 MATERIAL DISCLOSURES. No statement, repre sentation or warranty
made by Seller in this Agreement, in any Exhibit hereto or in the Disclosure
Schedule, or in any certificate, statement, list, schedule or other document
furnished or to be furnished to Buyer hereunder, contains or will contain any
untrue statement of a material fact, or fails or will fail to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not materially misleading.
3.23 OPERATOR AND RESELLER RELATIONSHIPS.
(a) Except as set forth in Sections 3.13 or 3.23 of the
Disclosure Schedule, there are no projections, representations, contracts,
commitments or obligations (whether written or oral) between Seller and any
Operator or Reseller currently involved in the business of the A/TS Network or
the use of any of the Acquisition Assets which involve:
(i) the amendment, modification, renewal, non-renewal
or termination of any lease, motor fuel purchase agreement or other
agreement or arrange ment relating to the business of the A/TS Network or
the use of any Acquisition Assets;
(ii) pricing, unit volume, sales revenues, maintenance
expenses, capital expenditures,
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earnings capability or any other financial information relating to the
business of the A/TS Network or the performance of any truck stop
operation;
(iii) lease, rental, merchandise or other payments to be
due to Seller; or
(iv) obligations to purchase materials used or sold in
the business of the A/TS Network (x) from specified manufacturers,
suppliers, distrib utors or any other Person or (y) meeting performance,
operating or other quality standards imposed by Seller or any other
Person.
(b) Section 3.23(b) of the Disclosure Schedule sets forth a
true and accurate list of all disclosures that have been made to date by Seller
to Operators and Resellers pursuant to any federal, state or local franchising
laws.
(c) Section 3.23(c) of the Disclosure Schedule sets forth a
list of (x) all employees of Seller with primary responsibility for negotiating
lease, purchase or other material contracts with Operators and Resellers, and
(y) all employees of Seller with primary responsibility for insuring that Seller
has complied with all franchising laws relating to the business of the A/TS
Network.
(d) Except as set forth in Section 3.23(d) of the Disclosure
Schedule, Seller has not received any oral or written communications from any
Governmental Authority concerning the applicability of any franchising laws to
the business of the A/TS Network.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
4.1 ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
4.2 CORPORATE AUTHORIZATION. Buyer has all requisite corporate power
and authority to enter into this Agreement and all other agreements to be
executed by Buyer in connection herewith and to consummate the transactions
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contemplated hereby and thereby. This Agreement and all other agreements herein
contemplated to be executed in connection herewith have been (or upon execution
will have been) duly executed and delivered by Buyer, have been effectively
authorized by all necessary corporate action, and constitute (or upon execution
will constitute) legal, valid and binding obligations of Buyer, enforceable in
accordance with their respective terms (i) except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general equitable principles (regardless whether such enforceability
is considered in a proceeding at law or in equity).
4.3 GOVERNMENTAL AUTHORIZATION. (a) The execu tion, delivery and
performance by Buyer of this Agreement require no action by, consent or approval
of, or filing with, any governmental body, agency, official or authority other
than:
(i) compliance with any applicable requirements of the
HSR Act; and
(ii) compliance with any applicable requirements of the
bulk sales, bulk transfer or similar laws of the states in which the
Acquisition Assets are located;
(iii) the Required Permit Approvals; and
(iv) compliance with state franchise
registration/disclosure laws.
(b) To Buyer's knowledge, there are no facts relating to the
identity or circumstances of Buyer that would prevent or materially delay any of
the authorizations referred to in Section 3.3 or 4.3.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by
Buyer of this Agreement does not and will not (a)(i) contravene or conflict with
the certificate of incorporation or bylaws of Buyer, (ii) assuming compliance
with the matters referred to in Section 4.3, contravene or conflict with or
constitute a violation of any provision of any Applicable Law binding upon or
applicable to Buyer, (iii) constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or
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obligation of Buyer or to a loss of any benefit to which Buyer is entitled under
any provision of any agreement, contract or other instrument binding upon Buyer
or any license, franchise, permit or other similar authorization held by Buyer,
except in the case of clauses (ii) and (iii) for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or loss
that would not have a material adverse effect on the condition (financial or
otherwise), business, assets or results of operations of Buyer.
4.5 NO BROKERAGE FEES. No broker or finder has acted for Buyer in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finders' fees in respect of
such transactions based in any way on agreements, arrangements or understandings
made by or on behalf of Buyer.
4.6 LITIGATION. There are no Proceedings pending or, to Buyer's
knowledge, threatened, against Buyer which seek to enjoin or rescind the
transactions contemplated by this Agreement or otherwise prevent Buyer from
complying with the terms and provisions of this Agreement.
4.7 MATERIAL DISCLOSURES. No statement, repre sentation or warranty
made by Buyer in this Agreement, in any exhibit hereto, or in any certificate,
statement, list, schedule or other document furnished or to be furnished by
Buyer hereunder, contains or will contain any untrue state ment of material
fact, or fails or will fail to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they are made, not materially misleading.
4.8 NO KNOWLEDGE OF BREACHES. At the date hereof Buyer has no
knowledge of any breach of any representation or covenant of Seller contained
herein.
ARTICLE V
CERTAIN UNDERSTANDINGS AND
AGREEMENTS OF THE PARTIES
5.1 CONDUCT OF THE BUSINESS. From the date hereof until the Closing
Date, Seller shall conduct the business of the A/TS Network in the ordinary
course and consistent with past practice and preserve intact the Acqui sition
Assets and the A/TS Network's business organization
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and relationships and goodwill with third parties and use its best efforts to
keep available the services of the pre sent officers, employees and agents of
Seller employed in the business of the A/TS Network. Without limiting the
generality of the foregoing, from the date hereof until the Closing Date:
(a) without Buyer's prior written consent,
Seller will not and will not agree to:
(i) purchase or otherwise acquire assets that would
constitute Acquisition Assets from any Person other than in the ordinary
course of business;
(ii) sell, assign, lease, license, transfer or
otherwise dispose of, or mortgage, pledge or encumber (other than with
Permitted Liens), any Real Property or amend, terminate or renew any lease
thereof;
(iii) sell, assign, lease, license, transfer or
otherwise dispose of, or mortgage, pledge or encumber (other than with
Permitted Liens), any Acquisition Assets (other than Real Property) or
assets that would constitute Acquisition Assets (other than Real Property)
except (x) pursuant to existing obliga tions of Seller as set forth in
Section 5.1(a)(iii) of the Disclosure Schedule, (y) in the ordinary course
of business (but only with respect to Acquisition Assets with a fair
market value not in excess of $100,000);
(iv) amend or modify any material respect or terminate
or renew any Scheduled Contract or any other Contract entered into by
Seller after the date hereof which, if in existence on the date hereof,
would be required to be set forth in Section 3.13 of the Disclosure
Schedule as a Scheduled Contract (each, a "Subsequent Material Contract");
(v) except in the ordinary course of business, waive,
cancel or take any other action mate rially impairing any of its rights
relating to the Acquisition Assets (but only with respect to Acqui sition
Assets with a fair market value not in excess of $100,000);
(vi) commit to make capital expenditures in excess of
an aggregate of $100,000 for all such capital expenditures relating to the
A/TS Network or
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the Acquisition Assets, other than capital expenditures set forth on
Section 5.1(a)(vi) of the Disclosure Schedule and capital expenditures
required under any Scheduled Contract;
(vii) enter into or commit or propose to enter into any
Subsequent Material Contract other than the entering into of a Subsequent
Material Contract as provided in Section 5.1(a)(vii) of the Disclosure
Schedule;
(viii)take any action that would consti tute, or fail to
take any action that would prevent, a breach of or a default under any
Contract or Subsequent Material Contract or a violation of the terms of
any Permit;
(ix) other than a Designated Employee who the Buyer has
notified Seller is to no longer provide services on behalf of the Buyer
(1) Seller shall not increase a Designated Employee's wage or salary level
except in the ordinary course of business; (2) amend any ERISA Plan or
Benefit Arrangement, including any Employment Agreement, or adopt any new
such plan or arrangement applicable to any Designated Employee, except for
changes made to Seller's similarly situated employees generally and in the
ordinary course of business; and (3) there has been no (a) material change
in the compensation, benefits, title or respon sibilities of any
Designated Employee or (b) the termination or re-assignment of any
Designated Employee with significant A/TS Network managerial responsi
bilities; or
(x) make any change in the accounting methods for any
Contract or other Acquisition Asset or in the manner of keeping the books
and records of the A/TS Network or financial statements relating to the
operation of the A/TS Network.
(b) Seller will:
(i) (1) maintain the Acquisition Assets in the
ordinary course of business in good operating order and condition,
reasonable wear and tear excepted, and (2) upon any damage, destruction or
loss to any of the Acquisition Assets, apply any and all insurance
proceeds received with respect thereto to the prompt repair, replacement
and restoration thereof to the condition of the Acquisition Assets before
such event;
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(ii) use its best efforts (other than paying
consideration) to obtain, prior to the Closing Date, all Required
Consents;
(iii) take all actions reasonably necessary to be in
compliance with, and to maintain the effectiveness of, all Permits;
(iv) notify Buyer in writing of any action, event,
condition or circumstance, or group of actions, events, conditions or
circumstances, relating to Seller, the A/TS Network, or, to Seller's
knowledge, any other Person, that results in, or could result in, a
Material Adverse Effect, such notification to be provided to Buyer by
Seller promptly after the occurrence of any such action, event, condition
or circumstance, or group thereof;
(v) notify Buyer in writing of the commencement of any
material Proceeding by or against Seller relating to the business of the
A/TS Network or any of the Acquisition Assets, or of Seller becoming aware
of any threat, claim, action, suit, inquiry, proceeding, notice of
violation, demand letter, subpoena, government audit or disallowance that
could reasonably be expected to result in such a Proceeding, such
notification to be provided to Buyer by Seller promptly after such
commencement or Seller's becoming aware thereof;
(vi) notify Buyer in writing of the occurrence of any
breach by Seller of any representation or warranty, or any covenant or
agreement, contained in this Agreement, promptly after becoming aware of
any such breach;
(vii) pay accounts payable and pursue collection of its
accounts receivable relating to the A/TS Network or Acquisition Assets in
the ordinary course of business; and
(viii)comply with all provisions and requirements of the
WARN Act applicable to the consummation of the transactions contemplated
herein.
5.2 ACCESS TO INFORMATION. From the date hereof until the Closing
Date, Seller and its representatives (including counsel, financial advisors,
auditors and other representatives) will promptly: (a) give Buyer and its
counsel, financial advisors, auditors and other authorized
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representatives reasonable access to the offices, prop erties, contracts, books
and records of Seller and its Affiliates relating to the A/TS Network or the
Acquisition Assets, (b) furnish to Buyer and its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information relating to the A/TS Network or the Acquisition Assets as
Buyer may reasonably request, including, without limitation, financial and
operating data of Seller's refining and marketing division directly relating to
the performance of the A/TS Network and (c) instruct the employees, counsel,
auditors, financial advisors and other representatives of Seller and its
Affiliates to cooperate with Buyer and its representa tives in its investigation
of the business of the A/TS Network and the Acquisition Assets; provided,
however, that nothing set forth herein shall obligate Seller to provide Buyer or
any of its attorneys, agents, employees, accoun tants or other representatives
with access to any infor mation that is protected by the attorney-client
privilege or any similar privilege. Seller will provide Buyer and its
representatives (including counsel, financial advisors, auditors and other
authorized representatives) reasonable access to Seller's employees employed in
the business of the A/TS Network, and Buyer shall have the right to discuss the
affairs and business of the A/TS Network with such employees.
5.3 CONFIDENTIALITY. Until the Closing, Buyer shall be subject to
the terms and conditions of the Confidentiality Agreement, as if an original
party thereto. The Confidentiality Agreement shall terminate upon the occurrence
of the Closing.
5.4 ACCESS TO RECORDS AND FILES. Seller shall have the right for a
period of three (3) years following the Closing Date to have reasonable access,
during normal busi ness hours and upon reasonable prior notice, to such books,
records and accounts, correspondence, and employment records and other similar
information as are transferred to Buyer pursuant to the terms of this Agreement
for the limited pur poses of concluding Seller's involvement in the business of
the A/TS Network prior to the Closing Date; PROVIDED, HOW EVER, that nothing set
forth herein shall obligate Buyer to provide Seller or any of its attorneys,
agents, employees, accountants or other representatives with access to any
information that is protected by the attorney-client privi lege or any similar
privilege. Nothing contained herein shall impose any obligation upon Buyer to
retain any such books and records beyond the retention periods delineated in the
Buyer's policies relating to the retention of books and
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records pertaining to similar subject matter or of a similar type. All
information obtained by Seller and its authorized representatives pursuant to
this Section 5.4 shall be kept confidential by Seller and shall not be used by
it for any purpose other than concluding its involvement in the busi ness of the
A/TS Network prior to the Closing Date.
5.5 PUBLIC ANNOUNCEMENTS. The parties hereto agree that prior to the
Closing they will not make any dis closures to any Person (other than Operators
and Resellers) regarding the existence or contents of this Agreement or
negotiations relating to the transactions contemplated herein or cause to be
publicized in any manner whatsoever by releases or otherwise any aspect or
proposed aspect of the transactions contemplated herein without prior written
notice to and approval of, which shall not be unreasonably withheld, the other
parties hereto, unless such party reasonably concludes that such release of
information is required by Applicable Law or necessary in order to obtain
Required Consents and the parties hereto cannot reach agreement upon a mutually
acceptable form of release. Notwithstanding the foregoing, the parties hereto
may, on a confidential basis, advise their respective agents, accoun tants,
attorneys and prospective financing sources (includ ing any Operators or
Resellers) with respect to the contents of this Agreement and the transactions
contemplated herein.
5.6 NO SHOPPING. From the date hereof until the earlier of the
Closing Date or the termination of this Agreement in accordance with its terms,
Seller shall not, and shall cause each of its Affiliates not to, directly or
indirectly, through any officer, director, employee or agent or otherwise,
solicit, initiate, encourage, participate in any negotiation or discussion or
enter into any agreement in respect of, or cooperate with (including, without
limita tion, by way of furnishing any non-public information con cerning, or
affording access to, the business, properties or assets of the A/TS Network),
any Acquisition Proposal (as hereinafter defined) pertaining to the A/TS
Network. The term "Acquisition Proposal" means any proposal (other than a
proposal by Buyer) for the acquisition of all or any portion of the assets
comprising the A/TS Network or for a merger, consolidation or other business
combination pursuant to which any other person would acquire the A/TS Network or
any substantial equity interest therein or any Acquisition Assets (or portion
thereof). In the event Seller receives any Acquisition Proposal it shall
promptly notify Buyer in writing of the identity of the party making the
Acquisition Proposal and, if, in the good faith judgment of Seller, Seller
determines that it can disclose the terms, conditions
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and circumstances of such Acquisition Proposal to Buyer without breaching an
obligation to such party or otherwise exposing Seller to liability, Seller shall
disclose such terms, conditions and circumstances to Buyer.
5.7 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each party will use all rea sonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under Applicable Law to consummate the transac tions contemplated by
this Agreement. Seller and the Buyer agree to execute and deliver such other
documents, certif icates, agreements and other writings, including instruments
of transfer with respect to the Acquisition Assets, and to take such other
actions as may be necessary or desirable in order to consummate or implement
expeditiously the trans actions contemplated by this Agreement, provided that
Seller is not obligated to pay consideration to obtain any consents.
5.8 COOPERATION IN LITIGATION. Each party will fully cooperate with
the other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter against or by such party relat
ing to or arising out of the conduct of the A/TS Network or the Acquisition
Assets prior to or after the Closing Date (other than litigation arising out of
the transactions con templated by this Agreement).
5.9 CERTAIN FILINGS. Seller and Buyer shall cooperate with one
another in determining whether any action by or in respect of, or filing with,
any Governmental Authority or with respect to any Required Permit Approval is
required or reasonably appropriate, or any action, consent, approval or waiver
from any party to any Contract is required or reasonably appropriate, in
connection with the consummation of the transactions contemplated by this Agree
ment; PROVIDED, HOWEVER, that Seller and Buyer retain the right to make any
filings required by Applicable Law. Subject to the terms and conditions of this
Agreement, Seller and Buyer shall seek to timely obtain any such actions,
consents, approvals or waivers and shall furnish all information required in
connection therewith. Without limiting the foregoing, (i) Seller and Buyer shall
each promptly complete and file all reports and forms, and respond to all
requests or further requests for additional information, as may be required or
authorized under the HSR Act and (ii) Seller will comply with all provisions and
requirements of the WARN Act applicable to the consummation of the transactions
contemplated herein, including any such
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provisions and requirements applicable to (x) any termination of the employment
of any of Seller's employees upon notice from Buyer pursuant to Section 5.12
that it no longer desires the services of such employees or (y) the expiration
of the six-month period set forth in Section 5.12. None of the provisions in
this Section 5.9 abrogate or limit in any way any of the representations,
warranties and covenants made by Seller in any of the other provisions in this
Agreement.
5.10 ADMINISTRATION OF ACCOUNTS.
(a) All accounts receivable paid in the ordinary course by any
third party in the name of or to Buyer in connection with the operation of the
A/TS Network on or prior to the Closing Date shall be held by Buyer in trust for
the benefit of Seller and, promptly upon receipt by Buyer of any such payment,
Buyer shall forward to Seller such monies, checks, instruments or other payments
without right of set off. Seller hereby authorizes Buyer to open any and all
mail addressed to Seller (if delivered to Buyer) if received on or after the
Closing Date.
(b) All accounts receivable paid in the ordinary course by any
third party in the name of or to Seller in connection with the operation of the
A/TS Network after the Closing Date shall be held by Seller in trust for the
benefit of Buyer and, immediately upon receipt by Seller of any such payment,
Seller shall forward to Buyer such monies, checks, instruments or other payments
without right of set off. Buyer hereby authorizes Seller to open any and all
mail addressed to Buyer (if delivered to Seller) if received on or after the
Closing Date.
5.11 TITLE INSURANCE; ENCUMBRANCES. If, at any time on or prior to
the Closing Date, Buyer obtains preliminary title reports or surveys showing, or
otherwise learns of, any Encumbrance on any parcel of Real Property that is not
a Permitted Encumbrance, Seller will, immedi ately upon receipt of notice from
Buyer of such Encumbrance (or immediately upon Seller's obtaining actual
knowledge of such Encumbrance, whichever is sooner), use its best efforts to
cause title to such Real Property to be cleared of such Encumbrance on or prior
to the Closing Date; PROVIDED, HOWEVER, that if such Encumbrance relates to or
is in connection with indebtedness, Seller covenants that it will cause the
indebtedness to be paid in full and/or take all actions necessary to remove such
Encumbrance.
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5.12 EMPLOYEES AND BENEFITS. (a) For a period of six months
following the Closing Date, Seller will use its best efforts to continue to have
the Designated Employees available to render services on behalf of and at the
direction of the Buyer. Such best efforts shall not require the Seller to incur
any costs in excess of those reimbursable by Buyer. Seller will continue to
maintain and contribute to the ERISA Plans and Benefit Arrangements, including
Employment Agreements, for the Designated Employees during such six month period
on the same terms and conditions as on the Closing Date, except for changes made
generally applicable to Seller's similarly situated employees. Buyer will
reimburse Seller for such employees' salaries (but not bonuses) and hourly wages
(at their salary and wage rate in effect as of the Closing or as thereafter
increased in the ordinary course consistent with past practice) and will pay to
Seller an additional amount equal to 45% of such salaries and wages as full
reimbursement for all employee benefit expenses incurred by Seller. Except as
provided in Section 7.2(d) (concerning Buyer's indemnification with respect to
certain employment discrimination violations), Buyer's obligation for any
Liability with respect to any Designated Employee that arises or accrues prior
to such time, if any, as such Designated Employee is employed by Buyer shall be
limited to payment of the amounts described in the preceding sentence. Buyer
acknowledges that Seller shall have no liability to Buyer for any actions or
decisions made or taken by the Designated Employees (whether as a result of the
negligence, gross negligence or willful misconduct of the Designated Employees
or otherwise) in the course of their rendering services on behalf of and at the
direction of Buyer.
(b) Upon at least 14 days' advance written notice to Seller,
during the six month period following the Closing Date, Buyer may offer
employment to such of the Designated Employees as Buyer may determine in its
sole discretion. Upon any such Designated Employee's acceptance of employment
with Buyer, Buyer will notify Seller of such acceptance and Buyer's obligation
to reimburse Seller for such employee's salary and benefits, and Seller's
obligation to provide such salary and benefits, will terminate on the effective
date of such employee's employment with Buyer, which date shall be within the
six month period following the Closing Date and which date shall be set forth in
the aforesaid notice of acceptance of employment.
(c) If a Designated Employee of Seller is hired by Buyer
within one year after the Closing Date, Buyer shall recognize under each of
Buyer's comparable plans, if
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any, such employee's prior service with Seller for purposes of eligibility for
participation and vesting.
(d) Upon 30 days' advance written notice to Seller, Buyer may
notify Seller that it no longer wishes the services of any of the Designated
Employees that Buyer may determine in its sole discretion. Upon the effective
date of such notice to Seller, such employee shall no longer provide services
to Buyer and Buyer's obligation hereunder to reimburse Seller for such
employee's salary, wages and bene fits will terminate. Neither Seller nor Buyer
shall have any obligation hereunder to employ or continue to employ any of
Seller's employees. With respect to any Designated Employee for whom notice has
not been given pursuant to either subsection (b) or subsection (d) of this
Section 5.12 within 14 days prior to the end of the six month period following
the Closing Date, then the service of any such Designated Employee on behalf of
Buyer shall end as of the last day of such six-month period.
(e) All termination or similar benefits, if any, payable to a
Designated Employee who is not employed by the Buyer shall be solely the
responsibility of Seller.
5.13 ADJUSTMENT CERTIFICATE. At the Closing, Seller shall deliver to
Buyer a draft certificate and within seven days after the Closing Date Seller
shall deliver to Buyer a final certificate (such final certificate being
referred to as the "Adjustment Certificate") specifying (i) the various amounts
of each type of Inventory as of the Closing Date and (ii) the various types and
amounts of deposits which Seller has made with third parties in connection with
the operation of the A/TS Network and (iii) the various types and amounts of
prepaid expenses (including, personal and real property taxes but excluding any
and all transfer and conveyance taxes). Buyer may elect not to purchase, and
exclude from the definition of Acqui sition Assets, any of such Inventory other
than petroleum distillate and gasoline, and saleable products and mer chandise.
Buyer and Seller shall mutually agree to the "fair market" wholesale price (the
"Inventory Amount") of those items of Inventory included within the definition
of Acquisition Assets according to the pricing methodology set forth in Section
5.13 of the Disclosure Schedule. Buyer shall, promptly following delivery by
Seller of the Adjustment Certificate, pay to Seller an amount equal to the
Inventory Amount plus the aggregate amount of such deposits and prepaid
expenses. In the event of any dispute as to the amount to be paid by Buyer to
Seller pursuant to this Section 5.13, Buyer and Seller shall attempt to resolve
such
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dispute and in the absence of any such resolution, Buyer and Seller shall
mutually appoint a Person to determine the amount payable by Buyer to Seller
pursuant to this Section 5.13.
5.14 COOPERATION WITH RESPECT TO FINANCING.
(a) Seller will cooperate with Buyer in connection with the
obtaining of the financing referred to in Section 6.2(h) hereof and in the
preparation of one or more registration statements or offering memoranda for the
public or private offering of debt or equity securities to be issued by Buyer
(collectively, the "Offering Material") by furnishing to Buyer all information
reasonably requested by Buyer relating to such financing or the preparation of
the Offering Material.
(b) In connection with the preparation of the Offering
Material, Seller will assist in the preparation of all historical information
requested by Buyer with respect to the A/TS Network or Acquisition Assets for
inclusion in such Offering Material, provided such information is available to
Seller without unreasonable expense, including, without limitation, (i) a
description of the business and properties of, and the legal proceedings with
respect to, the A/TS Network or Acquisition Assets and (ii) financial
information with respect to the A/TS Network or Acquisition Assets, including,
without limitation, financial statements, selected financial data and supple-
mentary financial information, management's discussion and analysis of financial
condition and results of operations and disagreements with accountants on
accounting and financial disclosure, if any.
5.15 PMPA. Prior to the Closing Date (i) Seller agrees not to take
any action (and Buyer agrees not to cause Seller to take any action) (including,
without limitation, failing to renew the lease of any Operator) which would give
any Operator any option or other right, whether under PMPA or any other statute
or regulation, to acquire the facility leased by Seller to such Operator.
5.16 PROPERTIES. Without diminishing or impairing any rights of
Seller or Buyer contained elsewhere in this Agreement or in any other agreement,
document or certificate delivered pursuant hereto, in the event that one or more
of the properties (the "Non-Conveyable Properties") included in the Acquisition
Assets cannot be conveyed by Seller to Buyer (whether as a result of a title
defect, environmental matter, damage or otherwise), Seller and Buyer
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shall enter into negotiations with respect to the conveyance of the Acquisition
Assets (other than the Non-Conveyable Properties) to Buyer at a purchase price
to be agreed upon by Seller and Buyer.
5.17 RECENT FINANCIAL STATEMENTS. Prior to the Closing Date, Seller
agrees to timely prepare and deliver to Buyer financial statements comparable to
those delivered pursuant to Section 3.5 hereof for any quarter or year which
ends on a date subsequent to September 30, 1992.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 (a) CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligations of
Seller and Buyer to consummate the transactions contemplated hereby shall be
subject to the fulfillment, at or prior to the Closing Date, of the following
conditions:
(b) NO ACTION OR PROCEEDING. No Proceeding shall be pending or
threatened before any Governmental Authority which presents a material risk of
the restraint or prohibition of the transactions contemplated by this Agreement
or the obtaining of material Damages or other relief in connection therewith.
(c) COMPLIANCE WITH LAW. There shall have been obtained all
permits, approvals and consents of Governmental Authorities which counsel for
Buyer or for Seller may reasonably deem necessary or appropriate so that
consummation of the transactions contemplated by this Agreement will be in
compliance with Applicable Law, including, without limitation, the permits,
approvals and consents listed in Section 3.3 and 4.3, but excluding any Required
Permit Approvals.
(d) ANCILLARY AGREEMENTS. Seller and Buyer shall have executed
and delivered the Ancillary Agreements.
6.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated hereby shall be, at the option of
Buyer, subject to the fulfillment, at or prior to the Closing Date, of the
following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of Seller contained in
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this Agreement, the Environmental Agreement or in any other document of Seller
delivered pursuant hereto shall be true and correct in all material respects on
the Closing Date with the same effect as if made on the Closing Date. Seller
shall have delivered to Buyer a certificate to such effect signed by the
President or any Vice President and the Secretary or any Assistant Secretary of
Seller.
(b) SELLER'S PERFORMANCE. Each of the obligations of Seller to
be performed by it on or before the Closing Date pursuant to the terms of this
Agreement or the Environmental Agreement shall have been duly performed in all
material respects on or before the Closing Date. Seller shall have delivered to
Buyer a certificate to such effect signed by the President or any Vice President
and the Secretary or any Assistant Secretary of Seller.
(c) OPINION OF SELLER'S COUNSEL. Buyer shall have been
furnished at the Closing with an opinion of Dennis Codon, counsel to Seller,
dated the Closing Date, addressed to Buyer in form and substance satisfactory to
Buyer. As to any matter contained in such opinion which involves the laws of a
jurisdiction in which such counsel is not admitted to practice, such counsel may
rely upon the opinion of local counsel of established reputation satisfactory
to Buyer. Any such opinion may expressly rely as to matters of fact upon
certificates furnished by appropriate officers of Seller or appropriate
governmental officials.
(d) ADDITIONAL CLOSING DOCUMENTS OF SELLER. Buyer shall have
received at the Closing the following documents, dated the Closing Date:
(i) copies, certified by the Secretary or an Assistant
Secretary of Seller, of resolutions of the Board of Directors of Seller or
the Executive Committee thereof authorizing the execution, delivery and
performance of this Agreement and all other agreements, documents and
instruments relating hereto and the consummation of the transactions
contemplated hereby;
(ii) bills of sale and assignment, in form and
substance reasonably satisfactory to counsel for Buyer, duly executed by
Seller, covering the items of personal property included in the
Acquisition Assets to be transferred or assigned to Buyer at the Closing,
and assignments in form and substance reasonably satisfactory to counsel
for Buyer;
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(iii) special warranty deeds (or their equivalent in
each applicable state) in proper statutory form for recording duly
executed and acknowledged by Seller covering the Owned Real Property to be
conveyed to Buyer pursuant to this Agreement;
(iv) such further instruments of sale, transfer,
conveyance, assignment or delivery covering the Acquisition Assets or any
part thereof as Buyer may reasonably require to assure the full and
effective sale, transfer, conveyance, assignment or delivery to it of the
Acquisition Assets to be transferred to Buyer under this Agreement; and
(v) such other documents (duly executed
as applicable) as Buyer may reasonably request.
(e) REQUIRED PERMIT APPROVALS. All
Required Permit Approvals shall have been obtained without the imposition of any
conditions that are or would become applicable to the A/TS Network, the
Acquisition Assets, Buyer or any Operator or Reseller which Buyer in good faith
reasonably determines would be materially burdensome upon the A/TS Network, the
Acquisition Assets, Buyer or any Operator or Reseller or Buyer's conduct of
business after the Closing. All such Required Permit Approvals shall be in
effect, and no Proceeding shall have been instituted or threatened by any
Governmental Authority with respect thereto as to which, in Buyer's good faith
opinion, there is a material risk of a determination that would terminate the
effectiveness of, or otherwise materially and adversely modify the terms of, any
such Permit Approval.
(f) REQUIRED CONTRACTUAL CONSENTS. All Required Contractual
Consents shall have been obtained in written instruments reasonably satisfactory
to Buyer.
(g) TITLE TO REAL PROPERTY. Title to the Real Property being
transferred to Buyer hereunder shall have been cleared of any Encumbrances which
are not Permitted Encumbrances
(h) FINANCING. All conditions precedent set forth in the
documents relating to the funding of any debt and equity the proceeds of which
Buyer shall use to effectuate the acquisition of the Acquisition Assets shall
have been fulfilled and the Persons committed to providing such funding shall be
prepared to do so concurrently with the Closing.
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(i) MATERIAL ADVERSE EFFECT. There shall not have occurred any
event, occurrence, development or state of circumstances or facts or change in
the Acquisition Assets or business of the A/TS Network (including any damage,
destruction or other casualty loss) affecting the business of the A/TS Network
or any Acquisition Asset which has had or which may reasonably be expected to
have, either alone or together with all such events, occurrences, developments,
states of circumstances or facts or changes, a Material Adverse Effect.
6.3 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
to consummate the transactions contemplated hereby shall be, at the option of
Seller, subject to the fulfillment, at or prior to the Closing Date, of the
following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of Buyer contained in this Agreement or in any document delivered
pursuant hereto shall be true and correct in all material respects on the
Closing Date with the same effect as if made on the Closing Date. Buyer shall
have delivered to Seller a certificate to such effect, signed by the President
or any Vice President and the Secretary or any Assistant Secretary of Buyer.
(b) PERFORMANCE OF COVENANTS. Each of the obligations of Buyer
to be performed on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects on or before
the Closing Date. Buyer shall have delivered to Seller a certificate to such
effect signed by the President or any Vice President and the Secretary or any
Assistant Secretary of Buyer.
(c) OPINION OF BUYER'S COUNSEL. Seller shall have been
furnished with an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel
to Buyer, dated the Closing Date, addressed to Seller in form and substance
satisfactory to Seller. As to any matter which involves the laws of a
jurisdiction in which the counsel rendering the opinion is not admitted to
practice, such counsel may rely upon the opinion of local counsel of established
reputation satisfactory to Seller. Such opinion may expressly rely as to matters
of fact upon certificates furnished by appropriate officers of Buyer or
appropriate governmental officials.
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(d) ADDITIONAL CLOSING DOCUMENTS OF BUYER. Seller shall have
received at the Closing the following documents, each dated the Closing Date:
(i) copies, certified by the Secretary or an Assistant
Secretary of Buyer, of resolutions of its Board of Directors or the
Executive Committee thereof authorizing the execution and delivery of this
Agreement and all other agreements, documents or instruments relating
hereto and the consummation of the transactions contemplated hereby;
(ii) confirmation of the wire transfers to be delivered
by Buyer at the closing pursuant to Section 2.05(i) and (iii) hereof; and
(iii) such other closing documents (duly executed as
applicable) as Seller may reasonably request.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY SELLER. Except for indemnification with
respect to Environmental Liabilities, which shall be governed by the
Environmental Agreement, Seller shall indemnify and hold harmless Buyer, Buyer's
Affiliates and their respective officers, directors, employees and agents
(collectively, the "Buyer Indemnitees") in respect of any and all Damages
reasonably incurred by any Buyer Indemnitee, whether paid or payable, as a
result of or otherwise in connection with each and all of the following:
(a) any breach of any representation or warranty made by
Seller in this Agreement;
(b) the breach of any covenant, agreement or obligation of
Seller contained in this Agreement or any other instrument contemplated by this
Agreement;
(c) any misrepresentation contained in any statement or
certificate furnished by Seller pursuant to this Agreement or in connection with
the transactions contemplated by this Agreement:
(d) any Liability relating to the A/TS Network or the
Acquisition Assets existing or arising on or resulting from events which
occurred or failed to occur on
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or before the Closing Date, except to the extent such liability is assumed by
Buyer hereunder;
(e) any failure of Buyer to obtain the protections afforded by
compliance with the notification requirements of the bulk sale, bulk transfer
and similar laws in force in the jurisdictions in which such laws may be
applicable to either Seller or the transactions contemplated by this Agreement;
(f) the Excluded Assets and any Liability which is not an
Assumed Liability, including, without limitation, the liabilities listed in
clauses (i) through (xii) of Section 2.3 (other than any Liability within clause
(vii) of Section 2.3 to the extent (and solely to the extent) such Liability
results from a claim against Buyer in respect of actions taken by Buyer prior to
the Closing Date);
(g) any Liability arising under the WARN Act with respect to
the termination by Seller or any of its Affiliates of any employee of Seller
(including any Designated Employee) and any Liability under any ERISA Plan or
Benefit Arrangement with respect to any employee (including any Designated
Employee) of Seller or any of Seller's Affiliates;
(h) any Liability with respect to any tax liabilities of any
and all kinds arising out of the ownership, operation or possession of the A/TS
Network or the Acquisition Assets prior to the Effective Time, and, except as
expressly provided elsewhere in this Agreement, any obligation of Seller or any
consolidated group of which Seller is or was a member with respect to any and
all taxes, including, without limitation, any debts, liabilities, obligations or
commitments for any income, excise, sales, use, gross receipts, franchise,
employment, payroll-related or property tax of any sort, and any deficiencies,
assessments, charges, interest and penalties associated therewith, imposed upon
Seller or any consolidated group of which Seller is or was a member by the
United States, any taxing authority outside the United States or any state or
local instrumentality or authority within the United States, relating to,
accrued for, applicable to or arising from any period as of, prior to or after
the Effective Time; and
(i) any claim pursuant to PMPA or any similar or related
federal or state statute or regulation (including any such claim arising out of
or resulting from the execution and delivery of this Agreement or the sale of
any of the Acquisition Assets to the Buyer) but excluding
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(x) any such claim to the extent to which it arises out of or results from
events which occur after the Closing Date or (y) any such claim against Buyer
which arises out of or results from actions which are alleged will be taken by
the Buyer after the Closing Date (provided, that any claim described in this
clause (y) shall not be excluded from the scope of Seller's indemnity in this
paragraph (f) if the claim against Buyer is withdrawn or dismissed or it is
determined that neither Buyer nor Seller has any Liability in respect of such
claim).
7.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
harmless Seller, Seller's Affiliates and their respective officers, directors,
employees and agents (collectively the "Seller Indemnitees") in respect of any
and all Damages reasonably incurred by any Seller Indemnitee, whether paid or
payable, as a result of or in connection with each and all of the following:
(a) any breach of any representation or warranty made by Buyer
in this Agreement;
(b) the breach of any covenant, agreement or obligation of
Buyer contained in this Agreement or any other instrument contemplated by this
Agreement;
(c) any misrepresentation contained in any statement or
certificate furnished by Buyer pursuant to this Agreement or in connection with
the transactions contemplated by this Agreement;
(d) the Assumed Liabilities and any Liability relating to the
A/TS Network or the Acquisition Assets arising after or resulting from events
which occurred after the Closing Date, except to the extent such liability is
specifically assumed by Seller hereunder;
(e) any Liability arising out of, or resulting from: (i) the
Buyer's violation of any employment discrimination law with respect to any
Designated Employee prior to or during the six month period following the
Closing Date; (ii) Buyer's improper use of any Designated Employee's employment
records transferred to Buyer by Seller or any of its Affiliates; or (iii)
Buyer's illegal conduct in connection with Buyer's interviews of Seller's
employees pursuant to Section 5.2; or
(f) any Liability with respect to any tax liabilities of any
and all kinds arising out of the ownership, operation or possession of the A/TS
Network or the Acquisition Assets after the Effective Time.
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7.3 DEFENSE OF CLAIMS. Whenever any claim shall arise for
indemnification hereunder, the party entitled to indemnification (the
"Indemnified Party") shall promptly notify the other party (the "Indemnifying
Party") of the claim and, when known, the facts constituting the basis for such
claim. If the Indemnified Party fails to provide the Indemnifying Party with
such notice prior to the time at which the Indemnifying Party's ability to
defend against such claim is irrevocably prejudiced by the failure to provide
such notice, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such portion of the claim as to which the
Indemnifying Party's ability to defend has been prejudiced by such failure. The
Indemnifying Party may, upon written notice to the Indemnified Party within 30
calendar days of receipt of the notice specified in the first sentence of this
para graph, assume the defense of any such claim if the Indemnifying Party
acknowledges to the Indemnified Party the Indemnified Party's right to indemnity
pursuant hereto in respect of the entirety of such claim. If the Indemnifying
Party assumes the defense of any such claim, the Indemnifying Party shall
select counsel reasonably acceptable to the Indemnified Party to conduct the
defense of such claim, shall take all steps necessary in the defense or
settlement thereof and shall at all times diligently and promptly pursue the
resolution thereof. If the Indemnifying Party shall have assumed the defense of
any claim in accordance with this Section 7.3, the Indemnifying Party shall be
authorized to consent to a settlement of, or the entry of any judgment arising
from, any such claim, without the prior written consent of the Indemnified
Party; PROVIDED, HOWEVER, that the Indemnifying Party shall pay or cause to be
paid all amounts arising out of such settlement or judgment concurrently with
the effectiveness thereof; PROVIDED, FURTHER, that the Indemnifying Party shall
not be authorized to encumber any of the assets of the Indemnified Party or to
agree to any restriction that would apply to the Indemnified Party, or to any
other Buyer or Seller Indemnitee, as applicable, or to its conduct of business
or to any other Buyer or Seller Indemnitee, as applicable, or to their conduct
of business; AND PROVIDED, FURTHER, that a condition to any such settlement
shall be a complete release of the Indemnified Party with respect to such claim.
The Indem nified Party shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense. The
Indemnified Party shall, and shall cause each of its Affiliates, officers,
employees, consultants and agents and each other Buyer or Seller Indemnitee, as
applicable, to, cooperate fully with the Indemnifying Party in the defense of
any claim pursuant to this Section 7.3. If the Indemnifying Party does not
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assume the defense of any claim resulting therefrom in accordance with the terms
of this Section 7.3, the Indemnified Party may defend against such claim in
such manner as it may deem appropriate, including settling such claim after
giving notice of the same to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate.
7.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the parties in Articles III and IV and in any instrument
or document furnished in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of the parties hereto and shall
expire on the fourth anniversary of the Closing Date, except (i) as to any
matter as to which a claim is submitted in writing to the Indemnifying Party
prior to such fourth anniversary and identified as a claim for indemnification
pursuant to this Agreement, (ii) the inaccuracy of any representation or
warranty arising out of the fraud, gross negligence or willful misconduct of
Seller or Buyer, which representation and warranty shall survive until sixty
(60) days following the expiration of the applicable statute of limitations,
including extensions thereof and (iii) any inaccuracy in the representations or
warranties set forth in Sections 3.8 and 4.5 of this Agreement, which
representations and warranties shall survive until the expiration of sixty (60)
days following the applicable statute of limitations, including extensions
thereof. The covenants of Seller and Buyer hereunder, including the
indemnification obligations of Seller under Section 7.1(b), (d), (e), (f) and
(g) and the indemnification obligations of Buyer under Section 7.2(b) and (d),
shall survive until the expiration of any applicable statute of limitations. No
claim or action for indemnity pursuant to Sections 7.1 or 7.2 hereof for breach
of any representation or warranty shall be asserted or maintained by any party
hereto after the expiration of such representation or warranty pursuant to the
first sentence of this Section 7.4 except for claims made in writing prior to
such expiration and actions (whether instituted before or after such expiration)
based on any claim made in writing prior to such expiration.
7.5 LIMITATIONS ON INDEMNIFICATION FOR BREACHES OF REPRESENTATIONS
AND WARRANTIES. No amount shall be recoverable for Damages under Section 7.1(a)
or (c) unless and only to the extent that the aggregate amount of such Damages,
when added to all other Damages claimed by the Buyer Indemnitees under Section
7.1(a) and (c) (exclusive of any Damages for which the Buyer Indemnitees are
indemnified pursuant to Article VIII), exceeds $250,000. Notwithstanding the
foregoing sentence, indemnification under Section
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7.1(a) and (c) may be claimed with respect to all Damages resulting from, and
full recovery shall be made for, (i) the inaccuracy of any representation or
warranty set forth in Section 3.8 or 3.19 and (ii) the inaccuracy of any
representation or warranty arising out of the fraud, gross negligence or willful
misconduct of Seller.
ARTICLE VIII
TERMINATION
8.1 GROUNDS FOR TERMINATION. This Agreement may
be terminated at any time prior to the Closing:
(i) by mutual written agreement of Seller and Buyer;
(ii) by Buyer at any time following the expiration of
ten (10) days from the date that Buyer has given written notice to Seller
of any one or more material inaccuracies or material misrepresentations in
or material breaches of the representations or warranties made by Seller
and Seller shall have failed to cure such inaccuracies and breaches in all
material respects in said ten (10) day period; PROVIDED, HOWEVER, that in
the event that within said ten (10) day period Seller has undertaken
reasonable actions to cure such inaccuracies and breaches and such actions
are being diligently pursued by Seller, no termination under this clause
(ii) shall take effect unless Seller shall have failed to cure such
inaccuracies and breaches in all material respects within forty-five (45)
days after delivery of the original notice from Buyer;
(iii) by Buyer at any time following the expiration of
ten (10) days from the date that Buyer has given written notice to Seller
of Seller's failure to perform and satisfy in any material respect any of
Seller's obligations under this Agreement and Seller shall have failed to
cure such failure in all material respects in said ten (10) day period;
PROVIDED, HOWEVER, that in the event that within said ten (10) day period
Seller has undertaken reasonable actions to cure such failure and such
actions are being diligently pursued by Seller, no termination under this
clause (iii) shall take effect unless seller shall have failed to cure
such failure in all material respects within forty-five (45) days after
delivery of the original notice from Buyer;
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(iv) by Seller at any time following the expiration of
ten (10) days from the date that Seller has given written notice to Buyer
of any one or more material inaccuracies or material misrepresentations in
or material breaches of the representations or warranties made by Buyer
herein and Buyer shall have failed to cure such inaccuracies and breaches
in all material respects in said ten (10) day period; PROVIDED, HOWEVER,
that in the event that within said ten (10) day period Buyer has
undertaken reasonable actions to cure such inaccuracies and breaches and
such actions are being diligently pursued by Buyer, no termination under
this clause (iv) shall take effect unless Buyer shall have failed to cure
such inaccuracies and breaches in all material respects within forty-five
(45) days after delivery of the original notice from Seller;
(v) by Seller at any time following the expiration of
ten (10) days from the date that Seller has given written notice to Buyer
of Buyer's failure to perform and satisfy in any material respect any of
Buyer's obligations under this Agreement and Buyer shall have failed to
cure such failure in all material respects in said ten (10) day period;
PROVIDED, HOWEVER, that in the event that within said ten (10) day period
Buyer has undertaken reasonable actions to cure such inaccuracies and such
actions are being diligently pursued by Buyer, no termination under this
clause (v) shall take effect unless Buyer shall have failed to cure such
inaccuracies in all material respects within forty-five (45) days after
delivery of the original notice from Seller;
(vi) by either Buyer or Seller if the Closing shall not
have been consummated by May 15, 1993, or such later date as mutually
agreed to in writing by Buyer and Seller (the "Termination Date");
provided, however, that neither Buyer nor Seller may terminate this
Agreement pursuant to this clause (vi) if the Closing shall not have been
consummated by the Termination Date by reason of the failure of such party
to perform in all material respects any of its cove nants or agreements
contained in this Agreement; or
(vii) by Buyer by written notice to Seller on or prior
to December 31, 1992 if Buyer, in its reasonable judgment, determines that
it is not satisfied with the results of its due diligence.
54
<PAGE>
8.2 EFFECT OF TERMINATION. Subject to the next sentence, if this
Agreement is terminated in accordance with Section 8.1 as a result of a breach
by any party to this Agreement, the liability of the breaching party shall not
exceed the out-of-pocket costs of the non-breaching party in connection with
this Agreement and the transactions contemplated hereby. If this Agreement is
terminated in accordance with Section 8.1 as a result of (i) the wilful failure
of a party to fulfill a condition to the performance of the other party, (ii)
the wilful failure of a party to perform a covenant under this Agreement, or
(iii) a breach, the consequences of which are material with respect to the
Acquisition Assets, of any representation contained in this Agreement, which the
party making such representation knew was false on the date hereof, then such
breaching party shall be fully liable for any and all Damages sustained or
incurred by the other party.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two Business Days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by telex or telecopier, once such notice or other communication
is transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter mailed in accordance
with the provisions of clause (ii) above or (iv) if sent through a reputable
overnight delivery service in circumstances to which such service guarantees
next day delivery, the day following being so sent:
If to Seller, to: Union Oil Company of California
911 Wilshire Boulevard
Suite 1410
Los Angeles, California 90017
Attention: A.J. Eliskalns
Telecopy: (213) 977-5835
55
<PAGE>
Copy to: Union Oil Company of California
1201 West 5th Street
Los Angeles, California 90017
Attention: W. Thomas Skok
Telecopy: (213) 977-7827
If to Buyer,to: National Auto/Truckstops, Inc.
c/o Unocal Petroleum Products and
Chemicals Division
1650 East Golf Road
Schaumburg, Illinois 60196-1088
Attention: William Osborne
Copy to: The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Louis J. Mischianti
Telecopier: (212) 318-1360
Copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attn: Stuart I. Oran, Esq.
Telecopier: (212) 757-3990
Either party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Either party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
9.2 AMENDMENTS; WAIVERS; REMEDIES.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by Buyer and Seller, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by either party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation
56
<PAGE>
or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent occurrence. No single or partial
exercise by either party in exercising any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
9.3 EXPENSES. Personal and real property taxes and prepaid expenses
shall be prorated as of the Closing Date. Buyer shall timely file (after giving
effect to any applicable extensions) or cause to be filed all required personal
and real property reports and returns which are due on or after the Closing Date
and shall pay or cause to be paid to the Tax Authorities all such taxes
reflected on such reports or returns. All taxes imposed on the transactions
contemplated hereby, including any sales and use taxes and any real property
transfer taxes, shall be borne by the Seller. Subject to the immediately
preceding sentence, as to any special or general assessments against any of the
Acquisition Assets which are payable in installments, Buyer shall be responsible
for all assessments which relate to periods after the Effective Time. The costs
of obtaining surveys and title insurance shall be borne by Buyer. Except as
otherwise provided herein, all costs, fees and expenses incurred in connection
with this Agreement shall be paid by the party incurring the same.
9.4 SCHEDULES. Seller and Buyer acknowledge that the Disclosure
Schedule is in draft form. Seller shall finalize the Disclosure Schedule as
promptly as practicable but in any event within ten days of the date hereof.
9.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
9.6 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the internal laws (and not the conflict of laws) of the
State of California; PROVIDED, HOWEVER, that the validity of the conveyance of
Real Property shall be governed by the law of the state in which the Real
Property is situated.
9.7 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto
57
<PAGE>
shall have received a counterpart hereof signed by the other party hereto.
9.8 ENTIRE AGREEMENT. This Agreement (including the documents,
schedules and exhibits referred to herein which are hereby incorporated by
reference) constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements, understandings
and negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
9.9 JURISDICTION. Each of the parties hereto irrevocably submits to
the jurisdiction of any state or federal court sitting in the County of Los
Angeles, State of California, in any action or proceeding arising out of or
relating to this Agreement, agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court, or to contest the
jurisdiction (in rem or in personam) or power or decision of such court over or
pertaining to the party or with respect to the subject matter in any other court
within or without the United States other than appropriate appellate courts.
Each of the parties hereto irrevocably waives any defense of inconvenient forum
to the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of the other party hereto with
respect thereto.
9.10 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
9.11 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.
58
<PAGE>
9.12 CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against either
party. Whenever required by the context, any gender shall include any other
gender, the singular shall include the plural and the plural shall include the
singular. The headings contained in this Agreement are for reference purposes
only and shall not effect in any way the meaning or interpretation of this
Agreement. Whenever the word "including" is used in this Agreement, it shall be
deemed to mean "including, without limitation," "including, but not limited to"
or other words of similar import such that the items following the word
"including" shall be deemed to be a list by way of illustration only and shall
not be deemed to be an exhaustive list of applicable items in the context
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
UNION OIL COMPANY OF CALIFORNIA
By: /s/ Neale E. Schmale
--------------------------------
Name: Neale E. Schmale
---------------------------
Title: Senior Vice President
--------------------------
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Louis J. Mischianti
--------------------------------
Name: Louis J. Mischianti
Title: Treasurer
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Hugh D. Schmieder
--------------------------------
Name: Hugh D. Schmieder
Title: Vice President
59
EXHIBIT 10.2
AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT
-----------------------------------------------
AMENDMENT NO. 1, dated as of April 13, 1993, to the Asset Purchase
Agreement, dated as of November 23, 1992 (the "Asset Purchase Agreement"), by
and between Union Oil Company of California, a California corporation
("Seller"), and National Auto/Truckstops, Inc., a Delaware corporation (together
with its successors and assigns, "Buyer").
Pursuant to Section 9.2(a) of the Asset Purchase Agreement, Buyer
and Seller desire to amend the Asset Purchase Agreement in order to amend and
clarify certain of the terms and provisions contained therein. Capitalized terms
used herein but not otherwise defined have the respective meanings specified in
the Asset Purchase Agreement.
Accordingly, the parties hereby agree as follows:
1. AMENDMENT OF SECTION 1.1. The definitions of
"Ancillary Agreements" and "Effective Time" in Section 1.1 of the Asset Purchase
Agreement are hereby amended by deleting such definitions in their entirety and
substituting in lieu thereof the following definitions, respectively:
"Ancillary Agreements" means, collectively, (i) a Bill of
Sale, Assignment and Assumption Agreement, (ii) a Non-Competition
Agreement, (iii) an Office Sublease, (iv) a Credit Card Agreement, (v) a
Trademark License Agreement, (vi) a Software License Agreement and (vii) a
Services Agreement, each in a form to be agreed to by Buyer and Seller.
"Effective Time" means 11:59 p.m. Central Time on the Closing
Date.
<PAGE>
2
2. AMENDMENT OF SECTION 2.1(VII). Section 2.1 (vii) of the Asset
Purchase Agreement is hereby amended by deleting such Section 2.1(vii) in its
entirety and substituting in lieu thereof the following:
(vii) to the extent that the following are held or used in the
conduct of the business of the A/TS Network (but excluding the marks
"Pure" and "Firebird" and any of the following which are (x) to be
licensed to Buyer pursuant to the Trademark License Agreement to be
executed by Buyer and Seller or (y) are not set forth in Section 3.19 of
the Disclosure Schedule), all of Seller's right, title and interest in
each patent and patent application, copyright, copyright application,
publication (including, without limitation, Road King magazine),
trademark, trademark registration, trade name, mark (including, without
limitation, (i) Road King, (ii) ATS Managers Quarterly, (iii) American
Traditions, (iv) Auto/Truckstop Restaurant, (v) Bring 'Em Back Happy, (vi)
King of the Road, (vii) Signature Network Protection, (viii) TAM, (ix) TLC
and (x) Truckers Bucks), service mark, product mark, logo and other
commercial symbol (in any such case, whether or not registered or to be
registered in the United States of America or elsewhere) applied for,
issued to or otherwise owned by Seller and held or used in the business of
the A/TS Network or with regard to any of the Acquisition Assets;
3. AMENDMENT OF SECTION 3.10. Section 3.10 of the Asset Purchase
Agreement is hereby amended by deleting such Section 3.10 in its entirety and
substituting in lieu thereof the following:
3.10 SUFFICIENCY OF AND TITLE TO THE TRANSFERRED ASSETS. Upon
consummation of the transactions contemplated by this Agreement, Seller
will have assigned, transferred and conveyed to Buyer, free and clear of
all Liens and Encumbrances (other than Permitted Encumbrances), all of the
Acquisition Assets, exclusive of the Excluded Assets and assets
transferred prior to Closing in the ordinary course of business or
otherwise transferred as permitted hereunder. The business of the A/TS
Network is a going concern and the transfer of the Acquisition Assets to
Buyer pursuant to this Agreement (together with sufficient working capital
supplied by Buyer, adequate
<PAGE>
3
arrangements for the supply of motor fuel and other petroleum products not
provided pursuant to a products agreement between Seller and Buyer, and
the rights of Buyer under the Office Sublease, the Credit Card Agreement,
the Trademark License Agreement, the Software License Agreement and the
Services Agreement) will enable Buyer to operate such business as Seller
operated it immediately prior to the Closing with all operations of such
business unimpaired in any material respect immediately after the Closing,
subject to the exclusion of the Excluded Locations.
4. AMENDMENT OF SECTION 3.15. Section 3.15 of the Asset Purchase
Agreement is hereby amended by adding the following to the end of such Section
3.15:
Seller makes no representation in this Section 3.15 as to its compliance
or non-compliance with the Americans with Disabilities Act (the "ADA").
5. AMENDMENT OF ARTICLE III. Article III of the Asset Purchase
Agreement is hereby amended by adding the following new Section 3.24 to the end
of such Article III:
3.24 OWNERSHIP OF ACQUISITION ASSETS. From November 23, 1992
to and including the Closing Date, the Acquisition Assets (together with
the assets being conveyed to Buyer pursuant to each of the Blythe
California Purchase Agreement, Buttonwillow California Purchase Agreement,
Ontario California Purchase Agreement, Redding California Purchase
Agreement, Sacramento California Purchase Agreement and Santa Nella
California Purchase Agreement, each dated as of November 23, 1992, between
Seller and Buyer, collectively, the "California Assets") are owned solely
by Seller and not by any subsidiary of Seller, and the Acquisition Assets
together with the California Assets constitute less than two-thirds in
gross value of all the assets (excluding money) used in trades and
businesses carried on by Seller, all within the meaning of Section 279 of
the Internal Revenue Code of l986, as amended, and the Treasury
regulations issued thereunder, all as in effect as of the Closing Date.
<PAGE>
4
6. AMENDMENT OF ARTICLE V. Article V of the Asset Purchase Agreement
is hereby amended by adding the following new Section 5.18 to the end of such
Article V:
5.18 POST-CLOSING COVENANT. Seller agrees promptly after the
Closing Date to perform the tasks set forth on Section 5.18 of the
Disclosure Schedule.
7. AMENDMENT OF SECTION 7.1. Section 7.1 of the Asset Purchase
Agreement is hereby amended by deleting Section 7.1(i) in its entirety and
substituting in lieu thereof the following:
(i) any claim pursuant to PMPA or any similar or related
federal or state statute or regulation (including any such claim arising
out of or resulting from the execution and delivery of this Agreement or
the sale of any of the Acquisition Assets to Buyer) but excluding (x) any
such claim to the extent to which it arises out of or results from events
which occur after the Closing Date or (y) any such claim against Buyer
which arises out of or results from actions which are alleged will be
taken by Buyer after the Closing Date (provided, that any claim described
in this clause (y) shall not be excluded from the scope of Seller's
indemnity in this paragraph (i) if the claim against Buyer is withdrawn or
dismissed or it is determined that neither Buyer nor Seller has any
Liability in respect of such claim);
(j) Seller's non-compliance as of the Effective Time with the
ADA;
(k) any claim arising out of, relating to or in connection
with SLIDELL 76 AUTO/TRUCK PLAZA, INC. v. UNION OIL COMPANY OF CALIFORNIA,
No. 92-14752 (22nd Judicial District Parish of St. Tammany) (the "Slidell
Litigation"), but excluding any such claim to the extent to which it
arises out of or results from events which occur after the Closing Date.
Without limiting the generality of the foregoing, in the event that Buyer
is ordered to sell the auto/truckstop facility at issue in the Slidell
Litigation (the "Slidell A/TS") to the plaintiff in the Slidell Litigation
for an amount (a "Court Ordered Amount") then Buyer may elect to have the
Appraisal Value (as defined below) of the Slidell A/TS determined.
"Appraisal Value" means the fair market value of the Slidell A/TS (giving
due considera-
<PAGE>
5
tion to all relevant factors including, without limitation, the
replacement cost of the Slidell A/TS and the related Acquisition Assets),
as determined by a qualified appraiser who is a member of the Appraisal
Institute, selected by the mutual agreement of the parties hereto (or, if
the parties cannot agree, selected by the American Arbitration
Association). If the amount of the Appraisal Value is greater than the
Court Ordered Amount, then Seller shall pay to Buyer an amount equal to
the excess of (x) the Appraisal Value over (y) the Court Ordered Amount.
If the Appraisal Value is less than the Court Ordered Amount, then Buyer
shall pay to Seller the excess of (x) the Court Ordered Amount over (y)
the Appraisal Value;
(l) any claim arising out of, relating to or in connection
with PORTLAND 76 AUTO/TRUCK PLAZA, INC. v. UNION OIL COMPANY OF
CALIFORNIA, DBA UNOCAL, Case No. 92-1635 JE, United States District Court,
District of Oregon, but excluding any such claim to the extent to which it
arises out of or results from events which occur after the Closing Date;
(m) Seller's failure to deliver at the Closing any of the Real
Estate Permits (as defined below) (it being understood and agreed that for
purposes of this Section 7.1(m) the Damages for which Seller shall
indemnify Buyer shall include, without limitation, any and all costs and
expenses incurred by Buyer in obtaining any of the Real Estate Permits
which Seller failed to deliver at the Closing (the "Non-Delivered Real
Estate Permits") and any and all costs and expenses incurred by Buyer in
taking any remedial action in respect of the Acquisition Assets which is
reasonably necessary in order to obtain any of the Non-Delivered Real
Estate Permits. (As used in this Section 7.1(m), "Real Estate Permits"
means, with respect to each parcel of Real Property, the following:
(i) with respect to each improvement located on the Real Property,
either (A) the permanent certificate or certificates of
occupancy or completion, as the same may have been amended
from time to time, that were required to be issued by the
appropriate Governmental Authorities ("Certificates") at the
time of construction of such improvement, (B) a letter from
the appropriate Governmental Authorities stating that no
Certificates were required for the construction of such
improvement or (C) a letter from the appro- priate
Governmental Authorities stating that the fact that
Certificates were not issued
<PAGE>
6
for such improvement or that Certificates may have been issued
for such improvement but cannot be located is not a violation
of law that will result in either fines or penalties being
assessed against the Buyer, the Real Property or any
subsequent owner thereof, or in the Buyer or any subsequent
owner of the Real Property being required to take remedial
action in order for the Real Property to be legally used,
occupied or operated;
(ii) all licenses, permits and authorizations of Governmental
Authorities (other than Certificates, all applications, plans
and filings that were necessary for the issuance of any
Certificate and all licenses, permits and authorizations which
were no longer required once a Certificate was issued) that
(A) were required for the construction of each improvement
located upon the Real Property (or, in the alternative,
written confirmation to the effect set forth in subclause
(i)(C) above with respect to such licenses, permits and
authorizations) and (B) are necessary for the current
operation of the Real Property;
(iii) all applications, if any (and all documents filed in
connection therewith) currently pending before any
Governmental Authority for the issuance of any of the
documents described in (i) and (ii) above; and
(iv) either (A) written confirmation from the applicable zoning
commission or other appro- priate Governmental Authority
stating that the Mortgaged Property as built complies with
existing land use and zoning ordinances, regulations and
restrictions applicable to such property, (B) an opinion from
local counsel to the same effect as covered by clause (A)
above or (C) a zoning endorsement in connection with the
Buyer's (and the Buyer's secured lenders) title insurance
policies covering such Real Property.)
Buyer agrees that (a) before taking any remedial action described in this
Section 7.1(m), it will provide Seller with written notice that it intends
to take such remedial action and (b) subject to the further provisions of
this Section 7.1(m), it will refrain from taking such remedial action if,
beginning within 15 days after receiving such notice Seller, at its sole
<PAGE>
7
cost and expense and subject to the above indemnity with respect to all
Damages incurred in connection therewith, either (i) diligently pursues in
judicial proceedings a claim that such remedial action is not necessary or
diligently attempts (for a period not to exceed 30 days) to convince the
applicable Governmental Authorities that such remedial action is not
necessary, provided that at all times and from time to time during such
proceedings or attempt (y) neither Buyer, the Real Estate nor the
operation, use or occupancy thereof, in Buyer's reasonable good-faith
judgment, is or is likely to be adversely affected as a result of such
remedial action not being taken and (z) all fines assessed against the
Real Estate or Buyer as a result of such remedial action not being taken
or the applicable Non-Delivered Real Estate Permits not being obtained are
promptly paid by Seller or (ii) undertakes such remedial action itself,
provided that (w) all contractors and others hired by Seller to perform
such remedial action are approved in advance by Buyer, such approval not
to be unreasonably withheld; (x) all plans and specifications for such
remedial action are approved in advance by Buyer, such approval not to be
unreasonably withheld; (y) Seller consults with Buyer during the entire
remediation process and allows Buyer and Buyer's representatives to
inspect the remediation work at all times and (z) Seller at all times
continuously and diligently performs such remedial action (A) in a good
and workmanlike manner, (B) in a manner such that, in the reasonable
good-faith judgment of Buyer, when such action has been completed, all of
the requirements of the applicable Governmental Authorities for the
issuance of the applicable Non-Delivered Real Estate Permits will have
been complied with and (C) in a manner so as to cause minimum interference
with the Real Estate and the use, operation and occupancy thereof. Seller
agrees that before taking any of the actions permitted to be taken by
Seller pursuant to this Section 7.1 (m), it shall give Buyer 5 days
written notice that it intends to take such action, such notice to include
a description in reasonable detail of the specific actions Seller intends
to take. Without limiting any of the foregoing provisions of this Section
7.1(m), the parties agree that if, in accordance with the foregoing,
Seller undertakes (or gives Buyer notice that it intends to undertake) the
actions permitted to be taken by Seller pursuant to this Section 7.1(m),
(a) Seller shall immediately stop (or not commence) such actions upon
receipt of written notice from Buyer that any of the conditions to the
taking of such action are not being complied with, at which point Buyer
may take the remedial action described in this Section 7.1(m) and
<PAGE>
8
(b) Buyer may take the remedial action described in this Section 7.1(m) if
and as soon as such actions by Seller are completed but do not result in
the applicable Non-Delivered Real Estate Permits being obtained; and
(n) any matter identified on Section 7.1(n) of the Disclosure
Schedule, to the extent that such matter (i) materially interferes with
the use, occupancy or operation of the parcel of Real Property relating to
such matter as such parcel is currently used, occupied and operated, (ii)
materially reduces the fair market value of such parcel below the fair
market value such parcel would have had but for such matter or (iii)
results in any material increase in the cost of operating, occupying or
owning (or leasing) such parcel.
8. AMENDMENT OF SECTION 7.4. Section 7.4 of the Asset Purchase
Agreement is hereby amended by deleting Section 7.4 in its entirety and
substituting in lieu thereof the following:
7.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by the parties in Articles III and IV
and in any instrument or document furnished in connection herewith and the
indemnification obligations of Seller under Section 7.1(n) shall survive
the Closing and any investigation at any time made by or on behalf of the
parties hereto and shall expire on the fourth anniversary of the Closing
Date, except (i) as to any matter as to which a claim is submitted in
writing to the Indemnifying Party prior to such fourth anniversary and
identified as a claim for indemnification pursuant to this Agreement, (ii)
the inaccuracy of any representation or warranty arising out of the fraud,
gross negligence or willful misconduct of Seller or Buyer, which
representation and warranty shall survive until sixty (60) days following
the expiration of the applicable statute of limitations, including
extensions thereof and (iii) any inaccuracy in the representations or
warranties set forth in Sections 3.8 and 4.5 of this Agreement, which
representations and warranties shall survive until the expiration of sixty
(60) days following the applicable statute of limitations, including
extensions thereof. The covenants of Seller and Buyer hereunder, including
the indemnification obligations of Seller under Section 7.1(b), (d), (e),
(f), (g), (h), (i), (j), (k), (l) and (m) and the
<PAGE>
9
indemnification obligations of Buyer under Section 7.2(b) and (d), shall
survive until the expiration of any applicable statute of limitations. No
claim or action for indemnity pursuant to Sections 7.1 or 7.2 hereof for
breach of any representation or warranty shall be asserted or maintained
by any party hereto after the expiration of such representation or
warranty pursuant to the first sentence of this Section 7.4 except for
claims made in writing prior to such expiration and actions (whether
instituted before or after such expiration) based on any claim made in
writing prior to such expiration.
9. SCHEDULES. Attached hereto is an amended and restated Disclosure
Schedule that supersedes in its entirety the draft form of Disclosure Schedule
previously delivered by Seller.
10. AMENDMENT OF SECTION 9.5. Section 9.5 of the Asset Purchase
Agreement is hereby amended by deleting Section 9.5 in its entirety and
substituting in lieu thereof the following:
9.5 SUCCESSORS AND ASSIGNS. Either party hereto may assign
this Agreement or any of its rights or benefits hereunder to any Person,
including, without limitation, an assignment by Buyer of some or all of
its rights hereunder to any of Buyer's lenders; provided, however, nothing
in this Agreement or in any other agreement delivered pursuant hereto
shall permit Buyer to assign any of its rights or benefits or delegate any
of its duties or obligations under the Trademark License Agreement
(subject to the rights granted in Section 2.01(iii) of the Trademark
License Agreement).
11. COUNTERPARTS. This Amendment No. 1 may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed by their respective authorized officers as of the day
and year first above written.
UNION OIL COMPANY OF CALIFORNIA
By: /s/ A.J. Eliskalns
------------------------------------
Name: A.J. Eliskalns
Title: Vice President
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Louis J. Mischianti
------------------------------------
Name: Louis J. Mischianti
Title: Vice President and Treasurer
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Hugh D. Schmieder
------------------------------------
Name: Hugh D. Schmieder
Title: Vice President
EXHIBIT 10.3
BLYTHE, CALIFORNIA PURCHASE AGREEMENT
dated as of
November 23, 1992
between
NATIONAL AUTO/TRUCKSTOPS, INC.
and
UNION OIL COMPANY OF CALIFORNIA
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS................................................ 1
1.1 Definitions............................................... 1
ARTICLE II TRANSFER OF ASSETS....................................... 5
2.2 Assumption of Liabilities................................. 6
2.3 Purchase Price for Acquisition Assets..................... 6
2.4 Closing................................................... 6
2.5 Allocation of Purchase Price.............................. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER................ 6
3.1 Corporate Existence and Power............................. 7
3.2 Corporate Authorization................................... 7
3.3 Governmental Authorization................................ 7
3.4 Non-Contravention......................................... 8
3.5 No Brokerage Fees......................................... 8
3.6 Properties; Leases; Tangible Assets....................... 8
3.7 Litigation................................................ 11
3.8 Permits; Required Consents................................ 11
3.9 Compliance with Laws...................................... 11
3.10 Material Disclosures...................................... 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER............. 12
4.1 Organization and Existence................................ 12
4.2 Corporate Authorization................................... 12
4.3 Governmental Authorization................................ 12
4.4 Non-Contravention......................................... 13
4.5 No Brokerage Fees......................................... 13
4.6 Litigation................................................ 14
4.7 Material Disclosures...................................... 14
ARTICLE V CERTAIN UNDERSTANDINGS AND
AGREEMENTS OF THE PARTIES................................ 14
5.1 Ownership of the Facility................................. 14
5.2 Access to Records and Files............................... 15
5.3 Public Announcements...................................... 16
5.4 No Shopping............................................... 16
i
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5.5 Further Assurances........................................ 17
5.6 Cooperation in Litigation................................. 17
5.7 Certain Filings........................................... 17
5.8 Title Insurance; Encumbrances............................. 18
5.9 Additional Agreements..................................... 18
5.10 Cooperation with Respect to Financing..................... 18
5.11 PMPA...................................................... 19
ARTICLE VI CONDITIONS TO CLOSING.................................... 19
6.1 Conditions to Obligations of Each Party................... 19
6.2 Conditions to Obligations of Buyer........................ 20
6.3 Conditions to Obligations of Seller....................... 22
ARTICLE VII INDEMNIFICATION......................................... 23
7.1 Indemnification by Seller................................. 23
7.2 Indemnification by Buyer.................................. 23
7.3 Defense of Claims......................................... 24
7.4 Survival of Representations and Warranties................ 25
ARTICLE VIII TERMINATION............................................ 26
8.1 Grounds for Termination................................... 26
8.2 Effect of Termination..................................... 28
ARTICLE IX MISCELLANEOUS............................................ 28
9.1 Notices................................................... 28
9.2 Amendments; Waivers; Remedies............................. 29
9.3 Expenses.................................................. 30
9.4 Successors and Assigns.................................... 30
9.5 Governing Law............................................. 30
9.6 Counterparts; Effectiveness............................... 30
9.7 Entire Agreement.......................................... 30
9.8 Jurisdiction.............................................. 31
9.9 Captions.................................................. 31
9.10 Severability.............................................. 31
9.11 Construction.............................................. 31
ii
<PAGE>
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (the "Agreement") is entered into as of
November 23, 1992 by and between Union Oil Company of California, a California
corporation ("Seller"), and National Auto/Truckstops, Inc., a Delaware
corporation (together with its successors and assigns,
"Buyer").
W I T N E S S E T H :
WHEREAS, Seller leases certain real property as more particularly
described in Section 1 of the Disclosure Schedule attached hereto (the
"Facility");
WHEREAS, Seller subleases the Facility to an independent operator
(the "Facility Operator") who operates the Facility as a truckstop as part of
Seller's auto/truckstop network (the "A/TS Network"); and
WHEREAS, Seller desires to sell its interest in the Facility to
Buyer, including substantially all of the assets relating thereto, and Buyer
desires to acquire such interest in the Facility and such assets on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
(a) The following terms, as used herein,
have the following meanings:
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person.
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2
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, regulation,
order, writ, injunction, directive, judgment, decree or other requirement of any
Governmental Authority applicable to such Person or any of its Affiliates or any
of their respective properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person or any
of its Affiliates).
"Assigned Lease Rights" means all of Seller's rights under the
Lease, including, without limitation, the right to receive Fixed Rent (as
defined in the Lease); provided, however, that Assigned Lease Rights shall not
include Excluded Lease Rights.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in Los Angeles, California are authorized or
required by law to close.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, and charges, and amounts paid or payable in
settlement, including (y) interest on cash disbursements in respect of any of
the foregoing at the lesser of Reference Rate in effect from time to time and
the maximum interest rate permitted by law, compounded quarterly, from the date
each such cash disbursement is made until the Person incurring the same shall
have been indemnified in respect thereof and (z) reasonable costs, fees and
expenses of attorneys, experts, accountants, appraisers, consultants, witnesses,
investigators and any other agents of such Person.
"Disclosure Schedule" means the Disclosure Schedule attached hereto.
"Effective Time" means 1:01 a.m. Eastern Standard Time on the
Closing Date.
"Environmental Laws" means federal, state, local and foreign laws,
principles of foreign law, regulations and codes, as well as orders, decrees,
judgments or injunctions issued, promulgated, approved or entered thereunder
relating to pollution, protection of the Environment or health or safety.
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3
"Environmental Liabilities" means all Damages, whether direct or
indirect, known or unknown, current or potential, absolute or contingent,
matured or unmatured, past, present or future, imposed by, under or pursuant to
Environmental Laws.
"Excluded Lease Rights" means the right to receive the Gallonage
Rental and 3% of Products and Services Gross Receipts (as such terms are defined
in Exhibit B of the Lease).
"GAAP" means generally accepted accounting principles then in effect
consistently applied.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Lease" means the lease pursuant to which Seller leases the Facility
to the Facility Operator.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person in accordance with GAAP.
"Lien" means, with respect to any asset, any mortgage, title defect
or objection, restrictive covenant, adverse claim, lien, pledge, charge,
security interest, hypothecation or encumbrance of any kind in respect of such
asset.
"Material Adverse Effect" means a material adverse change in or
effect on the Acquisition Assets taken as a whole.
"Permitted Liens" means (i) Liens for taxes or governmental
assessments, charges or claims the payment of
<PAGE>
4
which is not yet due, or for taxes the validity of which are being contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP are being maintained and set aside; (ii) statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics, materialmen and other
similar Persons and other Liens imposed by Applicable Law incurred in the
ordinary course of business for sums not yet delinquent or being contested in
good faith and for which adequate reserves in accordance with GAAP are being
maintained and set aside; and (iii) Liens relating to deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security.
"Person" means an individual, corporation, partnership, association,
trust, estate or other entity or organization, including a Governmental
Authority.
"PMPA" means the Petroleum Marketing Practices Act.
"Proceeding" means any claim, action, suit, hearing, inquiry,
arbitration, dispute, proceeding (public or private) or governmental
investigation brought by or against any Governmental Authority or any other
Person.
"Reference Rate" means the per annum rate of interest as published
in the Wall Street Journal as the prime rate (or reference rate). Any change in
the Reference Rate shall take effect at the opening of business on the day such
published quotations change.
"Seller's knowledge" means (i) the actual knowledge of managerial or
professional personnel employed by or on behalf of Seller or any of its
Affiliates (excluding any agents and servants who are not and have never been
employees of Seller) and working in Division 61 or having management or
supervisory responsibility for the A/TS Network or (ii) such knowledge as any
such Person could reasonably be expected to have in the exercise of his or her
employment duties.
(b) Each of the following terms is defined in the section set forth
opposite such term:
TERM SECTION
---- -------
Acquisition Assets 2.1
Acquisition Proposal 5.5
Agreement Recitals
<PAGE>
5
A/TS Network Recitals
Assumed Liabilities 2.2
Buyer Recitals
Buyer Indemnitees 7.1
California Statute 3.3(a)
Closing 2.5
Closing Date 2.5
Contracts 2.1(ii)
Encumbrances 3.6(a)
Facility Recitals
Facility Operator Recitals
Indemnified Party 7.3
Indemnifying Party 7.3
Leases 3.6(d)
Offer 5.12
Offering Material 5.10(a)
Permits 3.9(a)
Permitted Encumbrances 3.6(a)
Purchase Price 2.4
Required Consents 3.9(b)
Required Contractual Consent 3.9(b)
Required Permit Approval 3.9(b)
Scheduled Contracts 3.8(a)
Seller Recitals
Seller Indemnitees 7.2
Subsequent Material Contract 5.1(a)
Termination Date 8.1(vi)
ARTICLE II
TRANSFER OF ASSETS
2.1 ASSETS TO BE CONVEYED. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements hereinafter set forth, Seller shall convey, transfer,
assign, sell and deliver to Buyer, and Buyer shall acquire, accept and purchase
at the Closing, free and clear of all Liens, other than Permitted Encumbrances,
all the assets set forth below (the assets set forth below are referred to
collectively as the "Acquisition Assets"):
(i) Seller's interest in all buildings, fixtures,
signage and improvements erected on the Facility and appurtenances thereto
and all of Seller's rights to real property adjacent or appurtenant
thereto;
(ii) the Assigned Lease Rights; and
<PAGE>
6
(iii) all transferable franchises, licenses, permits or
other authorizations issued or granted by any Governmental Authority that
are owned by, granted to or held or used by Seller and which relate
primarily or exclusively to the Facility.
2.2 ASSUMPTION OF LIABILITIES. From and after the Closing Date,
Buyer shall assume and agree to pay when due, perform and discharge the
executory Liabilities of Seller under the Lease (the "Assumed Liabilities").
Buyer is not assuming any Liabilities of Seller other than the Assumed
Liabilities.
2.3 PURCHASE PRICE FOR ACQUISITION ASSETS. At the Closing the
purchase price for the Acquisition Assets set forth on Schedule 2.4 (the
"Purchase Price") shall be paid by wire transfer.
2.4 CLOSING. The Closing of the transactions contemplated by this
Agreement (the "Closing") shall occur at the law offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York at
10:00 a.m. on the date five (5) Business Days after all conditions to the
Closing set forth in Article VI have been satisfied or waived by the party
entitled to waive the same, or such other time, date or place as is agreed to in
writing by the parties hereto. The date on which the Closing occurs is referred
to herein as the "Closing Date".
2.5 ALLOCATION OF PURCHASE PRICE. Seller and Buyer hereby agree that
(i) the allocation for tax purposes of the Purchase Price shall be agreed to by
Buyer and Seller prior to the Closing, (ii) each party shall timely file
Internal Revenue Service Form 8594 and (iii) neither the Buyer nor the Seller
shall take a position on any report, return, information return or other
document (including any related or supporting information) filed or required to
be filed with any federal, state or local taxing authority, before any taxing
authority or in any judicial proceeding that is in any way inconsistent with
such allocation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
<PAGE>
7
3.1 CORPORATE EXISTENCE AND POWER. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to own and lease the Facility.
Seller is duly qualified to do business as a foreign corporation in each
jurisdiction where the character or ownership of the Acquisition Assets makes
such qualification necessary. Seller has heretofore delivered to Buyer true and
complete copies of the certificate of incorporation and bylaws of Seller as
currently in effect.
3.2 CORPORATE AUTHORIZATION. Seller has all requisite corporate
power and authority to enter into this Agreement and all other agreements to be
executed by Seller in connection herewith and to consummate the transactions
contemplated hereby and thereby. This Agreement and all other agreements to be
executed by Seller in connection herewith have been (or upon execution will have
been) duly executed and delivered by Seller, have been effectively authorized by
all necessary action, corporate or otherwise, and constitute (or upon execution
will constitute) legal, valid and binding obligations of Seller enforceable in
accordance with their respective terms (i) except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
3.3 GOVERNMENTAL AUTHORIZATION.
(a) The execution, delivery and performance by Seller of this
Agreement require no action by, consent or approval of, or filing with, any
Governmental Authority other than:
(i) compliance with any applicable requirements of the
HSR Act;
(ii) compliance with any applicable requirements of the
bulk sales, bulk transfer or similar laws of the states in which the
Acquisition Assets are located; and
(iii) the Required Permit Approvals.
<PAGE>
8
(b) To Seller's knowledge, there are no facts relating to the
identity or circumstances of Seller that would prevent or materially delay
obtaining any of the authorizations referred to in Sections 3.3 or 4.3.
3.4 NON-CONTRAVENTION. The execution, delivery and performance by
Seller of this Agreement and all other agreements to be executed by Seller in
connection herewith does not and will not (a) (i) contravene or conflict with
the certificate of incorporation or bylaws of Seller; (ii) assuming compliance
with the HSR Act and California Business and Professions Code Section
20999.25(a) (the "California Statute") and receipt of the Required Consents and
each Required Permit Approval, contravene or conflict with or constitute a
violation of any provision of any Applicable Law binding upon or applicable to
Seller or any of the Acquisition Assets; and (iii) assuming compliance with the
HSR Act and receipt of the Required Contractual Consents and each Required
Permit Approval, constitute a default under, conflict with, violate, breach or
give rise to any right of termination, cancellation or acceleration of, or to a
loss of any benefit to which Seller is entitled, under any Contract or any
license, franchise, permit or similar authorization relating to any of the
Acquisition Assets or by which the Acquisition Assets may be bound, or (b)
result in the creation or imposition of any Lien on any Acquisition Asset.
3.5 NO BROKERAGE FEES. No broker or finder, other than The First
Boston Corporation, has acted for Seller or any of Seller's Affiliates in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder, other than The First Boston Corporation, is entitled to any
brokerage or finders' fees in respect of such transactions based in any way on
agreements, arrangements or understandings made by or on behalf of Seller or any
of Seller's Affiliates.
3.6 PROPERTIES; LEASES; TANGIBLE ASSETS.
(a) Seller owns and has good and marketable title to or, in
the case of leased properties or assets, a good and marketable leasehold
interest in, all of the Acquisition Assets, except those assets disposed of in
the ordinary course of business after such date. Seller holds title to each such
property and asset free and clear of all Liens, adverse claims, easements,
rights of way, servitudes, zoning or building restrictions, or any other rights
of others or other adverse interests or title or survey defects of any kind,
including leases, chattel mortgages, condi-
<PAGE>
9
tional sales contracts, rights of first refusal (other than rights of first
refusal, if any, pursuant to the California Statute), options to purchase,
collateral security arrangements and other title or interest retention
arrangements (collectively, "Encumbrances"), except for (i) Permitted Liens,
(ii) Encumbrances set forth on Section 3.6(a) of the Disclosure Schedule and
(iii) with respect to the Facility, Encumbrances that, individually or in the
aggregate, do not and will not (A) materially interfere with the use, occupancy
or operation of the Facility as currently used, occupied and operated, (B)
materially reduce the fair market value of the Facility below the fair market
value such parcel would have had but for such Encumbrances or (C) result in any
material increase in the cost of operating, occupying or owning (or leasing) the
Facility. The Encumbrances described by clauses (i), (ii) and (iii) of the
foregoing sentence are collectively referred to herein as the "Permitted
Encumbrances."
(b) Except as disclosed in Section 3.6(b) of the Disclosure
Schedule, all tangible properties and assets included in the Acquisition Assets
(including, without limitation, the improvements that are part of the Facility)
are structurally sound and free of any material defects and are in good
operating condition and repair and are adequate for the uses to which they are
put, and none of the Acquisition Assets are in need of material replacement,
maintenance or repair, except, in the case of the improvements that are part of
the Facility, for regularly scheduled, routine maintenance and repair required
under the applicable auto/truckstop lease agreement.
(c) Section 3.6(c)(i) of the Disclosure Schedule sets forth
(by date and the parties thereto) all personal property leases and all real
property leases which relate to the Acquisition Assets (the "Leases"), and
indicating where appropriate those leases which have been recorded for tax,
protection of title or interest, or other purposes. With respect to the Leases
(including, without limitation, all exhibits thereto), there exist no defaults
by Seller and no events have occurred and no condition exists which, with the
giving of notice or lapse of time or both, would constitute such a default, and,
to Seller's knowledge, there exists no default or threatened default by any
third party thereunder, that has affected or could reasonably be expected to
affect the rights and privileges thereunder of Seller and no events have
occurred and no condition exists which, with the giving of notice or lapse of
time or both, would constitute such a default. Except as disclosed in Section
3.6(c)(ii) of the Disclosure Schedule
<PAGE>
10
and except for regularly scheduled, routine maintenance and repair, Seller has
performed all of its cleaning, maintenance and replacement responsibilities set
forth in the Leases (including all exhibits thereto), and, to Seller's
knowledge, each third party to such Leases has performed all of its cleaning,
maintenance and replacement responsibilities set forth in the Leases (including
all exhibits thereto). Except as disclosed in Section 3.6(c)(iii) of the
Disclosure Schedule, all Leases to which Seller is a party or by which it is
bound may be assigned, transferred and conveyed to Buyer without default,
penalty or modification thereof.
(d) To Seller's knowledge, except as disclosed in Section
3.6(d) of the Disclosure Schedule, with respect to the Facility, there exists no
(i) applicable restrictive covenant, zoning ordinance, building code, use or
occupancy restriction, land use restriction, fire, subdivision, health or other
law applicable to real property, or any violation of any such ordinance, code,
restriction or law, or any condemnation action or proceeding of any Governmental
Authority, that detracts or can reasonably be expected to detract in any
material respect from the use or value of such property in the business of the
A/TS Network or will interfere with the transferability thereof to Buyer
pursuant hereto or (ii) non-conforming uses or zoning or code exceptions that
currently permit the non-conforming use of the Facility.
(e) Except as disclosed in Section 3.6(e) of the Disclosure
Schedule, no condemnation proceeding is pending, or to Seller's knowledge
threatened, which would preclude or impair the use of the Facility for the uses
for which it is currently being used or is anticipated by Seller to be used. To
Seller's knowledge there is no existing or proposed plan to widen, modify or
realign any street or highway contiguous to the Facility which would materially
reduce the size or value of the Facility.
(f) The Facility has direct access to a public street or
highway and such access is adequate for the use of such parcel in the business
of the A/TS Network. The Facility is not dependent for its access, operation or
utility on any land, building or other improvement not included in the Facility.
Notwithstanding the foregoing, Seller makes no representation that title
insurance policies with so-called "access endorsements" are obtainable with
respect to the Facility.
<PAGE>
11
3.7 LITIGATION. Except as set forth in Section 3.7 of the Disclosure
Schedule, there are no Proceedings pending or, to Seller's knowledge,
threatened, against Seller, which seek to enjoin or rescind the transactions
contemplated by this Agreement or otherwise prevent Seller from complying with
the terms and provisions of this Agreement.
3.8 PERMITS; REQUIRED CONSENTS.
(a) Section 3.8(a) of the Disclosure Schedule sets forth all
material approvals, registrations, authorizations, certificates, certificates of
occupancy, consents, licenses, orders and permits or other similar
authorizations of or with any Governmental Authority (and all other Persons)
necessary for the ownership of the Acquisition Assets (the "Permits"), including
(i) all such permits and approvals relating to the transportation, storage or
sale of any petroleum product or the discharge of by-products or waste material
into a public waste discharge system and (ii) all registrations, approvals and
exemptions required under any state or federal franchise, business opportunity
or similar law.
(b) Section 3.8(b) of the Disclosure Schedule lists each
governmental or other registration, filing, application, notice, transfer,
consent, approval, order, qualification and waiver (each, a "Required Permit
Approval") required under Applicable Law to be obtained by Seller or Buyer by
virtue of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby to avoid the loss of any Permit. Except as
set forth in Section 3.8(b) of the Disclosure Schedule, each Permit is valid and
in full force and effect in all material respects and, assuming the related
Required Permit Approvals have been obtained prior to the Closing Date, are, or
will be, transferable by Seller, and none of the Permits will, assuming the
related Required Permit Approvals have been obtained prior to the Closing Date,
be terminated or become terminable or impaired in any respect as a result of the
transactions contemplated hereby.
3.9 COMPLIANCE WITH LAWS. Except as set forth in Section 3.9 of the
Disclosure Schedule, the ownership and leasing of the Facility have not violated
or infringed, and do not violate or infringe, any Applicable Law, or any order,
writ, injunction or decree of any Governmental Authority in any material
respect. Seller has not received, and has no knowledge of, any notification from
any Governmental Authority having jurisdiction over the Acquisition
<PAGE>
12
Assets affecting or purporting to restrict the Acquisition Assets or alleging
any violation of Applicable Law relating to the foregoing.
3.10 MATERIAL DISCLOSURES. No statement, representation or warranty
made by Seller in this Agreement, in any Exhibit hereto or in the Disclosure
Schedule, or in any certificate, statement, list, schedule or other document
furnished or to be furnished to Buyer hereunder, contains or will contain any
untrue statement of a material fact, or fails or will fail to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they are made, not materially misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
4.1 ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
4.2 CORPORATE AUTHORIZATION. Buyer has all requisite corporate power
and authority to enter into this Agreement and all other agreements to be
executed by Buyer in connection herewith and to consummate the transactions
contemplated hereby and thereby. This Agreement and all other agreements herein
contemplated to be executed in connection herewith have been (or upon execution
will have been) duly executed and delivered by Buyer, have been effectively
authorized by all necessary corporate action, and constitute (or upon execution
will constitute) legal, valid and binding obligations of Buyer, enforceable in
accordance with their respective terms (i) except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general equitable principles (regardless whether such enforceability
is considered in a proceeding at law or in equity).
4.3 GOVERNMENTAL AUTHORIZATION. (a) The execution, delivery and
performance by Buyer of this Agreement
<PAGE>
13
require no action by, consent or approval of, or filing with, any governmental
body, agency, official or authority other than:
(i) compliance with any applicable
requirements of the HSR Act;
(ii) compliance with any applicable requirements of the
bulk sales, bulk transfer or similar laws of the states in which the
Acquisition Assets are located;
(iii) the Required Permit Approvals; and
(iv) compliance with state franchise
registration/disclosure laws.
(b) To Buyer's knowledge, there are no facts relating to the
identity or circumstances of Buyer that would prevent or materially delay any of
the authorizations referred to in Section 3.3 or 4.3.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by
Buyer of this Agreement does not and will not (a)(i) contravene or conflict with
the certificate of incorporation or bylaws of Buyer, (ii) assuming compliance
with the matters referred to in Section 4.3, contravene or conflict with or
constitute a violation of any provision of any Applicable Law binding upon or
applicable to Buyer, (iii) constitute a default under or give rise to any right
of termination, cancellation or acceleration of any right or obligation of Buyer
or to a loss of any benefit to which Buyer is entitled under any provision of
any agreement, contract or other instrument binding upon Buyer or any license,
franchise, permit or other similar authorization held by Buyer, except in the
case of clauses (ii) and (iii) for any such contravention, conflict, violation,
default, termination, cancellation, acceleration or loss that would not have a
material adverse effect on the condition (financial or otherwise), business,
assets or results of operations of Buyer.
4.5 NO BROKERAGE FEES. No broker or finder has acted for Buyer in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finders' fees in respect of
such transactions based in any way on agreements, arrangements or understandings
made by or on behalf of Buyer.
<PAGE>
14
4.6 LITIGATION. There are no Proceedings pending or, to Buyer's
knowledge, threatened, against Buyer which seek to enjoin or rescind the
transactions contemplated by this Agreement or otherwise prevent Buyer from
complying with the terms and provisions of this Agreement.
4.7 MATERIAL DISCLOSURES. No statement, representation or warranty
made by Buyer in this Agreement, in any exhibit hereto, or in any certificate,
statement, list, schedule or other document furnished or to be furnished by
Buyer hereunder, contains or will contain any untrue statement of material fact,
or fails or will fail to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not materially misleading.
4.8 NO KNOWLEDGE OF BREACHES. At the date hereof Buyer has no
knowledge of any breach of any representation or covenant of Seller contained
herein.
ARTICLE V
CERTAIN UNDERSTANDINGS AND
AGREEMENTS OF THE PARTIES
5.1 OWNERSHIP OF THE FACILITY. From the date
hereof until the Closing Date:
(a) without Buyer's prior written consent, Seller will not and
will not agree to, except as set forth in Section 5.11 or Section 5.12, sell,
assign, lease, license, transfer or otherwise dispose of, or mortgage, pledge or
encumber (other than with Permitted Liens), the Facility or amend, terminate or
renew the lease thereof;
(b) Seller will:
(i) (1) maintain the Acquisition
Assets in the ordinary course of business in good operating order and
condition, reasonable wear and tear excepted, and (2) upon any damage,
destruction or loss to any of the Acquisition Assets, apply any and all
insurance proceeds received with respect thereto to the prompt repair,
replacement and restoration thereof to the condition of the Acquisition
Assets before such event;
<PAGE>
15
(ii) use its best efforts (other
than paying consideration) to obtain, prior to the
Closing Date, all Required Permit Approvals;
(iii) take all actions reasonably
necessary to be in compliance with, and to maintain the
effectiveness of, all Permits;
(iv) notify Buyer in writing of any
action, event, condition or circumstance, or group of actions, events,
conditions or circumstances, relating to Seller or, to Seller's knowledge,
any other Person, that results in, or could result in, a Material Adverse
Effect, such notification to be provided to Buyer by Seller promptly after
the occurrence of any such action, event, condition or circumstance, or
group thereof;
(v) notify Buyer in writing of the
commencement of any material Proceeding by or against Seller relating to
any of the Acquisition Assets, or of Seller becoming aware of any threat,
claim, action, suit, inquiry, proceeding, notice of violation, demand
letter, subpoena, government audit or disallowance that could reasonably
be expected to result in such a Proceeding, such notification to be
provided to Buyer by Seller promptly after such commencement or Seller's
becoming aware thereof; and
(vi) notify Buyer in writing of the
occurrence of any breach by Seller of any representation or warranty, or
any covenant or agreement, contained in this Agreement, promptly after
becoming aware of any such breach.
5.2 ACCESS TO RECORDS AND FILES. Seller shall have the right for a
period of three (3) years following the Closing Date to have reasonable access,
during normal business hours and upon reasonable prior notice, to such books,
records and accounts, correspondence, and employment records and other similar
information as are transferred to Buyer pursuant to the terms of this Agreement
for the limited purposes of concluding matters relating to Seller's ownership of
the Acquisition Assets; PROVIDED, HOWEVER, that nothing set forth herein shall
obligate Buyer to provide Seller or any of its attorneys, agents, employees,
accountants or other representatives with access to any information that is
protected by the attorney-client privilege or any similar privilege. Nothing
contained herein shall impose any obligation upon Buyer to retain any such books
and records
<PAGE>
16
beyond the retention periods delineated in the Buyer's policies relating to the
retention of books and records pertaining to similar subject matter or of a
similar type. All information obtained by Seller and its authorized
representatives pursuant to this Section 5.2 shall be kept confidential by
Seller and shall not be used by it for any purpose other than concluding matters
relating to Seller's ownership of the Acquisition Assets.
5.3 PUBLIC ANNOUNCEMENTS. The parties hereto agree that prior to the
Closing they will not make any disclosures to any Person (other than operators
and resellers in the A/TS Network) regarding the existence or contents of this
Agreement or negotiations relating to the transactions contemplated herein or
cause to be publicized in any manner whatsoever by releases or otherwise any
aspect or proposed aspect of the transactions contemplated herein without prior
written notice to and approval of, which shall not be unreasonably withheld, the
other parties hereto, unless such party reasonably concludes that such release
of information is required by Applicable Law or necessary in order to obtain
Required Consents and the parties hereto cannot reach agreement upon a mutually
acceptable form of release. Notwithstanding the foregoing, the parties hereto
may, on a confidential basis, advise their respective agents, accountants,
attorneys and prospective financing sources (including any Operators or
Resellers) with respect to the contents of this Agreement and the transactions
contemplated herein.
5.4 NO SHOPPING. Except as may be required by the California
Statute, from the date hereof until the earlier of the Closing Date or the
termination of this Agreement in accordance with its terms, Seller shall not,
and shall cause each of its Affiliates not to, directly or indirectly, through
any officer, director, employee or agent or otherwise, solicit, initiate,
encourage, participate in any negotiation or discussion or enter into any
agreement in respect of, or cooperate with (including, without limitation, by
way of furnishing any non-public information concerning, or affording access to,
the Acquisition Assets), any Acquisition Proposal (as hereinafter defined)
pertaining to the Acquisition Assets. The term "Acquisition Proposal" means any
proposal (other than a proposal by Buyer) for the acquisition of all or any
portion of the Acquisition Assets. In the event Seller receives any Acquisition
Proposal it shall promptly notify Buyer in writing of the identity of the party
making the Acquisition Proposal and, if, in the good faith judgment of Seller,
Seller determines that it can disclose the terms, conditions and circumstances
of such Acquisition Proposal to Buyer without breaching an obli-
<PAGE>
17
gation to such party or otherwise exposing Seller to liability, Seller shall
disclose such terms, conditions and circumstances to Buyer.
5.5 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each party will use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under Applicable Law to consummate the transactions contemplated by
this Agreement. Seller and the Buyer agree to execute and deliver such other
documents, certificates, agreements and other writings, including instruments of
transfer with respect to the Acquisition Assets, and to take such other actions
as may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement, provided that
Seller is not obligated to pay consideration to obtain any consents.
5.6 COOPERATION IN LITIGATION. Each party will fully cooperate with
the other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter against or by such party
relating to or arising out of the ownership of the Acquisition Assets prior to
or after the Closing Date (other than litigation arising out of the transactions
contemplated by this Agreement).
5.7 CERTAIN FILINGS. Seller and Buyer shall cooperate with one
another in determining whether any action by or in respect of, or filing with,
any Governmental Authority or with respect to any Required Permit Approval is
required or reasonably appropriate, or any action, consent, approval or waiver
from any party to any Contract is required or reasonably appropriate, in
connection with the consummation of the transactions contemplated by this
Agreement; PROVIDED, HOWEVER, that Seller and Buyer retain the right to make any
filings required by Applicable Law. Subject to the terms and conditions of this
Agreement, Seller and Buyer shall seek to timely obtain any such actions,
consents, approvals or waivers and shall furnish all information required in
connection therewith. Without limiting the foregoing, Seller and Buyer shall
each promptly complete and file all reports and forms, and respond to all
requests or further requests for additional information, as may be required or
authorized under the HSR Act. None of the provisions in this Section 5.7
abrogate or limit in any way any of the representations, warranties and
covenants made by Seller in any of the other provisions in this Agreement.
<PAGE>
18
5.8 TITLE INSURANCE; ENCUMBRANCES. If, at any time on or prior to
the Closing Date, Buyer obtains preliminary title reports or surveys showing, or
otherwise learns of, any Encumbrance on the Facility that is not a Permitted
Encumbrance, Seller will, immediately upon receipt of notice from Buyer of such
Encumbrance (or immediately upon Seller's obtaining actual knowledge of such
Encumbrance, whichever is sooner), use its best efforts to cause title to the
Facility to be cleared of such Encumbrance on or prior to the Closing Date;
PROVIDED, HOWEVER, that if such Encumbrance relates to or is in connection with
indebtedness, Seller covenants that it will cause the indebtedness to be paid in
full and/or take all actions necessary to remove such Encumbrance.
5.9 ADDITIONAL AGREEMENTS. At the Closing, Seller shall deliver the
officers' certificates referenced in Section 6.2(a) and (b), Buyer shall deliver
the officers' certificates referenced in Section 6.3(a) and (b), and Seller and
Buyer will enter into such additional instruments of sale, transfer, conveyance,
assignment and delivery as Buyer may reasonably request to vest in Buyer all
right, interest and title of Seller in and to the Acquisition Assets.
5.10 COOPERATION WITH RESPECT TO FINANCING.
(a) Seller will cooperate with Buyer in connection with the
obtaining of the financing referred to in Section 6.2(f) hereof and in the
preparation of one or more registration statements or offering memoranda for the
public or private offering of debt or equity securities to be issued by Buyer
(collectively, the "Offering Material") by furnishing to Buyer all information
reasonably requested by Buyer relating to such financing or the preparation of
the Offering Material.
(b) In connection with the preparation of the Offering
Material, Seller will assist in the preparation of all historical information
requested by Buyer with respect to the Acquisition Assets for inclusion in such
Offering Material, provided such information is available to Seller without
unreasonable expense, including, without limitation, (i) a description of the
business and properties of, and the legal proceedings with respect to
Acquisition Assets and (ii) financial information with respect to the
Acquisition Assets, including, without limitation, financial statements,
selected financial data and supplementary financial information, management's
discussion and analysis of financial condition and results of operations and
<PAGE>
19
disagreements with accountants on accounting and financial
disclosure, if any.
5.11 PMPA. Prior to the Closing Date Seller agrees not to take, except
as may be required by the California Statute, any action (and Buyer agrees not
to cause Seller to take any action) (including, without limitation, failing to
renew the lease of the Facility Operator) which would give the Facility Operator
any option or other right, whether under PMPA or any other statute or
regulation, to acquire the Facility.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 (a) CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligations of
Seller and Buyer to consummate the transactions contemplated hereby shall be
subject to the fulfillment, at or prior to the Closing Date, of the following
conditions:
(b) NO ACTION OR PROCEEDING. No Proceeding shall be pending or
threatened before any Governmental Authority which presents a material risk of
the restraint or prohibition of the transactions contemplated by this Agreement
or the obtaining of material Damages or other relief in connection therewith.
(c) COMPLIANCE WITH LAW. There shall have been obtained all
permits, approvals and consents of Governmental Authorities which counsel for
Buyer or for Seller may reasonably deem necessary or appropriate so that
consummation of the transactions contemplated by this Agreement will be in
compliance with Applicable Law, including, without limitation, the permits,
approvals and consents listed in Sections 3.3 and 4.3, but excluding any
Required Permit Approvals.
(d) CALIFORNIA STATUTE. (i) The Facility Operator shall have
waived in writing its rights, if any, under the California Statute to acquire
the Facility, (ii) the time within which the Facility Operator may accept the
Offer shall have lapsed without the Facility Operator having accepted the Offer
or (iii) Seller and Buyer shall have agreed in writing subsequent to the date
hereof that the Facility Operator does not have the right under the California
Statute to acquire the Facility.
<PAGE>
20
6.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated hereby shall be, at the option of
Buyer, subject to the fulfillment, at or prior to the Closing Date, of the
following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of Seller contained in this Agreement or in any other document of
Seller delivered pursuant hereto shall be true and correct in all material
respects on the Closing Date with the same effect as if made on the Closing
Date. Seller shall have delivered to Buyer a certificate to such effect signed
by the President or any Vice President and the Secretary or any Assistant
Secretary of Seller.
(b) SELLER'S PERFORMANCE. Each of the obligations of Seller to
be performed by it on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects on or before
the Closing Date. Seller shall have delivered to Buyer a certificate to such
effect signed by the President or any Vice President and the Secretary or any
Assistant Secretary of Seller.
(c) ADDITIONAL CLOSING DOCUMENTS OF SELLER. Buyer shall have
received at the Closing the following documents, dated the Closing Date:
(i) copies, certified by the Secretary or an Assistant
Secretary of Seller, of resolutions of the Board of Directors of Seller or
the Executive Committee thereof authorizing the execution, delivery and
performance of this Agreement and all other agreements, documents and
instruments relating hereto and the consummation of the transactions
contemplated hereby;
(ii) bills of sale and assignment, in form and
substance reasonably satisfactory to counsel for Buyer, duly executed by
Seller, covering the items of personal property included in the
Acquisition Assets to be transferred or assigned to Buyer at the Closing,
including the Bill of Sale, Assignment and Assumption Agreement and
assignments in form and substance reasonably satisfactory to counsel for
Buyer;
(iii) a special warranty deed in proper
statutory form for recording duly executed and
<PAGE>
21
acknowledged by Seller covering the Facility to be
conveyed to Buyer pursuant to this Agreement;
(iv) such further instruments of sale, transfer,
conveyance, assignment or delivery covering the Acquisition Assets or any
part thereof as Buyer may reasonably require to assure the full and
effective sale, transfer, conveyance, assignment or delivery to it of the
Acquisition Assets to be transferred to Buyer under this Agreement; and
(v) such other documents (duly executed
as applicable) as Buyer may reasonably request.
(d) REQUIRED PERMIT APPROVALS. All
Required Permit Approvals shall have been obtained without the imposition of any
conditions which Buyer in good faith reasonably determines would be materially
burdensome upon the Acquisition Assets or Buyer or Buyer's ownership of the
Acquisition Assets after the Closing. All such Required Permit Approvals shall
be in effect, and no Proceeding shall have been instituted or threatened by any
Governmental Authority with respect thereto as to which, in Buyer's good faith
opinion, there is a material risk of a determination that would terminate the
effectiveness of, or otherwise materially and adversely modify the terms of, any
such Permit Approval.
(e) TITLE TO THE FACILITY. Title to the Facility shall have
been cleared of any Encumbrances which are not Permitted Encumbrances
(f) FINANCING. All conditions precedent set forth in the
documents relating to the funding of any debt and equity the proceeds of which
Buyer shall use to effectuate the acquisition of the Acquisition Assets shall
have been fulfilled and the Persons committed to providing such funding shall be
prepared to do so concurrently with the Closing.
(g) MATERIAL ADVERSE EFFECT. There shall not have occurred any
event, occurrence, development or state of circumstances or facts or change in
the Acquisition Assets (including any damage, destruction or other casualty
loss) affecting any Acquisition Asset which has had or which may reasonably be
expected to have, either alone or together with all such events, occurrences,
developments, states of circumstances or facts or changes, a Material Adverse
Effect.
<PAGE>
22
6.3 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller
to consummate the transactions contemplated hereby shall be, at the option of
Seller, subject to the fulfillment, at or prior to the Closing Date, of the
following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of Buyer contained in this Agreement or in any document delivered
pursuant hereto shall be true and correct in all material respects on the
Closing Date with the same effect as if made on the Closing Date. Buyer shall
have delivered to Seller a certificate to such effect, signed by the President
or any Vice President and the Secretary or any Assistant Secretary of Buyer.
(b) PERFORMANCE OF COVENANTS. Each of the obligations of Buyer
to be performed on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects on or before
the Closing Date. Buyer shall have delivered to Seller a certificate to such
effect signed by the President or any Vice President and the Secretary or any
Assistant Secretary of Buyer.
(c) ADDITIONAL CLOSING DOCUMENTS OF BUYER.
Seller shall have received at the Closing the following
documents, each dated the Closing Date:
(i) copies, certified by the Secretary or an Assistant
Secretary of Buyer, of resolutions of its Board of Directors or the
Executive Committee thereof authorizing the execution and delivery of this
Agreement and all other agreements, documents or instruments relating
hereto and the consummation of the transactions contemplated hereby;
(ii) confirmation of the wire transfer
to be delivered by Buyer at the Closing pursuant to
Section 2.3 hereof; and
(iii) such other closing documents (duly executed as
applicable) as Seller may reasonably request.
<PAGE>
23
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold
harmless Buyer, Buyer's Affiliates and their respective officers, directors,
employees and agents (collectively, the "Buyer Indemnitees") in respect of any
and all Damages reasonably incurred by any Buyer Indemnitee, whether paid or
payable, as a result of or otherwise in connection with each and all of the
following:
(a) any breach of any representation or warranty made by
Seller in this Agreement;
(b) the breach of any covenant, agreement or obligation of
Seller contained in this Agreement or any other instrument contemplated by this
Agreement;
(c) any misrepresentation contained in any statement or
certificate furnished by Seller pursuant to this Agreement or in connection with
the transactions contemplated by this Agreement;
(d) any Liability relating to the Acquisition Assets existing
or arising on or resulting from events which occurred or failed to occur prior
to the Effective Time;
(e) any failure of Buyer to obtain the protections afforded by
compliance with the notification requirements of the bulk sales, bulk transfer
and similar laws enforced in the jurisdictions in which such laws may be
applicable to either Seller or the transactions contemplated by this Agreement;
and
(f) any claim pursuant to PMPA or any similar or related
federal or state statute (including the California Statute) or regulation
(including any such claim arising out of or resulting from the execution and
delivery of this Agreement or the sale of any of the Acquisition Assets to the
Buyer) but excluding (x) any such claim to the extent to which it arises out of
or results from events which occur after the Closing Date or (y) any such claim
against Buyer which arises out of or results from actions which are alleged will
be taken by the Buyer after the Closing Date (provided, that any claim described
in this clause (y) shall not be excluded from the scope of Seller's indemnity in
this paragraph (f) if the claim against Buyer is withdrawn or dismissed or it is
determined that neither Buyer nor Seller has any Liability in respect of such
claim).
<PAGE>
24
7.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold
harmless Seller, Seller's Affiliates and their respective officers, directors,
employees and agents (collectively the "Seller Indemnitees") in respect of any
and all Damages reasonably incurred by any Seller Indemnitee, whether paid or
payable, as a result of or in connection with each and all of the following:
(a) any breach of any representation or warranty made by Buyer
in this Agreement;
(b) the breach of any covenant, agreement or obligation of
Buyer contained in this Agreement or any other instrument contemplated by this
Agreement; and
(c) any misrepresentation contained in any statement or
certificate furnished by Buyer pursuant to this Agreement or in connection with
the transactions contemplated by this Agreement.
7.3 DEFENSE OF CLAIMS. Whenever any claim shall arise for
indemnification hereunder, the party entitled to indemnification (the
"Indemnified Party") shall promptly notify the other party (the "Indemnifying
Party") of the claim and, when known, the facts constituting the basis for such
claim. If the Indemnified Party fails to provide the Indemnifying Party with
such notice prior to the time at which the Indemnifying Party's ability to
defend against such claim is irrevocably prejudiced by the failure to provide
such notice, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such portion of the claim as to which the
Indemnifying Party's ability to defend has been prejudiced by such failure. The
Indemnifying Party may, upon written notice to the Indemnified Party within 30
calendar days of receipt of the notice specified in the first sentence of this
paragraph, assume the defense of any such claim if the Indemnifying Party
acknowledges to the Indemnified Party the Indemnified Party's right to indemnity
pursuant hereto in respect of the entirety of such claim. If the Indemnifying
Party assumes the defense of any such claim, the Indemnifying Party shall select
counsel reasonably acceptable to the Indemnified Party to conduct the defense of
such claim, shall take all steps necessary in the defense or settlement thereof
and shall at all times diligently and promptly pursue the resolution thereof. If
the Indemnifying Party shall have assumed the defense of any claim in accordance
with this Section 7.3, the Indemnifying Party shall be authorized to consent to
a settlement of, or the entry of any judgment arising from, any such claim,
without the prior written consent of the Indemnified Party; PROVIDED, HOWEVER,
that the Indemnifying Party shall pay or cause to be paid
<PAGE>
25
all amounts arising out of such settlement or judgment concurrently with the
effectiveness thereof; PROVIDED, FURTHER, that the Indemnifying Party shall not
be authorized to encumber any of the assets of the Indemnified Party or to agree
to any restriction that would apply to the Indemnified Party, or to any other
Buyer or Seller Indemnitee, as applicable, or to its conduct of business or to
any other Buyer or Seller Indemnitee, as applicable, or to their conduct of
business; AND PROVIDED, FURTHER, that a condition to any such settlement shall
be a complete release of the Indemnified Party with respect to such claim. The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense. The
Indemnified Party shall, and shall cause each of its Affiliates, officers,
employees, consultants and agents and each other Buyer or Seller Indemnitee, as
applicable, to, cooperate fully with the Indemnifying Party in the defense of
any claim pursuant to this Section 7.3. If the Indemnifying Party does not
assume the defense of any claim resulting therefrom in accordance with the terms
of this Section 7.3, the Indemnified Party may defend against such claim in such
manner as it may deem appropriate, including settling such claim after giving
notice of the same to the Indemnifying Party, on such terms as the Indemnified
Party may deem appropriate.
7.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the parties in Articles III and IV and in any instrument
or document furnished in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of the parties hereto and shall
expire on the fourth anniversary of the Closing Date, except (i) as to any
matter as to which a claim is submitted in writing to the Indemnifying Party
prior to such fourth anniversary and identified as a claim for indemnification
pursuant to this Agreement, (ii) the inaccuracy of any representation or
warranty arising out of the fraud, gross negligence or willful misconduct of
Seller or Buyer, which representation and warranty shall survive until sixty
(60) days following the expiration of the applicable statute of limitations,
including extensions thereof and (iii) any inaccuracy in the representations or
warranties set forth in Sections 3.5 and 4.5 of this Agreement, which
representations and warranties shall survive until the expiration of sixty (60)
days following the applicable statute of limitations, including extensions
thereof. The covenants of Seller and Buyer hereunder, including the
indemnification obligations of Seller under Sections 7.1(b) and (d) the
indemnification obligations of Buyer under Sections 7.2(b) and (d), shall
survive until the expiration of any applicable statute of limitations. No claim
or action for indemnity pursuant to
<PAGE>
26
Sections 7.1 or 7.2 hereof for breach of any representation or warranty shall be
asserted or maintained by any party hereto after the expiration of such
representation or warranty pursuant to the first sentence of this Section 7.4
except for claims made in writing prior to such expiration and actions (whether
instituted before or after such expiration) based on any claim made in writing
prior to such expiration.
ARTICLE VIII
TERMINATION
8.1 GROUNDS FOR TERMINATION. This Agreement may
be terminated at any time prior to the Closing:
(i) by mutual written agreement of Seller and Buyer;
(ii) by Buyer at any time following the expiration of
ten (10) days from the date that Buyer has given written notice to Seller
of any one or more material inaccuracies or material misrepresentations in
or material breaches of the representations or warranties made by Seller
and Seller shall have failed to cure such inaccuracies and breaches in all
material respects in said ten (10) day period; PROVIDED, HOWEVER, that in
the event that within said ten (10) day period Seller has undertaken
reasonable actions to cure such inaccuracies and breaches and such actions
are being diligently pursued by Seller, no termination under this clause
(ii) shall take effect unless Seller shall have failed to cure such
inaccuracies and breaches in all material respects within forty-five (45)
days after delivery of the original notice from Buyer;
(iii) by Buyer at any time following the expiration of
ten (10) days from the date that Buyer has given written notice to Seller
of Seller's failure to perform and satisfy in any material respect any of
Seller's obligations under this Agreement and Seller shall have failed to
cure such failure in all material respects in said ten (10) day period;
PROVIDED, HOWEVER, that in the event that within said ten (10) day period
Seller has undertaken reasonable actions to cure such failure and such
actions are being diligently pursued by Seller, no termination under this
clause (iii) shall take effect unless Seller shall have failed to cure
such failure in all material respects within
<PAGE>
27
forty-five (45) days after delivery of the original notice from Buyer;
(iv) by Seller at any time following the expiration of
ten (10) days from the date that Seller has given written notice to Buyer
of any one or more material inaccuracies or material misrepresentations in
or material breaches of the representations or warranties made by Buyer
herein and Buyer shall have failed to cure such inaccuracies and breaches
in all material respects in said ten (10) day period; PROVIDED, HOWEVER,
that in the event that within said ten (10) day period Buyer has
undertaken reasonable actions to cure such inaccuracies and breaches and
such actions are being diligently pursued by Buyer, no termination under
this clause (iv) shall take effect unless Buyer shall have failed to cure
such inaccuracies and breaches in all material respects within forty-five
(45) days after delivery of the original notice from Seller;
(v) by Seller at any time following the expiration of
ten (10) days from the date that Seller has given written notice to Buyer
of Buyer's failure to perform and satisfy in any material respect any of
Buyer's obligations under this Agreement and Buyer shall have failed to
cure such failure in all material respects in said ten (10) day period;
PROVIDED, HOWEVER, that in the event that within said ten (10) day period
Buyer has undertaken reasonable actions to cure such inaccuracies and such
actions are being diligently pursued by Buyer, no termination under this
clause (v) shall take effect unless Buyer shall have failed to cure such
inaccuracies in all material respects within forty-five (45) days after
delivery of the original notice from Seller;
(vi) by either Buyer or Seller if the Closing shall not
have been consummated by June 30, 1993, or such later date as is mutually
agreed to in writing by Buyer and Seller (the "Termination Date");
provided, however, that neither Buyer nor Seller may terminate this
Agreement pursuant to this clause (vi) if the Closing shall not have been
consummated by the Termination Date by reason of the failure of such party
to perform in all material respects any of its covenants or agreements
contained in this Agreement; or
(vii) by Buyer by written notice to Seller on or prior
to December 31, 1992 if Buyer, in its reasonable judgment, is not
satisfied with the results of its due diligence.
<PAGE>
28
8.2 EFFECT OF TERMINATION. Subject to the next sentence, if this
Agreement is terminated in accordance with Section 8.1 as a result of a breach
by any party to this Agreement, the liability of the breaching party shall not
exceed the out-of-pocket costs of the non-breaching party in connection with
this Agreement and the transactions contemplated hereby. If this Agreement is
terminated in accordance with Section 8.1 as a result of (i) the wilful failure
of a party to fulfill a condition to the performance of the other party, (ii)
the wilful failure of a party to perform a covenant under this Agreement, or
(iii) a breach, the consequences of which are material with respect to the
Acquisition Assets, of any representation contained in this Agreement, which the
party making such representation knew was false on the date hereof, then such
breaching party shall be fully liable for any and all damages sustained or
incurred by the other party.
ARTICLE IX
MISCELLANEOUS
9.1 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two Business Days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by telecopier, once such notice or other communication is
transmitted to the telecopier number specified below and the appropriate answer
back or telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (ii) above or (iv) if sent through a reputable overnight delivery service
in circumstances to which such service guarantees next day delivery, the day
following being so sent:
If to Seller, to: Union Oil Company of California
911 Wilshire Boulevard
Los Angeles, California 90017
Attention: A.J. Eliskalns
Telecopy: (213) 977-5835
<PAGE>
29
Copy to: Union Oil Company of California
1201 West 5th Street
Los Angeles, California 90017
Attention: W. Thomas Skok
Telecopy: (213) 977-7827
If to Buyer, to: National Auto/Truckstops, Inc.
c/o Unocal Petroleum Products and
Chemicals Division
1650 East Golf Road
Schaumburg, Illinois 60196-1088
Attention: William Osborne
Copy to: The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Louis J. Mischianti
Telecopier: (212) 318-1360
Copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attn: Stuart I. Oran, Esq.
Telecopier: (212) 757-3990
Either party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Either party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
9.2 AMENDMENTS; WAIVERS; REMEDIES.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by Buyer and Seller, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by either party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation
<PAGE>
30
or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent occurrence. No single or partial
exercise by either party in exercising any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
9.3 EXPENSES. Personal and real property taxes shall be prorated as
of the Closing Date. Buyer shall file or cause to be filed all required personal
and real property reports and returns which are due on or after the Closing Date
and shall pay or cause to be paid to the Tax Authorities all such taxes
reflected on such reports or returns. All taxes resulting from the transactions
contemplated hereby, including any sales and use taxes and any real property
transfer taxes, shall be borne by the Seller. The costs of obtaining surveys and
title insurance shall be borne by Buyer. Except as otherwise provided herein,
all costs, fees and expenses incurred in connection with this Agreement shall be
paid by the party incurring the same.
9.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
9.5 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the internal laws (and not the conflict of laws) of the
State of California.
9.6 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents,
schedules and exhibits referred to herein which are hereby incorporated by
reference) constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements, understandings
and negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. Neither this Agreement nor any provision
hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
<PAGE>
31
9.8 JURISDICTION. Each of the parties hereto irrevocably submits to
the jurisdiction of any state or federal court sitting in the County of Los
Angeles, State of California, in any action or proceeding arising out of or
relating to this Agreement, agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court, or to contest the
jurisdiction (in rem or in personam) or power or decision of such court over or
pertaining to the party or with respect to the subject matter in any other court
within or without the United States other than appropriate appellate courts.
Each of the parties hereto irrevocably waives any defense of inconvenient forum
to the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of the other party hereto with
respect thereto.
9.9 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
9.10 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.
9.11 CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against either
party. Whenever required by the context, any gender shall include any other
gender, the singular shall include the plural and the plural shall include the
singular. The headings contained in this Agreement are for reference purposes
only and shall not effect in any way the meaning or interpretation of this
Agreement. Whenever the word "including" is used in this Agreement, it shall be
deemed to mean "including, without limitation," "including, but not limited to"
or other words of similar import such that the items following the word
"including" shall be deemed to be a list by way of illustration only and shall
not be deemed to
<PAGE>
32
be an exhaustive list of applicable items in the context thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
UNION OIL COMPANY OF CALIFORNIA
By: /s/ Neale E. Schmale
--------------------------------
Name: Neale E. Schmale
------------------------------
Title: Sr. Vice President
-----------------------------
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Louis J. Mischianti
--------------------------------
Name: Louis J. Mischianti
Title: Treasurer
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Hugh D. Schmieder
--------------------------------
Name: Hugh D. Schmieder
Title: Vice President
EXHIBIT 10.4
AMENDMENT NO. 1 TO THE BLYTHE, CALIFORNIA
ASSET PURCHASE AGREEMENT
-----------------------------------------
AMENDMENT NO. 1, dated as of April 13, 1993, to the Blythe,
California Purchase Agreement, dated as of November 23, 1992 (the "Asset
Purchase Agreement"), by and between Union Oil Company of California, a
California corporation ("Seller"), and National Auto/Truckstops, Inc., a
Delaware corporation (together with its successors and assigns, "Buyer").
Pursuant to Section 9.2(a) of the Asset Purchase Agreement, Buyer
and Seller desire to amend the Asset Purchase Agreement in order to amend and
clarify certain of the terms and provisions contained therein. Capitalized terms
used herein but not otherwise defined have the respective meanings specified in
the Asset Purchase Agreement.
Accordingly, the parties hereby agree as follows:
1. AMENDMENT OF SECTION 1.1. The definition of
"Effective Time" in Section 1.1 of the Asset Purchase Agreement is hereby
amended by deleting such definition in its entirety and substituting in lieu
thereof the following definition:
"Effective Time" means 11:59 p.m. Central Time on the Closing
Date.
<PAGE>
2
2. AMENDMENT OF SECTION 3.9. Section 3.9 of the Asset Purchase
Agreement is hereby amended by adding the following to the end of such
Section 3.9:
Seller makes no representation in this Section 3.9 as to its compliance or
non-compliance with the Americans with Disabilities Act (the "ADA").
3. AMENDMENT OF ARTICLE V. Article V of the Asset Purchase
Agreement is hereby amended by adding the following new Section 5.12 to the end
of such Article V:
5.12 POST-CLOSING COVENANT. Seller agrees promptly after the
Closing Date to perform the tasks set forth on Section 5.12 of the
Disclosure Schedule.
4. AMENDMENT OF SECTION 7.1. Section 7.1 of the Asset Purchase
Agreement is hereby amended by deleting Section 7.1(f) in its entirety and
substituting in lieu thereof the following:
(f) any claim pursuant to PMPA or any similar or related
federal or state statute (including the California Statute) or regulation
(including any such claim arising out of or resulting from the execution
and delivery of this Agreement or the sale of any of the Acquisition
Assets to Buyer) but excluding (x) any such claim to the extent to which
it arises out of or results from events which occur after the Closing Date
or (y) any such claim against Buyer which arises out of or results from
actions which are alleged will be taken by Buyer after the Closing Date
(provided, that any claim described in this clause (y) shall not be
excluded from the scope of Seller's indemnity in this paragraph (f) if the
claim against Buyer is withdrawn or dismissed or it is determined that
neither Buyer nor Seller has any Liability in respect of such claim); and
(g) Seller's non-compliance as of the Effective Time with the
ADA.
<PAGE>
3
5. AMENDMENT OF SECTION 7.4. Section 7.4 of the Asset Purchase
Agreement is hereby amended by deleting Section 7.4 in its entirety and
substituting in lieu thereof the following:
7.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by the parties in Articles III and IV
and in any instrument or document furnished in connection herewith shall
survive the Closing and any investigation at any time made by or on behalf
of the parties hereto and shall expire on the fourth anniversary of the
Closing Date, except (i) as to any matter as to which a claim is submitted
in writing to the Indemnifying Party prior to such fourth anniversary and
identified as a claim for indemnification pursuant to this Agreement, (ii)
the inaccuracy of any representation or warranty arising out of the fraud,
gross negligence or willful misconduct of Seller or Buyer, which
representation and warranty shall survive until sixty (60) days following
the expiration of the applicable statute of limitations, including
extensions thereof and (iii) any inaccuracy in the representations or
warranties set forth in Sections 3.5 and 4.5 of this Agreement, which
representations and warranties shall survive until the expiration of sixty
(60) days following the applicable statute of limitations, including
extensions thereof. The covenants of Seller and Buyer hereunder, including
the indemnification obligations of Seller under Sections 7.1(b), (d), (e),
(f) and (g) and the indemnification obligations of Buyer under Sections
7.2(b) and (d), shall survive until the expiration of any applicable
statute of limitations. No claim or action for indemnity pursuant to
Sections 7.1 or 7.2 hereof for breach of any representation or warranty
shall be asserted or maintained by any party hereto after the expiration
of such representation or warranty pursuant to the first sentence of this
Section 7.4 except for claims made in writing prior to such expiration and
actions (whether instituted before or after such expiration) based on any
claim made in writing prior to such expiration.
6. SCHEDULES. Attached hereto is an amended and restated
Disclosure Schedule that supersedes in its entirety
<PAGE>
4
the draft form of Disclosure Schedule previously delivered by Seller.
7. AMENDMENT OF SECTION 9.4. Section 9.4 of the Asset Purchase
Agreement is hereby amended by deleting Section 9.4 in its entirety and
substituting in lieu thereof the following:
9.4 SUCCESSORS AND ASSIGNS. Either party hereto may assign
this Agreement or any of its rights or benefits hereunder to any Person,
including, without limitation, an assignment by Buyer of some or all of
its rights hereunder to any of Buyer's lenders.
8. COUNTERPARTS. This Amendment No. 1 may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed by their respective authorized officers as of the day
and year first above written.
UNION OIL COMPANY OF CALIFORNIA
By: /s/ A.J. Eliskalns
------------------------------------
Name: A.J. Eliskalns
Title: Vice President
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Louis J. Mischianti
------------------------------------
Name: Louis J. Mischianti
Title: Vice President and Treasurer
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Hugh D. Schmieder
------------------------------------
Name: Hugh D. Schmieder
Title: Vice President
Exhibit 10.5
SCHEDULE OF OMITTED CALIFORNIA PURCHASE AGREEMENTS
The following documents have been omitted as Exhibits to the Registration
Statement because they are on substantially identical terms as Exhibits 10.2 or
10.3, as the case may be, in all material respects.
1. California Purchase Agreement, dated November 23, 1992, between the
National Subsidiary and Unocal, with respect to the TravelCenter located
at Buttonwillow, California (the "Buttonwillow Purchase Agreement")
2. Amendment No. 1 to Buttonwillow Purchase Agreement, dated April 13,
1993, between the National Subsidiary and Unocal
3. California Purchase Agreement, dated November 23, 1992, between the
National Subsidiary and Unocal, with respect to the TravelCenter located
at Ontario, California (the "Ontario Purchase Agreement")
4. Amendment No. 1 to Ontario Purchase Agreement, dated April 13, 1993,
between the National Subsidiary and Unocal
5. California Purchase Agreement, dated November 23, 1992, between the
National Subsidiary and Unocal, with respect to the TravelCenter located
at Redding, California (the "Redding Purchase Agreement")
6. Amendment No. 1 to Redding Purchase Agreement, dated April 13, 1993,
between the National Subsidiary and Unocal
7. California Purchase Agreement, dated November 23, 1992, between the
National Subsidiary and Unocal, with respect to the TravelCenter located
at Sacramento, California (the "Sacramento Purchase Agreement")
8. Amendment No. 1 to Sacramento Purchase Agreement, dated April 13, 1993,
between the National Subsidiary and Unocal
9. California Purchase Agreement, dated November 23, 1992, between the
National Subsidiary and Unocal, with respect to the TravelCenter located
at Santa Nella, California (the "Santa Nella Purchase Agreement")
10. Amendment No. 1 to Santa Nella Purchase Agreement, dated April 13, 1993,
between the National Subsidiary and Unocal
EXHIBIT 10.6
ASSET PURCHASE AGREEMENT
dated as of
July 22, 1993
among
T.S. NETWORK CORP.
and
BP EXPLORATION & OIL INC.
and
TRUCKSTOPS CORPORATION OF AMERICA INC.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.......................................... 1
1.1 DEFINITIONS.......................................... 1
ARTICLE II TRANSFER OF PURCHASED ASSETS......................... 9
2.1 Assets to be Conveyed................................ 9
2.2 Excluded Assets...................................... 12
2.3 Assumption of Sellers' Liabilities................... 14
2.4 Assignment of Contracts and Rights................... 16
2.5 Purchase Price for BP Assets......................... 17
2.6 Allocation of Purchase Price for
Purchased Assets................................... 18
2.7 Joint Technology..................................... 18
ARTICLE III THE CLOSING.......................................... 18
3.1 Closing.............................................. 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS............ 19
4.1 Corporate Existence and Power........................ 19
4.2 Corporate Authorization.............................. 20
4.3 Governmental Authorization........................... 20
4.4 Non-Contravention.................................... 21
4.5 Financial Statements................................. 21
4.6 No Undisclosed Liabilities........................... 22
4.7 Absence of Certain Changes........................... 22
4.8 No Brokerage Fees.................................... 24
4.9 Properties; Leases; Tangible Assets.................. 24
4.10 Sufficiency of and Title to the
Transferred Assets................................. 27
4.11 Affiliates........................................... 28
4.12 Litigation........................................... 28
4.13 Contracts............................................ 28
4.14 Permits.............................................. 29
4.15 Compliance with Laws................................. 30
4.16 Employment and Similar Agreements:
Obligations Upon Change in Control................... 30
4.17 Labor and Employment Matters......................... 31
4.18 Employee Benefit Plans............................... 31
4.19 Intellectual Property................................ 33
i
<PAGE>
PAGE
4.20 Customers............................................ 34
4.21 Franchisee Relationships............................. 34
4.22 TAFSI................................................ 34
4.23 Disclaimer........................................... 35
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER.............. 36
5.1 Organization and Existence........................... 36
5.2 Corporate Authorization.............................. 36
5.3 Governmental Authorization........................... 36
5.4 Non-Contravention.................................... 36
5.5 No Brokerage Fees.................................... 37
5.6 Litigation........................................... 37
ARTICLE VI CERTAIN UNDERSTANDINGS AND AGREEMENTS OF
THE PARTIES........................................ 37
6.1 Conduct of the Business.............................. 37
6.2 TAFSI................................................ 41
6.3 Confidentiality...................................... 41
6.4 Access to Records and Files.......................... 41
6.5 Public Announcements................................. 42
6.6 No Shopping.......................................... 42
6.7 Further Assurances................................... 43
6.8 Cooperation in Litigation............................ 43
6.9 Certain Filings...................................... 43
6.10 Administration of Accounts........................... 44
6.11 Title Insurance; Encumbrances........................ 44
6.12 Employees and Benefits............................... 45
6.13 Inventory............................................ 47
6.14 Cooperation with Respect to Financing................ 50
6.15 Recent Financial Statements.......................... 51
6.16 Schedule Updates..................................... 51
6.17 Assistance with Accounts Receivable.................. 51
6.18 Financing............................................ 52
6.19 Properties........................................... 52
ARTICLE VII CONDITIONS TO CLOSING................................ 52
7.1 ..................................................... 52
7.2 Conditions to Obligations of Buyer................... 52
7.3 Conditions to Obligations of the Sellers............. 55
ARTICLE VIII INDEMNIFICATION...................................... 56
8.1 Indemnification by Seller............................ 56
8.2 Indemnification by Buyer............................. 58
8.3 Defense of Claims.................................... 59
ii
<PAGE>
PAGE
8.4 Survival of Representations and Warranties
.................................................. 60
8.5 Limitations on Indemnification for
Breaches of Representations and
Warranties......................................... 60
8.6 Cap.................................................. 61
8.7 Limitation on Damages................................ 61
8.8 Exclusive Remedies................................... 62
8.9 Insurance............................................ 62
ARTICLE IX TERMINATION.......................................... 62
9.1 Grounds for Termination.............................. 62
ARTICLE X MISCELLANEOUS........................................ 63
10.1 Notices.............................................. 63
10.2 Amendments; Waivers; Remedies........................ 65
10.3 Expenses............................................. 65
10.4 Successors and Assigns............................... 66
10.5 Governing Law........................................ 66
10.6 Counterparts; Effectiveness.......................... 66
10.7 Entire Agreement..................................... 66
10.8 Jurisdiction......................................... 66
10.9 Captions............................................. 66
10.10 Severability......................................... 66
10.11 Construction......................................... 67
10.12 Taxes................................................ 67
10.13 Exhibit and Schedules................................ 70
10.14 No Third Party Beneficiaries......................... 70
10.15 No Inducements....................................... 70
iii
<PAGE>
EXHIBITS
Exhibit A - Assignment and Assumption Agreement
Exhibit B - Credit Card Agreement
Exhibit C - Environmental Agreement
Exhibit D - Fuel Supply Agreement
Exhibit E - Non-Competition Agreement
Exhibit F - Office Sub-Lease
Exhibit G - Services Agreement
Exhibit H - TAFSI Assumption Agreement
Exhibit I - Trademark License Agreement
Exhibit J - Software License Agreement
Exhibit K - Opinion of Counsel to BP
Exhibit L - Leased Property Assignment and Assumption
Agreements
Exhibit M - Sellers' 7.2(a) Certificate
Exhibit N - Sellers' 7.2(b) Certificate
Exhibit O - Buyer's 7.3(a) Certificate
Exhibit P - Buyer's 7.3(b) Certificate
Exhibit Q - Opinion of Paul, Weiss, Rifkind, Wharton &
Garrison
SCHEDULES
1.1(a) - Accounting Principles
1.1(b) - Assignment Trademarks
1.1(c) - Franchise Agreements
1.1(d) - Franchisee Truckstops
2.1(ii) - Equipment
2.1(vii) - Patents, Trademarks, etc.
2.2(iv) - Headquarters Property
4.1 - Authority to do Business
4.3(a) - Governmental Approvals
4.4 - Consents
4.5 - Financial Statements
4.6 - Undisclosed Liabilities
4.7(a) - Material Adverse Effect
4.7(b) - Recent Material Contracts
4.9(a) - Encumbrances
4.9(b) - Maintenance and Repair
4.9(c) - Owned Real Property
4.9(d)(i) - Leases
4.9(d)(ii) - Non-assignable Leases
4.9(e) - Real Property Restrictions
4.9(f) - Existing Highway Plans
4.9(g) - Computer Hardware
4.9(h) - Work in Progress
iv
<PAGE>
4.12(a) - Litigation
4.12(b) - Proceedings seeking to enjoin
the transaction
4.13(a) - Contracts
4.13(b)(i) - No material defaults
4.13(b)(ii) - No defaults
4.13(b)(iii) - Material Contracts Assignable
4.13(b)(iv) - Contracts Assignable
4.14(a)(i) - Material Permits
4.14(a)(ii) - Permits
4.14(b)(i) - Material Required Permit Approvals
4.14(b)(ii) - Required Permit Approvals
4.14(b)(iii) - Material Permits Assignable
4.14(b)(iv) - Permits Assignable
4.15 - Compliance with Law
4.16 - Employment Agreements
4.18(a) - ERISA Plans
4.18(b) - Benefit Arrangements
4.18(c) - Multiemployer Plans
4.18(d) - Workers' Compensation
4.18(e) - WARN Compliance
4.19(i) - Intellectual Property
4.19(ii) - Intellectual Property Proceedings
4.20 - Customers
4.21(a) - Generic UFOC
4.21(b) - Franchise States
4.22 - TAFSI Tax Liabilities
6.1(a)(iii) - Existing Obligations
6.1(a)(vi) - Capital Expenditures
6.1(a)(vii) - Subsequent Material Contracts
6.12(a) - Specified Employees
7.2(f) - Closing Required Permit Approvals
7.2(g) - Closing Required Contractual Consents
6.13(b) - Inventory Values
6.13(c)(ii)(1) - Hydrocarbon valuation procedures
6.13(c)(ii)(2) - Non-hydrocarbon valuation procedures
v
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of July 22, 1993, by and among BP
Exploration & Oil Inc., an Ohio corporation ("BP"), Truckstops Corporation of
America Inc., a Delaware corporation ("TA", and together with BP, collectively,
the "Sellers"), and T.S. Network Corp., a Delaware corporation (together with
its successors and assigns, "Buyer") (the "Agreement").
W I T N E S S E T H :
WHEREAS, Sellers conduct a truckstop business (the "Business"); and
WHEREAS, Sellers desire to sell to Buyer and Buyer wishes to
purchase from Sellers the Business, including sub stantially all of the
operating assets relating thereto, on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
(a) The following terms, as used herein, have the following
meanings:
"ACCOUNTING PRINCIPLES" means: (i) those principles and practices
set forth in Section 1.1(a) of the Disclosure Schedule and (ii) to the extent
not inconsistent with (i), GAAP.
"AFFECTED EMPLOYEE" means any Employee in the Business who becomes
an employee of Buyer at the Effective Time.
"AFFILIATE" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person.
"ANCILLARY AGREEMENTS" means, collectively, (i) the Non-Competition
Agreement, (ii) the Fuel Supply Agreement, (iii) the Trademark License
Agreement, (iv) the Credit Card Agreement, (v) the Services Agreement, (vi) the
Office Sub-Lease, (vii) the Assignment and Assumption
<PAGE>
2
Agreement, (viii) the TAFSI Assumption Agreement, and (ix) the Software License
Agreement.
"APPLICABLE LAW" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, regulation,
order, writ, injunction, directive, judgment, decree or other requirement of any
Governmental Authority applicable to such Person or its properties, assets,
officers, directors, employees, consultants or agents in connection with such
officer's, director's, employee's, consultant's or agent's activities on behalf
of such Person.
"ASSIGNED TRADEMARKS" means those U.S. trademarks, trademark
registrations, tradenames, marks, logos and other U.S. commercial symbols set
forth in Section 1.1(b) of the Disclosure Schedule.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement in the form of Exhibit A.
"BP GROUP" means The British Petroleum Company p.l.c. and its direct
and indirect subsidiaries.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York are authorized or required
by law to close.
"CENTRAL STAFF SERVICES" means the legal, cash management, treasury,
tax, insurance, health and safety and pension services, employee benefits funds
and plans provided to the Business by the headquarters and divisions of BP other
than the Business or members of the BP Group other than Sellers, including
employee and other records necessary to administer salaried payrolls and
benefits and welfare plans retained by Sellers and to file taxes, except to the
extent expressly transferred to Buyer pursuant to this Agreement.
"COMPANY TRUCKSTOP" means any truckstop utilized in the Business
which is owned or leased by any Seller.
"CONFIDENTIALITY AGREEMENT" means the Confiden tiality Agreement,
dated January 27, 1993, as amended, between The First Boston Corporation, on
behalf of Sellers, and The Clipper Group, L.P.
"CREDIT CARD AGREEMENT" means the Credit Card Agreement in the form
of Exhibit B.
<PAGE>
3
"DAMAGES" means all demands, claims, actions or causes of action,
assessments, losses, damages (including punitive damages), costs, expenses,
liabilities, judgments, awards, fines, sanctions, penalties, and charges, and
amounts paid or payable in settlement, including (except where recovery thereof
is prohibited as a matter of law) interest on cash disbursements in respect of
any of the foregoing at the lesser of the Reference Rate in effect from time to
time and the maximum interest rate permitted by law, compounded quarterly, from
the date each such cash disbursement is made until the Person incurring the same
shall have been indemnified in respect thereof. In the event that an
Indemnifying Party elects not to assume the defense of any claim as to which an
Indemnified Party has a right of indemnification pursuant to Article 8 hereof,
Damages shall also include the reasonable costs, fees and expenses of such
Indemnified Party's attorneys, experts, accountants, appraisers, and agents
incurred in responding to, investigating and defending against such claim.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto.
"DISTRIBUTION CENTER" means the Packaged Products Service Center
located in Nashville, Tennessee.
"EFFECTIVE TIME" means 12:01 a.m. Eastern Standard Time on the
Closing Date.
"EMPLOYEE" means any employee of BP, TA or TAFSI on the Closing
Date.
"ENVIRONMENT" means navigable ocean waters, ocean waters, natures
resources, surface waters, ground water, drinking water supply, land surface,
subsurface strata and ambient air, both inside and outside of buildings and
structures.
"ENVIRONMENTAL AGREEMENT" means the Environmental Agreement dated as
of the date hereof between BP, TA and Buyer attached as Exhibit C hereto.
"ENVIRONMENTAL LAWS" means federal, state and local laws, principles
of common law, regulations and codes, as well as orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder relating to
pollution or protection of the Environment.
"ENVIRONMENTAL LIABILITIES" means all Liabilities, whether direct or
indirect, known or unknown, current or potential, absolute or contingent,
matured or unmatured,
<PAGE>
4
past, present or future, imposed by, under or pursuant to Environmental Laws.
"ERISA AFFILIATE" means, with respect to any Person, any entity,
whether or not incorporated, which, together with such Person was or is required
to be treated as a single employer under Section 414 of the Internal Revenue
Code of 1986, as amended, or Section 4001 of ERISA.
"FRANCHISEE" means any Person who owns and independently operates a
truckstop location that is part of the Business.
"FRANCHISEE GUARANTY" means that certain Guaranty Agreement, dated
March 26, 1993, executed by BP in favor of Davenport Bank and Trust Company,
N.A. pursuant to which TA has guaranteed certain obligations of Iowa-80
Truckstop, Inc.
"FRANCHISE AGREEMENTS" means the franchise agreements listed in
Section 1.1(c) of the Disclosure Schedule between TAFSI and TAFSI's Franchisees.
"FRANCHISEE TRUCKSTOP" means any truckstop identified in Section
1.1(d) of the Disclosure Schedule.
"FUEL SUPPLY AGREEMENT" means the Fuel Supply Agreement in the form
of Exhibit D.
"GAAP" means generally accepted accounting prin ciples then in
effect consistently applied.
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state or local governmental authority, court, commission, tribunal
or organization or any regulatory, administrative or other agency, or any
political or other subdivision, department or branch of any of the foregoing.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"LIABILITY" means, with respect to any Person, any liability or
obligation of such Person of any kind, charac ter or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliqui
dated, secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise and whether or not
the same is required to be accrued on the financial statements of such Person in
accordance with GAAP.
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5
"LIEN" means, with respect to any asset or shares of capital stock,
any mortgage, title defect or objection, restrictive covenant, adverse claim,
lien, pledge, charge, security interest, option, right of first refusal,
easement, servitude, transfer restriction, hypothecation or encum brance of any
kind in respect of such asset or shares.
"MATERIAL ADVERSE EFFECT" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, or Liabilities that results in a material adverse effect on, or a
material adverse change in, the Business, considered as a whole.
"MATERIAL ADVERSE TRUCKSTOP EFFECT" means a change in or effect on
the operations, affairs, prospects, financial condition, results of operations,
assets, or Liabilities that results in a material adverse effect on, or a
material adverse change in any Company Truckstop or any Franchisee Truckstop.
"NON-COMPETITION AGREEMENT" means the Non- Competition Agreement in
the form of Exhibit E.
"OFFICE SUB-LEASE" means the Office Sub-Lease in the form of
Exhibit F.
"OUTSIDE SOURCED PETROLEUM PRODUCTS" means any petroleum or
petroleum derivative products (including, without limitation, gasoline,
distillates, lubricants or grease) acquired or to be acquired from any Person
(other than Sellers or any Affiliate of Sellers).
"PERMITS" means each approval, registration, authorization,
certificate, certificate of occupancy, consent, license, order or permit or
other similar authorization of or with any Governmental Authority necessary for
the operation of the Business or the Purchased Assets in substantially the same
manner as currently operated by the Sellers, or otherwise affecting or relating
to the Business.
"PERMITTED LIENS" means (i) Liens for taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for taxes
the validity of which are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP are being
maintained and set aside; (ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other similar Persons and
other Liens imposed by Applicable Law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good faith and for
which adequate reserves in accordance
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6
with GAAP are being maintained and set aside; and (iii) Liens relating to
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security.
"PERSON" means an individual, corporation, part nership,
association, trust, estate or other entity or organization, including a
Governmental Authority.
"PMPA" means the Petroleum Marketing Practices Act.
"PROCEEDING" means any action, suit, hearing, arbitration,
proceeding or governmental investigation brought by or against any Governmental
Authority or any other Person.
"REFERENCE RATE" means the per annum rate of interest as published
in the Wall Street Journal as the Chase Manhattan prime rate (or reference
rate). Any change in the Reference Rate shall take effect at the opening of
business on the day such published quotations change.
"REQUIRED CONSENTS" means, collectively, the Required Contractual
Consents and the Required Permit Approvals.
"REQUIRED CONTRACTUAL CONSENTS" means those consents, notices,
waivers or approvals which must be obtained by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the invalidity of the transfer of any Contract, the termination
thereof, a breach or a default thereunder or any other change or modification to
the terms thereof.
"REQUIRED PERMIT APPROVALS" means each govern mental or other
registration, filing, application, notice, transfer, consent, approval, order,
qualification or waiver required under Applicable Law to be obtained by the
Sellers or the Buyer by virtue of the execution and delivery of this Agreement
or the consummation of the transactions con templated hereby to avoid the loss
of any Permit.
"SELLERS' KNOWLEDGE" or "knowledge of any Seller" means the actual
knowledge of any of the following persons: R. K. Purvis, R. J. Ress, J. F.
Cullen, R. K. Morris, Harrison T. Bubb, Keith A. McCabe, Peter D. Wilbur, Ed
Kuhn or Jim George.
"SERVICES AGREEMENT" means the Services Agreement in the form of
Exhibit G.
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7
"SOFTWARE LICENSE AGREEMENT" means the software license from BP to
Buyer in the form of Exhibit J.
"TAFSI" means TA Franchise Systems Inc., a Delaware corporation.
"TAFSI ASSIGNMENT AND ASSUMPTION AGREEMENT" means the TAFSI
Assignment and Assumption Agreement in the form of Exhibit H.
"TAFSI SHARES" means the 100 shares of common stock, par value $1
per share, of TAFSI owned by TA.
"TAXES" means all federal, state, county, local, foreign and other
taxes, including, without limitation, income taxes, estimated taxes, profit
taxes, excise taxes, sales taxes, use taxes, value added taxes, taxes on
services, transfer taxes, gross receipts taxes, franchise taxes, gasoline and
motor fuels taxes, employment and payroll-related taxes, real and personal
property taxes, inventory and merchandise taxes, capital stock taxes, tollgate,
asset and license taxes, net worth taxes, transaction taxes and import duties,
whether or not measured in whole or in part by net income and including all
deficiencies or other additions to tax, interest and penalties with respect
thereto.
"TRADEMARK LICENSE AGREEMENT" means the Trademark License Agreement
in the form of Exhibit I.
"VENDOR OUTLEASES" means Agreements with third parties permitting
the operation of service or sales businesses (E.G., manicurist services, T-shirt
sales, etc.) at truckstops, which agreements are terminable without liability to
Sellers or their successors and assigns on no more than one month's notice.
"WARN ACT" means the Worker Adjustment and Retraining Notification
Act (and any applicable similar state law).
"WARRANTY LIABILITIES" means exclusively those Liabilities incurred
in the ordinary course of business pursuant to warranties and similar programs
of the Business to repair, replace, reperform or refund a purchase price of
goods or services sold by the Business prior to the Closing Date; PROVIDED,
HOWEVER, that such Liability shall not include any other cost, expense or
Damages (whether or not resulting from a breach of such warranty) but shall
include solely the obligation to repair, replace, reperform or refund a purchase
price of goods or services.
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8
(b) Each of the following terms is defined in the section set forth
opposite such term:
TERM SECTION
Acquisition Proposal 6.6
Adjusted Closing Inventory Amount 6.13(c)
Agreement Recitals
Agreements 4.13(a)
Annual Financial Statements 4.5
Assets 2.1
Assumed Liabilities 2.3
Benefit Arrangements 4.18(b)
BP Recitals
BP Indemnitees 8.2
Business Recitals
Buyer Recitals
Buyer Indemnitees 8.1
Buyer's Basket 8.5(b)
Cap 8.6
Closing 3.1
Closing Date 3.1
Closing Inventory 6.13(c)(ii)
Closing Inventory Amount 6.13(c)(iv)
Closing Payment 6.13(c)(i)
Code 3.1(b)
Contracts 2.1(iv)
Disagreement Notice 6.13(d)(i)
Employment Agreements 4.16
Encumbrances 4.9(a)
Equipment 2.1(ii)
ERISA 2.3(v)
ERISA Plans 4.18
Estimated Inventory Amount 6.13(c)(i)
Excluded Assets 2.2
Excluded Liabilities 2.3
Financial Statements 4.5
Headquarters 2.2(iv)
Indemnified Party 8.3
Indemnifying Party 8.3
Intellectual Property 4.19
Inventory 2.1(iii)
Interim Financial Statements 4.5
Leased Real Property 4.9(d)
Leases 4.9(d)
Management 10.3
Material Permits 4.14(a)
Material Required Permit Approvals 4.14(b)
Non-Conveyable Properties 6.19
Offering Material 6.14(a)
Owned Real Property 4.9(c)
Permitted Encumbrances 4.9(a)
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9
Purchased Assets 2.1
Purchase Price 2.5
Purchased Records 2.1(x)
Real Property 4.9(d)
Retained Records 2.2(vi)
Scheduled Contracts 4.13(a)
Sellers Recitals
Sellers' Basket 8.5(a)
Sellers' Benefit Plans 6.12(b)(i)
Subsequent Material Contract 6.1(a)(iv)
TA Recitals
Termination Date 9.1(iv)
Update Notice 6.16
VSP 2.3(v)
ARTICLE II
TRANSFER OF PURCHASED ASSETS
2.1 ASSETS TO BE CONVEYED. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein after set forth, Sellers shall convey,
transfer, assign, sell and deliver to Buyer, and Buyer shall acquire, accept and
purchase at the Closing, (A) subject to the exclusions in Section 2.2 below, all
assets, properties, rights, interests, licenses, permits, contracts, causes of
action and claims whatsoever, wherever located, whether tangible or intangible,
real, personal or mixed, whether or not reflected on the books and records of
any of the Sellers, as the same shall exist as of the Effective Time
(collectively, "Assets"), which are utilized primarily in the Business, and (B)
all of the tangible Assets located at any Company Truckstop or at the
Distribution Center (all of the Assets identified in the foregoing clauses (A)
and (B) (other than the Excluded Assets) being collectively referred to as the
"Purchased Assets"), including, without limitation, and except as otherwise
specified in Section 2.2 below, all right, title and interest of any Seller in,
to and under:
(i) all real property and leases (whether capitalized or operating)
of, and other interests in, real property listed in Section 4.9(c) of the
Disclosure Schedule and all other real property and leases (whether
capitalized or operating) of, and any other interests in real property of
any Seller primarily held or primarily used in the Business, in each case
together with all of Sellers' interest in all buildings, fixtures, signage
and improvements erected thereon and appurtenances thereto and all of
Sellers'
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10
rights, if any, to real property adjacent or
appurtenant thereto;
(ii) all machinery, equipment, furniture, office equipment,
communications equipment, computer hardware which is primarily used in the
Business (including, without limitation, computer hardware utilized in
connection with management information systems), vehicles (including
automobiles), storage tanks, spare and replacement parts and other
tangible property (and interests in any of the foregoing) of Sellers held
or used in the Business (including, without limitation, the 12th floor
computer hardware and the items listed in Schedule 2.1(ii) of the
Disclosure Schedule) (collectively, the "Equipment");
(iii) all items of inventory primarily relating to the Business
notwithstanding how classified in Sellers' financial records, including
all hydrocarbon inventories for use or sale (including gasoline, diesel
fuel, motor oil, automobile transmission fluid, anti freeze, and motor oil
and fuel additives) and all non-hydrocarbon inventories of food,
beverages, tires, batteries and accessories and other merchandise owned by
Sellers, including, without limitation, all raw materials,
work-in-process, finished goods, supplies, spare parts, samples and stores
whether at the Real Properties, including the Distribution Center, or in
transit to any Real Property (collectively, "Inven tory");
(iv) subject to Section 2.4, all Scheduled Contracts (other than
Employment Agreements and Employee Plans and Benefit Arrangements as
described in Section 2.2(vii) and (viii)) and, only to the extent
primarily relating to the Business, all other con tracts, agreements,
options, leases, licenses, sales and purchase orders, commitments and
other instruments of any kind, whether written or oral, and to which any
Seller is a party or beneficiary on the Closing Date or by which any of
the Purchased Assets are then bound (all of the foregoing to be assigned
to Buyer pursuant hereto or the benefits and burdens under which are to be
provided to Buyer pursuant to Section 2.4 hereof are hereinafter referred
to collectively as the "Contracts" and individually as a "Contract");
(v) to the extent primarily related to the Purchased Assets or the
Business, all prepaid charges and expenses, deposits and similar assets of
either Seller, as the case may be, including any such prepaid charges and
expenses with respect to leases and rentals
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11
and utilities, but excluding all prepaid taxes except to the extent
provided otherwise in Section 10.12 of this Agreement;
(vi) all of Sellers' rights, claims, credits, causes of action or
rights of set-off against third parties to the extent primarily relating
to the Business or the Purchased Assets, whether liquidated or
unliquidated, fixed or contingent, including all rights of Sellers under
or pursuant to all warranties, representations and guarantees made by
suppliers, manufacturers, contractors and other third parties in
connection with products or services purchased by or furnished to Sellers
or any other Person for use in the Business or affecting any of the
Purchased Assets, but excluding in each case such rights, claims, credits,
causes of action or rights of set-off to the extent primarily relating to
the Excluded Assets;
(vii) all of Sellers' right, title and interest in each patent and
patent application, copyright, copy right application, publication,
trademark, trademark registration, trade name, mark, service mark, product
mark, logo and other commercial symbols identified in Section 2.1(vii) of
the Disclosure Schedule (including, without limitation, Truckstops of
America, Country Pride and Country Fresh and the other Assigned Trade
marks) and, to the extent that the following are primarily held or
primarily used in the conduct of the Business, all of Sellers' right,
title and interest in each patent and patent application, copyright, copy
right application, publication, trademark, trademark registration, trade
name, mark, service mark, product mark, logo and other commercial symbol
(in any such case, whether or not registered or to be registered, in the
United States of America or elsewhere) applied for, issued to or otherwise
owned by any Seller and primarily held or primarily used in the Business
or with regard to any of the Purchased Assets;
(viii) each process, invention, trade secret, formula and documentation
owned by any Seller or which any Seller has the right to use and assign to
Buyer which is primarily held or primarily used in the Business or with
regard to any of the Purchased Assets, but excluding any of the foregoing
which relate to the formulation or blending of the gasoline, petroleum
distillates or other petroleum products sold by the Business;
(ix) subject to Section 2.4, all transferable franchises, licenses,
permits or other authorizations
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12
issued or granted by any Governmental Authority that are owned by, granted
to or held or used by either Seller and primarily utilized in the
Business, including the items listed in Sections 4.14(b)(i) and
4.14(a)(ii) of the Disclosure Schedule;
(x) to the extent reasonably available to Sellers, copies of all
books, records, files and papers of either Seller, whether in hard copy or
computer format, including books of account, invoices, engineer ing
information, sales and promotional literature, manuals and data, sales and
purchase correspondence, lists of present and former suppliers, lists of
present and former customers, and documentation developed or used for
accounting, marketing, engineering, manu facturing or any similar purpose,
but in each such case only to the extent related to the conduct of the
Business or with regard to any of the Purchased Assets at any time prior
to the Closing ("Purchased Records"), but excluding in each case the
Retained Records;
(xi) to the extent primarily utilized in the conduct of Business, all
computer software owned by Sellers, or licensed by Sellers and assignable
to Buyer, used to prepare or maintain the books and records of Sellers
relating to the Purchased Assets, including, without limitation, computer
software used in connection with accounts receivable aging, but excluding
in each case (A) software used by Central Staff Services and (B) software
proprietary to the BP Group and used in other units of the BP Group;
(xii) the Star Software;
(xiii) the TAFSI Shares; and
(xiv) other than the BP mark and shield and variants thereof, all
goodwill primarily associated with the Business or the Purchased Assets,
together with the right to represent to third parties that Buyer is the
successor to the Business.
2.2 EXCLUDED ASSETS. Notwithstanding anything contained in Section
2.1 (other than Section 2.1(B)), to the contrary, Sellers are not selling, and
Buyer is not purchas ing, pursuant to this Agreement, any of the following, all
of which shall be excluded from the Purchased Assets (here inafter referred to
collectively as the "Excluded Assets"):
(i) all of Sellers' cash and cash equivalents
(except for cash on hand at the Real Properties and any
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13
deposits conveyed to Buyer pursuant to Section 2.1(v)), bank deposits and
marketable securities;
(ii) all accounts, accounts receivable, notes and notes receivable
existing as of the Effective Time whether or not the same arose out of
Sellers' operation of the Business and payable to Sellers or any of their
Affiliates;
(iii) any intercompany accounts;
(iv) the real property and all furniture and personal property located
thereon at the Business' Cleveland, Ohio headquarters office (the
"Headquarters");
(v) all of Sellers' patents, patent applications, copyright,
copyright applications, publications, trademarks, trademark registrations,
trade names, marks, service marks, product marks, logos or other
commercial symbols which are not conveyed to Buyer pursuant to Section
2.1(vii);
(vi) all books, records, correspondence and other information which
primarily relate to Excluded Assets or Excluded Liabilities (the "Retained
Records"); PROVIDED, HOWEVER, that Sellers agree to furnish copies of such
records (but only if such Retained Records were utilized in the conduct of
the Business) to Buyer if requested by Buyer for bona fide reasons
relating to the operation of the Business from and after the Closing Date;
and further provided that Seller shall not disclose to Buyer any
documents, records, or other information prepared in connection with the
filing of any federal income tax return or any state income or franchise
tax return;
(vii) all Employment Agreements, whether or not identified in Sections
4.13, 4.16, 4.17 and/or 4.18 of the Disclosure Schedule;
(viii) all Employee Plans and Benefit Arrangements, whether or not
identified in Section 4.13, 4.16, 4.17 and/or 4.18 of the Disclosure
Schedule;
(ix) to the extent not utilized primarily in the conduct of the
Business, any assets or property owned or leased by Central Staff Services
or other members of the BP Group not located at the Real Properties;
(x) tax refunds relating to Taxes paid by Sellers or their Affiliates;
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14
(xi) all forecasts, financials and proprietary manuals (except manuals
used in the operation of the Business) prepared by or used by other
members of the BP Group, and copies of and subscriptions to third-party
reports which are not primarily used in the Business;
(xii) Sellers' insurance coverage and rights thereunder; and
(xiii) the BP mark and shield, and variants thereof.
2.3 ASSUMPTION OF SELLERS' LIABILITIES. From and after the Closing
Date, Buyer shall assume and agree to pay when due, perform and discharge (a)
the Liabilities of Sellers under each of the Contracts (including the Franchise
Guaranty) in effect on the Closing Date and assigned to Buyer pursuant to
Section 2.1(iv); (b) the liabilities of Sellers to be assumed by Buyer pursuant
to Section 2.4; (c) the Liabilities under the Assigned Permits to be performed
after the Closing Date; (d) those Liabilities which Buyer has expressly agreed
to pay pursuant to Section 10.12 hereof; and (e) the Warranty Liabilities
(subject to the rest of this Section 2.3, the liabilities described in the
foregoing clauses (a) through (e) are collectively referred to as the "Assumed
Liabilities"). Notwithstanding the foregoing, the Buyer is not assuming and
shall not be deemed to be assuming any of the following (collectively, the
"Excluded Liabilities"), all of which shall be excluded from and shall not
constitute Assumed Liabilities:
(i) except to the extent provided in Sec tion 10.12(b) relating to
certain prorations, all Tax liabilities of any and all kinds arising out
of Sellers' ownership, operation or possession of the Purchased Assets,
and any obligations of Sellers or any consolidated group of which any
Seller is or was a member with respect to any and all Taxes, including,
without limitation, any debts, liabilities, obligations or commitments for
any income, debts, liabilities, obligations or commitments for any Taxes
imposed upon any Seller or any consolidated group of which any Seller is
or was a member by the United States, any taxing authority outside the
United States or any state or local instrumentality or authority within
the United States, relating to, accrued for, applicable to or arising from
any period on, prior to or after the Closing Date;
(ii) any Liability of Sellers or any of their Affiliates for any
accounts payable, except for
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15
liabilities which Buyer expressly agrees to pay pursuant to Section 10.12
hereof;
(iii) whether or not such agreements are assigned to or assumed by
Buyer hereunder, any Liability arising out of or resulting from any breach
by Sellers or any of their Affiliates of any Contract (including, without
limitation, any Scheduled Contract) or other agreement to which Sellers or
any of their Affiliates is a party, including Liabilities arising out of a
breach due to lack of notice to, or lack of consent from, a third party
for assignment of such contracts to Buyer;
(iv) any Liability of Sellers or any of their Affiliates arising out
of, or resulting from, any violation or alleged violation by Sellers or
any such Affiliate of any Applicable Law or in connection with or arising
out of the sale by Sellers or any such Affiliate of any product or the
provision of any service;
(v) any Liability of Sellers or any of their Affiliates or ERISA
Affiliates relating to any officer, director, employee (including any
Employee or Affected Employee), consultant or agent (or any beneficiary or
dependent of the foregoing) of any Seller or any Affiliate or ERISA
Affiliate of any Seller, including, without limitation, employment
agreements between any Seller and any of its employees (whether or not
such employment agreements are identified in Section 4.16 of the
Disclosure Schedule), workers' compensation, union contracts, medical or
sick pay liabilities (including, without limitation, for continuation
coverage mandated by law), pension or profit sharing liabilities or
severance liabilities (including, without limitation, under the WARN Act)
whether or not resulting from the transactions contemplated herein and any
other employee benefit offered by any Seller or any of its Affiliates or
ERISA Affiliates, including any liability for contributions or payments to
be made under or otherwise relating to any employee benefit plan (as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") whether or not covered by ERISA) or other plan,
agreement, commitment or arrangement maintained for an officer, director,
employee, consultant or agent of Sellers or any Affiliate or ERISA
Affiliate, whether or not identified in Section 4.13, 4.16, 4.17 and/or
4.18 of the Disclosure Schedule, including, without limitation, any
Liability relating to any Employee or Affected Employee arising out of or
relating to the BP America Inc. 1992 Voluntary Separation Program (the
"VSP"), whether or
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16
not any benefit under the VSP is provided or to be provided on or after
the Effective Time; in no event shall Buyer assume any obligation for any
Liability of Sellers or any of their Affiliates relating to any Employee
or any Affected Employee that arises or accrues prior to such time, if
any, as such Affected Employee is employed by Buyer;
(vi) any Liability (A) of Sellers or any of their Affiliates resulting
from any Proceeding or (B) resulting from any Proceeding affecting any of
the Purchased Assets or the Business existing at or prior to the Effective
Time;
(vii) any Liability of Sellers under any Contract which is required to
be disclosed in the Disclosure Schedule and is not so disclosed if such
Contract (A) was not entered into in the ordinary course of business or
(B) would require the Buyer to make aggregate payments thereunder in
excess of $100,000;
(viii) any Liability of Sellers or any of their Affiliates under any
contract or agreement required to be disclosed, but not disclosed, in the
Disclosure Schedule providing for the purchase by Sellers or any of their
Affiliates of Outside Sourced Petroleum Products;
(ix) any brokerage or finder's fee payable by Sellers or any of their
Affiliates in connection with the transactions contemplated by this
Agreement;
(x) any Liability in respect of indebtedness for borrowed money
(including, without limitation, any Liability in respect of any industrial
revenue or development bonds);
(xi) any Liability under any agreement or commitment, other than the
Franchise Guaranty, pursuant to which any Seller or any of its Affiliates
guarantees or otherwise agrees to pay or becomes obligated to pay any
obligations of any Franchisees; and
(xii) those Liabilities under the Assigned Permits required to be
performed or satisfied before the Closing Date.
2.4 ASSIGNMENT OF CONTRACTS AND RIGHTS.
(a) Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Purchased Asset or any claim or
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17
right or any benefit arising thereunder or resulting there from if an attempted
assignment thereof, without the consent of a third party thereto, would
constitute a breach or other contravention thereof, be ineffective with respect
to any party thereto or in any way materially and adversely affect the rights of
Sellers or, upon transfer, Buyer thereunder.
(b) Sellers agree that between the date hereof and the Closing
Date they will use their best efforts (other than paying consideration) to
obtain the necessary consents to the assignment of each Contract or other Pur
chased Asset which by its terms requires the consent of any of the other
contracting parties thereto to an assignment thereof to Buyer. If (x) such
consent is not obtained with respect to any such Contract or other Purchased
Asset and (y) notwithstanding the provisions of Section 7.2(g), Buyer elects to
consummate the Closing, each of the Sellers and Buyer will use their reasonable
best efforts to arrange for Buyer to obtain, to the extent practicable, the
claims, rights and benefits and assume the corresponding obligations thereunder
in accordance with this Agreement, including subcontracting, sub-licensing or
sub-leasing to Buyer, or under which Sellers shall enforce for the benefit of
Buyer, with Buyer assuming Sellers' obligations, any and all claims, rights and
benefits of Sellers against a third party thereto. Sellers will promptly pay to
Buyer when received all monies received by Sellers under any Contract or other
Purchased Asset or any claim, right or benefit arising thereunder that has been
assigned to Buyer or which Sellers have made an arrangement to the satisfaction
of Buyer pursuant to this Section 2.4. Buyer agrees to perform at its sole
expense all of the obligations of Sellers to be performed after the Closing Date
under any such Contract or other Purchased Asset which Buyer is receiving
pursuant to the provisions of this Section 2.4, and will promptly reimburse
Sellers for any reasonable payments or costs Sellers incur with respect to such
obligations.
2.5 PURCHASE PRICE FOR BP ASSETS. The purchase price for the
Purchased Assets (the "Purchase Price") shall be in the amount and shall be
payable as follows:
(i) at the Closing, Buyer shall pay to BP, by wire transfer of
immediately available funds, the sum of $92,000,000;
(ii) at the Closing, Buyer shall assume the Assumed Liabilities; and
(iii) Buyer shall make a payment to BP in respect of the Inventory, by
wire transfer of immediately
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18
available funds, pursuant to and in accordance with Section 6.13.
2.6 ALLOCATION OF PURCHASE PRICE FOR PURCHASED ASSETS. Sellers and
Buyer hereby agree that (i) the allocation for tax purposes of the Purchase
Price shall be prepared and agreed to by Sellers and Buyer at the Closing if
practicable, but in no event more than 90 days after the Closing Date, (ii) each
party shall timely file Internal Revenue Service Form 8594 in accordance with
such agreed to allocation, and (iii) neither Buyer nor BP shall take a position
on any report, return, information return or other document (including any
related or supporting information) filed or required to be filed with any
federal, state or local taxing authority, before any taxing authority or in any
judicial proceeding that is in any way inconsistent with such allocation.
2.7 JOINT TECHNOLOGY. Sellers shall retain a paid-up, irrevocable
nonexclusive license to use any unpatented trade secrets, formulas or other
proprietary information conveyed to Buyer hereunder, to the extent such
information is used in other businesses (other than the Business) of Sellers or
the BP Group.
ARTICLE III
THE CLOSING
3.1 CLOSING. The Closing of the transactions contemplated by this
Agreement (the "Closing") shall occur at the law offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York at
10:00 a.m. on October 28, 1993, provided that all conditions to the Closing set
forth in Article VII have been satisfied or waived by the party entitled to
waive the same, or such other time, date or place as is agreed to in writing by
the parties hereto. The date on which the Closing occurs is referred to herein
as the "Closing Date." At the Closing, the parties will deliver the documents
and take the actions specified below (in addition to any other deliveries and
actions specified elsewhere in this Agreement):
(a) Buyer will pay Sellers the Purchase Price in accordance
with Section 2.5 above by wire transfer to BP's account number 2522435 at
National City Bank, Cleveland, Ohio, or such other account as BP may in
writing specify;
(b) Buyer shall deliver to Sellers: (i) the
opinion of counsel specified in Section 7.3(d);
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19
(ii) the certified resolutions specified in Section 7.3(e)(i); (iii) the
certificates specified in Paragraphs (a) and (b) of Section 7.3; (iv) a
recent certificate of good standing for Buyer from the State of Delaware;
and (v) an affidavit of non-foreign status pursuant to section 1445 of the
Internal Revenue Code of 1986, as amended (the "Code");
(c) Sellers shall deliver to Buyer: (i) the opinion of counsel
specified in Section 7.2(d); (ii) the certified resolutions specified in
Section 7.2(e)(i); (iii) the certificates specified in Paragraphs (a) and
(b) of Section 7.2; (iv) recent certificates of good standing for each
Seller from the states of Ohio and Delaware, respectively; and (v) limited
warranty deeds or their equivalent of each parcel of Owned Real Property;
and
(d) Buyer and Sellers will execute (i) the Assignment and
Assumption Agreement; (ii) each of the Ancillary Agreements not yet
executed as of the Closing Date; (iii) assignment and assumption in the
form of Exhibit L hereto for each Real Property Lease covering Leased Real
Property; and (iv) all tax and transfer returns required in connection
with the consummation of the transactions contemplated hereby.
The actions and deliveries listed in the foregoing paragraphs (a)
through (d) shall be deemed to occur simultaneously, and none shall be deemed
completed until all such actions and deliveries are completed. All transfers and
assumptions shall be deemed effective as of the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to Buyer
as follows:
4.1 CORPORATE EXISTENCE AND POWER. Each of BP, TA and TAFSI is a
corporation duly incorporated, validly existing and in good standing under the
laws of its state of incorporation, and has all corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on the Business as now conducted and to own and operate the assets comprising
the Business. To the best of Sellers' knowledge, each Seller and TAFSI is duly
qualified to do business as a foreign corporation in each jurisdiction where
such qualification is necessary to
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20
carry on the Business as now conducted. The list of jurisdictions in which the
Sellers and TAFSI are duly qualified to do business as a foreign corporation is
set forth in Section 4.1 of the Disclosure Schedule. Sellers have heretofore
delivered to Buyer true and complete copies of the Code of Regulation of BP,
Certificates of Incor poration of each of TA and TAFSI and bylaws of each of BP,
TA and TAFSI, each as currently in effect.
4.2 CORPORATE AUTHORIZATION. Each Seller has all requisite corporate
power and authority to enter into this Agreement and all other agreements to be
executed by each of BP, TA and TAFSI, as the case may be, in connection herewith
and to consummate the transactions contemplated hereby and thereby. This
Agreement and all other agreements to be executed by BP, TA or TAFSI, as the
case may be, in connection herewith have been (or upon execution will have been)
duly executed and delivered by BP, TA or TAFSI, as the case may be, have been
effectively authorized by all necessary action, corporate or otherwise, and
constitute (or upon execution will constitute) legal, valid and binding
obligations of BP, TA or TAFSI, as the case may be.
4.3 GOVERNMENTAL AUTHORIZATION.
(a) The execution, delivery and performance by BP, TA and
TAFSI of this Agreement require no action by, consent or approval of, or filing
with, any Governmental Authority other than:
(i) compliance with any applicable requirements of the
HSR Act;
(ii) compliance with any applicable requirements of the
bulk sales, bulk transfer or similar laws of the states in which the
Purchased Assets are located;
(iii) compliance with any applicable requirements of the
WARN Act;
(iv) approvals, consents and filings identified in
Section 4.3(a) of the Disclosure Schedule; and
(v) approvals, consents and filings the failure to
obtain or make will not have a Material Adverse Effect or a Material
Adverse Truckstop Effect.
(b) To the best of Sellers' knowledge, the execution,
delivery and performance by the Sellers of this
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21
Agreement require no action by, consent or approval of, or filing with any
Governmental Authority other than as identi fied in clauses (i), (ii) or (iii)
of Section 4.3(a) or as identified in Section 4.3(a) of the Disclosure Schedule.
(c) To Sellers' knowledge, there are no facts relating to the
identity or circumstances of BP, TA or TAFSI that would prevent or materially
delay obtaining any of the authorizations referred to in Sections 4.3, 4.14 or
5.3.
4.4 NON-CONTRAVENTION. The execution, delivery and performance by
Sellers of this Agreement and all other agreements to be executed by Sellers in
connection herewith does not and will not (a) (i) contravene or conflict with
the Code of Regulation of BP, the Certificate of Incorporation of TA, the
Certificate of Incorporation of TAFSI, or bylaws of each of BP, TA and TAFSI;
(ii) assuming compliance with the HSR Act and the WARN Act, contravene or
conflict with or constitute a violation of any provision of any Applicable Law
binding upon or applicable to BP, TA or TAFSI, the Business or any of the assets
comprising the Business, other than any such contravention, conflict or
violation which will not have and could not reasonably be expected to have a
Material Adverse Effect or a Material Adverse Truckstop Effect; and (iii)
assuming compliance with the HSR Act and receipt of the consents identified in
Section 4.4 of the Disclosure Schedule, constitute a default under, conflict
with, violate, breach or give rise to any right of termination, cancellation or
acceleration of, or to a loss of any benefit to which BP, TA or TAFSI is
entitled, under any material Contract or any material Permit or similar
authorization relating to the Business or included in any of the Purchased
Assets or by which the Business or any of the Purchased Assets may be bound, or,
to the best of Seller's knowledge, any Contract or Permit or (b) result in the
creation or imposition of any Lien on any such asset, other than for any
applicable transfer or sales Taxes.
4.5 FINANCIAL STATEMENTS. Section 4.5 of the Disclosure Schedule
sets forth (i) pro forma balance sheets of the Business as of December 31, 1989,
December 31, 1990, December 31, 1991, and December 31, 1992, and pro forma
statements of operations before income taxes and pro forma disclosures of
capital expenditures and diesel and gasoline sales by volume of the Business for
each of the years ended December 31, 1990, December 31, 1991, and December 31,
1992 (the "Annual Financial Statements") and (ii) a pro forma balance sheet of
the Business as of June 30, 1993 and a pro forma statement of operations before
income taxes and pro forma disclosures of capital expenditures and diesel and
gasoline sales by volume of the Business for the six months
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22
ended June 30, 1993 (the "Interim Financial Statements" and together with the
Annual Financial Statements, the "Financial Statements"). The Financial
Statements (i) were prepared in all material respects in accordance with the
books and records of Sellers subject to the assumptions, exceptions and
limitations described therein; (ii) were prepared in accordance with the
Accounting Principles applied on a consistent basis subject to the assumptions,
exceptions and limitations described therein; (iii) fairly present the financial
condition and the results of operations of the Business as at the relevant dates
thereof and for the periods covered thereby in accordance with the Accounting
Principles applied on a consistent basis subject to the assumptions, exceptions
and limitations described therein; (iv) fairly present in all materials respects
the revenues, cost of goods sold and direct operating expenses actually incurred
by the Business during the periods covered thereby in accordance with the
Accounting Principles applied on a consistent basis subject to the assumptions,
exceptions and limitations described therein; and (v) do not contain any
material items of special or nonrecurring income except as otherwise stated
therein. Except as otherwise stated in the Financial Statements, no improper
accounting practices have been used for the purpose of not reflecting or
incorrectly reflecting in the Financial Statements any material properties,
assets, revenues or expenses. Upon the delivery of any financial statements by
BP to Buyer pursuant to Section 6.15 hereof, the definition of Financial State
ments shall be deemed to include the financial statements delivered to Buyer by
Sellers pursuant to Section 6.15 and the representations made by BP in this
Section 4.5 shall encompass the financial statements delivered pursuant to
Section 6.15.
4.6 NO UNDISCLOSED LIABILITIES. Since June 30, 1993, except (i) for
the transactions specifically contem plated by this Agreement and (ii) as set
forth in Section 4.6 of the Disclosure Schedule, no material Liability, (or to
the best of Seller's knowledge, any Liability), which is an Assumed Liability
was incurred other than in the ordinary course of business.
4.7 ABSENCE OF CERTAIN CHANGES. Since June 30, 1993, the Business
has been conducted substantially in the ordinary course, and there has not been:
(a) except as set forth in Section 4.7(a) of the Disclosure
Schedule, any event, occurrence, development, state of facts or change in
the Business or any of the Purchased Assets which has had either alone or
together with all such events, occurrences, developments, states of facts
or changes, a Material
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23
Adverse Effect or a Material Adverse Truckstop Effect, including, however,
only those events, occurrences, facts or changes specific to the Business,
and excluding all events, occurrences, or changes affecting the truckstop
industry generally or industries generally, including, without limitation,
changes in tax laws or regulatory regimes, the truckstop business climate
or the general business climate.
(b) except as set forth in Section 4.7(b) of the Disclosure
Schedule, any material transaction or commitment made, or any Contract
entered into, by BP, TA or TAFSI, as the case may be, relating to the
Business or any of the Purchased Assets (including the acquisition or
disposition of any material asset of the Business), or any material
waiver, amendment, termina tion or cancellation of any Contract or Permit
by BP, TA or TAFSI, or any material relinquishment of any rights
thereunder by BP, TA or TAFSI, or of any other material right or debt owed
to BP, TA or TAFSI relating to the Business or any Purchased Asset, other
than (i) in the ordinary course of business or (ii) as expressly permitted
by this Agreement;
(c) except as set forth in Schedule 4.7(c) of the Disclosure
Schedule, any material change (i) in the compensation or benefits (other
than for pay or benefit changes in the ordinary course) of any employee
with an annual base pay in excess of $75,000 or (ii) the termination or
re-assignment of any employee with an annual base pay in excess of
$75,000;
(d) any change by BP, TA or TAFSI in the accounting principles
or methods or practices applied to the Business or in the manner it keeps
the books and records of the Business;
(e) any labor dispute (other than routine individual
grievances), lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to any such employees or any activity or
proceeding by a labor union or representative thereof to organize any
employees of BP, TA or TAFSI involved in the Business;
(f) any payment, discharge or satisfaction of any material
Liabilities, (or to the best of Sellers' knowledge, any Liability) of BP,
TA or TAFSI related to the Business, other than payments, dis charges or
satisfactions in the ordinary course of business; or
<PAGE>
24
(g) any material waiver by Sellers or material amendment or
any termination or cancellation of any Contract which is required to be
disclosed in Section 4.13(c) of the Disclosure Schedule or any material
relinquishment, amendment or modification of any rights thereunder.
4.8 NO BROKERAGE FEES. No broker or finder, other than The First
Boston Corporation, has acted for any Seller or any Affiliates of any Seller in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder, other than The First Boston Corporation, is entitled to any
brokerage or finders' fees in respect of such transactions based in any way on
agreements, arrangements or understandings made by or on behalf of BP or any of
BP's Affiliates.
4.9 PROPERTIES; LEASES; TANGIBLE ASSETS.
(a) Each of BP, TA and TAFSI owns and has good and marketable
title to or, in the case of leased properties, a good leasehold interest in, all
of its assets and properties, including all such assets reflected in the balance
sheet as of December 31, 1992 or acquired thereafter, except those assets
disposed of in the ordinary course of business after such date. BP, TA or TAFSI,
as the case may be, as of the Closing shall hold title to each such property and
assets free and clear of all Liens, adverse claims, easements, rights of way,
servitudes, encumbrance and other survey defects or any other rights of others
or other adverse interests or title, including leases, chattel mortgages,
conditional sales contracts, rights of first refusal, options to purchase,
collateral security arrangements and other title or interest retention
arrangements (collectively, "Encumbrances"), except for (i) Permitted Liens,
(ii) Encumbrances set forth on Section 4.9(a) of the Disclosure Schedule, (iii)
with respect to each parcel of Real Property or each material item of Personal
Property, Encumbrances that, individually or in the aggregate, do not and will
not (A) materially interfere with the use, occupancy or operation of such item
of Personal Property or parcel of Real Property as currently used, occupied and
operated, (B) materially reduce the fair market value of such parcel of Real
Property below the fair market value such parcel of Real Property would have had
but for such Encumbrances (it being understood that the fair market value of
such parcel of Real Property as used in this clause (B) means the fair market
value of such parcel of Real Property as a truckstop as it is currently
operated) or (C) result in any material increase over the current cost of
operating, occupying or owning (or leasing) such parcel of Real Property, (iv)
mechanics liens and other monetary liens
<PAGE>
25
of an ascertainable amount which First American Title Insurance Company, or such
other title insurance company Buyer deems acceptable, will insure against as of
the Closing and (v) finance or mortgage liens created solely by any lessor of
any of the Leased Real Property (as hereinafter defined), provided that the
applicable Leases are not in violation thereof (or that Sellers obtain written
waivers to such violations) and that the holder of any such lien cannot disturb
the rights of the tenant under any Lease set forth in Section 4.9(a)-1 of the
Disclosure Schedule if such lien is foreclosed on, and finance or mortgage liens
created solely by any "CAT scale" sublessee of any of the Leased Real Property
or by any "CAT scale" lessee of any of the Owned Real Property (as hereinafter
defined), provided that Sellers shall cooperate with Buyer and Buyer's lenders
to cause the holders of such liens to enter into agreements with Buyer and
Buyer's lenders satisfactory to Buyer's lenders. The Encumbrances described by
clauses (i), (ii), (iii), (iv) and (v) of the foregoing sentence are
collectively referred to herein as the "Permitted Encum brances." Each parcel of
Real Property as currently used, occupied and operated does not breach in any
material respect any applicable zoning or building restrictions.
(b) Except as disclosed in Section 4.9(b) of the Disclosure
Schedule, and except for (i) Purchased Assets which did not have an original
acquisition cost in excess of $10,000 and (ii) any exceptions to the following
which will not have, or are not reasonably likely to have, a Material Adverse
Effect or Material Adverse Truckstop Effect, all tangible properties and assets
included in the Purchased Assets are in operating condition and repair and are
adequate for the uses to which they are put, and no such properties or assets
necessary for the conduct of the Business in substantially the same manner as
such business has heretofore been conducted are in need of material replacement,
maintenance or repair, normal wear and tear excepted.
(c) Section 4.9(c) of the Disclosure Schedule sets forth a
true and complete list of all Purchased Assets that either (a) constitute real
property owned by BP, TA or TAFSI, as the case may be, and are used in the
Business or (b) constitute real property leased by BP, TA or TAFSI, as the case
may be, pursuant to leases in connection with so-called "industrial revenue
bond" or "industrial development bond" financings, and are utilized in the
Business (such property, together with all recorded easements and licenses
benefiting such property, collec tively referred to hereinafter as the "Owned
Real Property"), such list setting forth the location of each parcel of Owned
Real Property, the record owner thereof, the
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26
approximate acreage and a brief description of the nature of the activities of
BP, TA or TAFSI, as the case may be, on such Owned Real Property. The Owned Real
Property described by clause (b) of the immediately preceding sentence shall be
deemed, for purposes of all provisions herein, to be assets owned by BP, TA or
TAFSI, as the case may be.
(d) Section 4.9(d)(i) of the Disclosure Schedule sets forth
(by date and the parties thereto) all personal property leases with annual
rental payments in excess of $10,000 and all real property leases relating to
real property used by BP, TA or TAFSI as lessee (such property, collectively
referred to hereinafter as the "Leased Real Property"; the Leased Real Property
and Owned Real Property being collectively referred to as the "Real Property")
or to which BP, TA or TAFSI is a party or by which BP, TA or TAFSI is bound as
lessor (including all cases in which BP, TA or TAFSI is both the lessor or
lessee of such personal property or real property), excluding Vendor Outleases,
which were entered into in connection with the Business (the "Leases"), and
indicating where appropriate those leases which have been recorded for tax,
protection of title or interest, or other purposes. Except as disclosed in
Section 4.9(d)(ii) of the Disclosure Schedule, all Leases to which BP, TA or
TAFSI, as the case may be, is a party or by which it is bound may be assigned,
transferred and conveyed to Buyer without default, penalty or modification
thereof.
(e) Except as set forth in Section 4.9(e) of the Disclosure
Schedule, with respect to any Real Property, there exists no applicable
restrictive covenant, zoning ordinance, building code, use or occupancy
restriction, land use restriction, fire, subdivision, health or other law
applicable to real property, or any violation of any such ordinance, code,
restriction or law, or any condemnation action or proceeding of any Governmental
Authority, that prohibits the current use of such Real Property in the Business,
other than for items which can and will be corrected prior to the Closing by
notice to or filing with a governmental or private party. The Real Property is
conveyed to Buyer subject to the following: (i) real estate taxes and
assessments, both general and special, not then due and payable; (ii) building
and zoning ordinances, laws, regulations and restrictions by municipal or other
governmental authorities, but only to the extent not in violation of any
representation or warranty contained herein; and (iii) Permitted Encumbrances.
(f) No condemnation proceeding is pending, or to Sellers'
knowledge threatened, which would preclude or materially impair the use of any
Real Property for the uses
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27
for which it is currently being used or is anticipated by BP, TA or TAFSI to be
used. Except as set forth in Section 4.9(f) of the Disclosure Schedule, to
Seller's knowledge there is no existing or proposed plan to widen, modify or
realign any street or highway contiguous to any of the Real Property which would
materially impair the current use or value of any of the Real Property.
(g) Section 4.9(g) of the Disclosure Sched ule sets forth a
true, complete and correct list of all computer hardware with a net book value
in excess of $5,000 used primarily in the Business, other than Excluded Assets.
(h) Each parcel of Real Property which is a truckstop facility
or a distribution center has direct access by ownership, easement or otherwise
to a public street or highway and such access is adequate for the current use of
such parcel in the Business. No Real Property is dependent for its access,
operation or utility on any land, building or other improvement not included in
the Real Property.
(i) Except as set forth in Section 4.9(i) of the Disclosure
Schedule, there is no work being done at or materials being supplied to any
parcel of Real Property as of the date hereof other than routine maintenance
projects.
4.10 SUFFICIENCY OF AND TITLE TO THE TRANSFERRED ASSETS. Upon
consummation of the transactions contemplated by this Agreement, Buyer will have
acquired (directly or indirectly by the acquisition of the TAFSI Shares) free
and clear of all Liens and Encumbrances (other than Permitted Encumbrances), all
of the assets and properties used primarily in the Business and all of the
tangible assets and properties located at any Company Truckstop or the Distri
bution Center, including all Purchased Assets and exclusive of the Excluded
Assets and assets transferred prior to Closing in the ordinary course of
business or otherwise transferred as permitted hereunder. The Business is a
going concern and the transfer of the Purchased Assets to the Buyer pursuant to
this Agreement will enable the Buyer to operate the Business substantially as
Sellers operated it immediately prior to the Closing except that: (i) except as
otherwise specified in the Ancillary Agreements, Buyer shall replace all Central
Staff Services previously provided by Sellers and its Affiliates in support of
the Business; (ii) the absence of Required Contractual Consents or Required
Permit Approvals may have effects; (iii) the Business shall not benefit from
travel, insurance, and other discount purchase programs of the BP Group or other
BP units; (iv) as a consequence of Buyer's election, if made by Buyer, not to
hire all Employees; and (v) the difference in
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28
financial strength, market position and reputation between BP and Buyer may have
effects.
4.11 AFFILIATES. The Business is conducted exclusively by BP, TA and
TAFSI and not by any of their Affiliates and no assets or properties primarily
used in the Business are owned or leased by any Affiliate of BP, TA or TAFSI, as
the case may be, other than for assets associated with Central Staff Services or
BP Group benefit plans.
4.12 LITIGATION.
(a) Except as disclosed in Section 4.12(a) of the Disclosure
Schedule and except for any of the following that have not had and are not
likely to have a Material Adverse Effect or a Material Adverse Truckstop Effect:
(i) there are no Proceedings pending or, to Sellers' knowledge, threatened,
against or affecting the Business or any of the Purchased Assets; (ii) there are
no existing judgments affecting in any respect any of the Purchased Assets or
the Business; or (iii) there are no existing orders or decrees of any
Governmental Authority specifically applicable to any of the Purchased Assets or
the Business.
(b) Except as set forth in Section 4.12(b) of the Disclosure
Schedule, there are no Proceedings pending or, to Sellers' knowledge,
threatened, against BP, TA or TAFSI, the Business or the Purchased Assets which
seek to enjoin or rescind the transactions contemplated by this Agreement or
otherwise prevent BP, TA or TAFSI from complying with the terms and provisions
of this Agreement.
4.13 CONTRACTS.
(a) Section 4.13(a) of the Disclosure Schedule, together with
Sections 4.9, 4.16 and 4.18 of the Disclosure Schedule, sets forth an accurate
and complete list of all of the following contracts, commitments and obligations
(whether written or oral) (all of the foregoing, "Agreements") of any Seller
which primarily relate to the Business or any of the Purchased Assets: (i)
Agreements relating to the Business which by their terms obligate any Seller to
make payments in any year in excess of $100,000 or to make aggregate payments in
excess of $200,000; (ii) employment or consulting Agreements which obligate
Seller to make payments in any year in excess of $20,000 or to make aggregate
payments in excess of $50,000; (iii) collective bargaining Agreements or other
Agreements with any labor union; (iv) any Agreement relating to the Business
which was not entered into in the ordinary course; (v) all leases of Personal
Property requiring payments in any year in excess
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29
of $10,000 or aggregate payments in excess of $50,000; (vi) any Real Property
Leases; (vii) all Agreements providing for the purchase of Outside Source
Petroleum Products (other than Agreements providing for the purchase of heating
oil involving less than $55,000); (viii) all Agreements (other than agreements
relating solely to copyrights and copyright applications and registrations)
relating to any Intellectual Property which is identified in Section 2.1(vii) of
the Disclosure Schedule; (ix) any Agreement pursuant to which any Seller has
guaranteed any obligations of any Franchisee; (x) any Agreement between any
Seller and any Franchisee; and (xi) any Agreements pursuant to which a motel or
hotel or fast food franchise or any other business is in operation on any of the
Real Properties, other than Vendor Outleases. (The Agreements set forth in
Section 4.13(a) of the Disclosure Schedule referred to as the "Scheduled
Contracts").
(b) Except as disclosed in Section 4.13(b)(i) of the
Disclosure Schedule, there exists no breach or default under any of the
Contracts (including the Scheduled Contracts), except breaches or defaults which
do not and will not have a Material Adverse Effect or Material Adverse Truckstop
Effect. Except as disclosed in Schedule 4.13(b)(ii) of the Disclosure Schedule,
to Sellers' knowledge, there exists no breach or default under any of the
Contracts (including the Scheduled Contracts). Except as disclosed in Section
4.13(b)(iii) of the Disclosure Schedule, all Contracts (including the Scheduled
Contracts) may be assigned, transferred and conveyed to Buyer without default,
penalty or modification thereof, except for any default, penalty, or
modification which will not have a Material Adverse Effect or a Material Adverse
Truckstop Effect. Except as disclosed in Section 4.13(b)(iv) of the Disclosure
Schedule, to the best of Sellers' knowledge, all of the Contracts (including the
Scheduled Contracts) may be assigned, transferred and conveyed to Buyer without
default, penalty or modification thereof.
4.14 PERMITS.
(a) Section 4.14(a)(i) of the Disclosure Schedule sets forth a
list of all Permits, the absence or loss of which would have a Material Adverse
Effect or a Material Adverse Truckstop Effect (the "Material Permits"),
including, without limitation, (i) all such material permits and approvals
relating to the transportation, storage or sale of any petroleum product or the
discharge of by-products or waste material into a public waste discharge system
and (ii) all material registrations, approvals and exemptions required under any
state or federal franchise, business opportunity or similar law and (iii) all
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30
certificates of occupancy and completion in connection with any Real Property.
To the best of Sellers' knowledge, Section 4.14(a)(ii) of the Disclosure
Schedule sets forth a list of all Permits.
(b) Section 4.14(b)(i) of the Disclosure Schedule lists each
material governmental or other registration, filing, application, notice,
transfer, consent, approval, order, qualification and waiver (each, a "Material
Required Permit Approval") required under Applicable Law to be obtained by BP,
TA, TAFSI or Buyer by virtue of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby to avoid the loss of
any Material Permit. To the best of Sellers' knowledge, Section 4.14(b)(ii)
lists each Required Permit Approval. Except as set forth in Section 4.14(b)(iii)
of the Disclosure Schedule, each Material Permit is valid and in full force and
effect in all material respects and, assuming the related Required Permit
Approvals have been obtained prior to the Closing Date, are, or will be,
transferable by BP and TA, and none of the Permits will, assuming the related
Required Permit Approvals have been obtained prior to the Closing Date, be
terminated or become terminable or impaired in any respect as a result of the
transactions contemplated hereby. To the best of Sellers' knowledge, except as
set forth in Section 4.14(b)(iv) of the Disclosure Schedule, each Permit is
valid and in full force and effect in all material respects and, assuming the
related Required Permit Approvals have been obtained prior to the Closing Date,
are, or will be, transferable by BP and TA, and none of the Permits will,
assuming the related Required Permit Approvals have been obtained prior to the
Closing Date, be terminated or become terminable or impaired in any respect as a
result of the transactions contemplated hereby.
4.15 COMPLIANCE WITH LAWS. Except as set forth in Section 4.15
of the Disclosure Schedule, the ownership and operation of the Business and the
ownership, use and condition of the Purchased Assets by Seller do not violate or
infringe any Applicable Law, or any order, writ, injunction or decree of any
Governmental Authority in any material respect. Neither BP, TA nor TAFSI has
received in the last six months, any written notification from any Governmental
Authority having jurisdiction over the Business or the Purchased Assets
affecting or purporting to restrict the operation of the Business or the use of
the Purchased Assets in any material respect or alleging any material violation
of Applicable Law relating to the foregoing.
4.16 EMPLOYMENT AND SIMILAR AGREEMENTS: OBLIGATIONS UPON
CHANGE IN CONTROL. Except as set forth in
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31
Section 4.16 or 4.18 of the Disclosure Schedule, there is no employment,
consulting, severance pay, continuation pay, termination pay, indemnification
agreement or other agreement (whether or not subject to ERISA) with any Seller
(or any Affiliate or any ERISA Affiliate of any Seller) and any Employee of the
Business (hereinafter referred to collectively as the "Employment Agreements")
and, except as set forth in Section 4.16 of the Disclosure Schedule, no such
scheduled agreement provides for an increase in any such Employee's
compensation, benefits and rights provided on the date hereof if any such
Employee were to accept or refuse an employment offer from Buyer. Sellers have,
or will have by the Closing Date, provided Buyer copies of all such agreements
which are to Seller's knowledge, correct and complete.
4.17 LABOR AND EMPLOYMENT MATTERS. Except as set forth in
Section 4.16, 4.17 and/or 4.18 of the Disclosure Schedule with respect to the
Business: (a) Sellers have not, and to Sellers' knowledge no Affiliate or ERISA
Affiliate of any Seller has, engaged in any unfair labor practice; (b) there is
no labor strike, dispute, slowdown or stoppage pending or, to any Seller's
knowledge, threatened against any Seller or Affiliate or ERISA Affiliate of any
Seller or directly affecting the Business; (c) no union representation question
or, to any Sellers' knowledge, union or other organizational activity that would
be subject to the National Labor Relations Act exists respecting any employee;
(d) no collective bargaining agreement exists which is binding on any Seller or
Affiliate or ERISA Affiliate of any Seller; (e) none of the Sellers or Affiliate
or ERISA Affiliate of any Seller has experienced any material work stoppage or
other material labor difficulties; (f) none of the Sellers or Affiliate or ERISA
Affiliate of any Seller are delinquent in any material respect in payments to
any of their employees; (g) none of the Sellers or Affiliate or any ERISA
Affiliate of any Seller has received any notice of any labor, employment or
civil rights dispute or grievance or any other unfair labor practice proceeding
with respect to claims of, or obligations to, any of the employees of the
Business; and (h) to the best of Sellers' knowledge, there are no threatened
material labor, employment or civil rights dispute or grievance, or any other
unfair labor proceeding with respect to claims of, obligations to, any of the
employees of the Business.
4.18 EMPLOYEE BENEFIT PLANS.
(a) Section 4.18(a) of the Disclosure Schedule lists each
"employee benefit plan", as such term is defined in Section 3(3) of ERISA, which
(i) is subject to
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any provision of ERISA, and (ii) currently covers any Employee of the Business
(hereinafter referred to collectively as the "ERISA Plans"). With respect to
each ERISA Plan, Sellers have, or will have by the Closing Date, furnished to
Buyer the most recent summary plan description of such plan.
(b) Section 4.18(b) of the Disclosure Schedule lists each
material written plan or arrangement providing for health, medical, life or
other welfare benefit coverage (including insured, self-insured or other
arrangement), disability benefits, severance pay, termination pay, supplemental
unemployment benefits, vacation benefits, retirement benefits or providing for
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits and any other employee benefit plan,
program, agreement, policy or arrangement which (i) is not disclosed pursuant to
Section 4.18(a) above, (ii) is or has been entered into, maintained,
administered or contributed to, as the case may be, by any Seller or Affiliate
or ERISA Affiliate of any Seller, and (iii) currently covers any Employee of the
Business. Such plans and arrangements described above are hereinafter referred
to as the "Benefit Arrangements." Sellers have, or will have by the Closing
Date, furnished Buyer a copy and/or description of each Benefit Arrangement.
(c) No ERISA Plan or Benefit Arrangement is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA).
(d) Section 4.18(d) of the Disclosure Schedule sets forth a
list of each state in which any Employee is covered by any workers' compensation
law.
(e) Neither any Seller nor any Affiliate or ERISA Affiliate of
any Seller has incurred any liability or obligation under the WARN Act with
respect to the Business. Section 4.18(e) of the Disclosure Schedule lists
separately for each Company Truckstop, and each other site of employ ment (or
each facility or operating unit within each site of employment) at which there
is employed an Employee involved in the Business: (i) a list of active employees
on July 31, 1993; and (ii) by means of the monthly report specified in Section
6.1(b)(v), to the best of Seller's knowledge, a list of employees whose
employment has terminated since July 31, 1993 at each such location and the date
of each such termination.
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33
4.19 INTELLECTUAL PROPERTY. There is listed in Section 4.19(i) of
the Disclosure Schedule (i) an identification of each copyright, copyright
registration, copyright application, patent, patent registration, patent
application, written invention disclosure, trademark, trademark registration,
trademark application, trade name, mark, service mark, publication, logo and
other commercial symbol (together with any and all federal or state registration
numbers, offices of registration and dates of such registration) held or
employed by BP, TA or TAFSI primarily in the Business other than any of the
foregoing relating primarily to the formulation or blending of the gasoline,
petroleum distillates or other petroleum products sold by the Business
("Intellectual Property") and (ii) a true and complete list of all licenses or
similar agreement or arrangements to which BP, TA or TAFSI is a party either as
licensee or licensor for each such item of Intellectual Property.
Notwithstanding the foregoing, Sellers need not list in Section 4.19(i) of the
Disclosure Schedule any generally available commercial software, copyrights or
publicly available publications. Except as indicated in Section 4.19(ii) of the
Disclosure Schedule:
(a) During the period the Business has been owned by the BP
Group, there have not been any Proceedings to which either Sellers or
TAFSI is or has been a party concerning the infringement or misappro
priation of any intellectual property rights of any third person or any
Proceedings otherwise concerning BP's, TA's or TAFSI's ownership interest
in any of such items of Intellectual Property, nor is any such Pro ceeding
threatened in writing;
(b) BP, TA or TAFSI, as applicable, has the right and
authority to use said items of Intellectual Property in connection with
the Business in the manner presently conducted and, subject to obtaining
the Required Consents, to convey such right and authority to Buyer, and
such use does not conflict with, infringe upon or violate any intellectual
property rights, including any patent, copyright, trademark or trade name,
of any other Person:
(i) in any respect which will or is reasonably likely to
have a Material Adverse Effect or a Material Adverse Truckstop
Effect; or
(ii) to the best of Seller's knowledge, in any respect;
and
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34
(c) there are no outstanding, or to Sellers' knowledge any
threatened in writing, disputes or disagreements with respect to any
licenses or similar agreements or arrangements described in Section 4.19
of the Disclosure Schedule; and
(d) pursuant to this Agreement, concurrently with the Closing
and subject to obtaining the Required Consents, Buyer will be vested with
all rights, title and interest and authority previously held by Sellers to
use all of the Intellectual Property.
4.20 CUSTOMERS. Except as set forth in Sec tion 4.20 of the
Disclosure Schedule, during the calendar year ended December 31, 1992, not more
than five percent (5%) of the total revenues of the Business was attributable to
any single customer.
4.21 FRANCHISEE RELATIONSHIPS.
(a) Section 4.21(a) of the Disclosure Schedule sets forth a
copy of a current generic Uniform Franchise Offering Circular for the Business.
Variations required by or for specific states are not included in the generic
circular.
(b) Since December 31, 1992, neither of any Sellers nor TAFSI
has received any oral or written communi cations from any Governmental Authority
in any jurisdiction in which the Sellers have not filed a franchise offering
circular concerning the applicability of any franchising laws to the Business.
Section 4.21(b) of the Disclosure Schedule identifies each state in which any
Seller has filed a franchise offering circular relating to the Business.
4.22 TAFSI.
(a) TAFSI does not directly or indirectly own any interest
in any other Person.
(b) TAFSI is authorized to issue 1,000 shares of common stock,
par value $1 per share, of which 100 shares are issued and outstanding. All of
the TAFSI Shares are owned by TA and are duly authorized, validly issued, fully
paid and non-assessable. No other class of capital stock or other ownership
interests of TAFSI is authorized or outstanding.
(c) There is no outstanding right, subscription, warrant,
call, unsatisfied pre-emptive right, option or other agreement of any kind to
purchase or otherwise to receive any of the outstanding, authorized but
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35
unissued, unauthorized or treasury shares of the capital stock or any other
security of TAFSI and there is no outstanding security of any kind convertible
into any such capital stock.
(d) TA owns beneficially and of record, free and clear of any
Lien, the TAFSI Shares, and TA will convey to the Buyer good and valid title
thereto, free and clear of any Lien.
(e) All returns, reports and other forms related to Taxes
required to be filed on or before the Closing Date with respect to the Business,
activities or assets of TAFSI have been duly filed or will be duly filed on or
before the Closing Date, in accordance with all Applicable Laws (after taking
into account extensions duly obtained) and all Taxes shown to be due on such
returns, reports and forms have been paid, provided for in reserves, or properly
protested. Except as set forth on Section 4.22 of the Disclosure Schedule, no
audit of any such return, report or form is pending or, to the knowledge of
TAFSI or the Seller, threatened. Section 4.22 of the Disclosure Schedule sets
forth the status of any audit that is pending, including the amounts of any
deficiencies and additions to Tax indicated on any notices, proposed deficiency
or statutory notices of deficiency that may have been issued in connection
therewith and, except as set forth on Section 4.22 of the Disclosure Schedule,
all of such deficiency or additions to Tax have been paid.
4.23 DISCLAIMER. EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT,
SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE WITH RESPECT
TO THEMSELVES, THE PURCHASED ASSETS, THE INVENTORY OR OTHERWISE. SELLERS HEREBY
DISCLAIM ANY IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NOTHING IN
THIS SECTION 4.23 OR ELSEWHERE IN THIS AGREEMENT OR IN THE ANCILLARY AGREEMENTS
SHALL LIMIT OR IMPAIR IN ANY MANNER WHATSOEVER ANY OF SELLERS' REPRESENTATIONS
AND WARRANTIES MADE ELSEWHERE IN THIS AGREEMENT, EACH OF WHICH THE BUYER IS
ENTITLED TO RELY UPON. SELLERS' OFFERING MEMORANDUM AND ALL INFORMATION
CONTAINED THEREIN ARE SUPERSEDED BY THIS AGREE MENT.
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36
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers that:
5.1 ORGANIZATION AND EXISTENCE. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
5.2 CORPORATE AUTHORIZATION. Buyer has all requisite corporate power
and authority to enter into this Agreement and all other agreements to be
executed by Buyer in connection herewith and to consummate the transactions
contemplated hereby and thereby. This Agreement and all other agreements herein
contemplated to be executed in connection herewith have been (or upon execution
will have been) duly executed and delivered by Buyer, have been effectively
authorized by all necessary corporate action, and constitute (or upon execution
will constitute) legal, valid and binding obligations of Buyer.
5.3 GOVERNMENTAL AUTHORIZATION.
(a) The execution, delivery and performance by Buyer of this
Agreement require no action by, consent or approval of, or filing with, any
governmental body, agency, official or authority other than:
(i) compliance with any applicable
requirements of the HSR Act; and
(ii) compliance with any applicable requirements of the
bulk sales, bulk transfer or similar laws of the states in which the
Purchased Assets are located;
(iii) the approvals necessary to transfer the Permits
from the Sellers to the Buyer; and
(iv) compliance with state franchise
registration/disclosure laws.
(b) To Buyer's knowledge, there are no facts relating to the
identity or circumstances of Buyer that would prevent or materially delay any of
the authorizations referred to in Section 4.4 or this Section 5.3.
5.4 NON-CONTRAVENTION. The execution, delivery and performance by
Buyer of this Agreement does not and will
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37
not (i) contravene or conflict with the certificate of incorporation or bylaws
of Buyer, (ii) assuming compliance with the matters referred to in Section 5.3,
contravene or conflict with or constitute a violation of any provision of any
Applicable Law binding upon or applicable to Buyer, (iii) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Buyer or to a loss of any benefit to which Buyer is
entitled under any provision of any agreement, contract or other instrument
binding upon Buyer or any license, franchise, permit or other similar
authorization held by Buyer, except in the case of clauses (ii) and (iii) for
any such contravention, conflict, violation, default, termination, cancellation,
acceleration or loss that would not have a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations of
Buyer.
5.5 NO BROKERAGE FEES. No broker or finder has acted for Buyer in
connection with this Agreement or the transactions contemplated hereby, and no
broker or finder is entitled to any brokerage or finders' fees in respect of
such transactions based in any way on agreements, arrangements or understandings
made by or on behalf of Buyer.
5.6 LITIGATION. There are no material Proceed ings pending or, to
Buyer's knowledge, threatened, against Buyer which seek to enjoin or rescind the
transactions contemplated by this Agreement or otherwise prevent Buyer from
complying with the terms and provisions of this Agreement.
ARTICLE VI
CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
6.1 CONDUCT OF THE BUSINESS. From the date hereof until the Closing
Date, BP, TA and TAFSI shall conduct the Business in the ordinary course and
consistent with past practice and shall use their reasonable best efforts to
preserve intact the Purchased Assets and the Business' organization and
relationships and goodwill with third parties and use its reasonable efforts to
keep available the services of the present officers, employees and agents of the
Sellers employed primarily in the Business. Without limiting the generality of
the foregoing, from the date hereof until the Closing Date:
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38
(a) without Buyer's prior written consent, which shall not be
unreasonably withheld or delayed, neither BP, TA or TAFSI or will agree
to:
(i) other than in the ordinary course of the Business,
purchase or otherwise acquire assets for a consideration of more
than $25,000 from any Person;
(ii) sell, assign, lease, license, transfer or otherwise
dispose of, or mortgage, pledge or encumber (other than with
Permitted Liens), any Real Property or amend or terminate any lease
thereof, other than Vendor Outleases;
(iii) sell, assign, lease, license, transfer or otherwise
dispose of, or mortgage, pledge or encumber (other than with
Permitted Liens), any Purchased Assets (other than Real Property) or
assets that would constitute Purchased Assets (other than Real
Property) except (x) pursuant to existing obligations of BP, TA or
TAFSI, as the case may be and as set forth in Section 6.1(a)(iii) of
the Disclosure Schedule or (y) Inventory or Purchased Assets with a
fair market value not in excess of $100,000 in any one or series of
related transactions and in each case in the ordinary course of
business;
(iv) other than in the ordinary course of the Business,
amend or modify in any material respect or terminate or renew any
Scheduled Contract or any other Contract entered into by BP, TA or
TAFSI after the date hereof which, if in existence on the date
hereof, would be required to be set forth in Section 4.13 of the
Disclosure Schedule as a Scheduled Contract (each, a "Subsequent
Material Contract");
(v) other than in the ordinary course of the Business,
waive, cancel or take any other action materially impairing any of
their rights relating to the Purchased Assets (but only with respect
to Purchased Assets with a fair market value not in excess of
$100,000);
(vi) commit to make capital expenditures in excess of an
aggregate of $100,000 for all such capital expenditures relating to
the Business or the Purchased Assets, other than capital
expenditures set forth on Section 6.1(a)(vi) of
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39
the Disclosure Schedule and capital expenditures required under any
Scheduled Contract;
(vii) other than in the ordinary course of the Business,
enter into or commit or propose to enter into any Subsequent
Material Contract, other than the entering into of a Subsequent
Material Contract as provided in Section 6.1(a)(vii) of the
Disclosure Schedule;
(viii) take any action that would consti tute, or fail to
take any action that would prevent, a material breach of or a
material default under any Purchased Contract or Subsequent Material
Contract or a violation of the terms of any material Permit;
(ix) other than in the ordinary course of the Business:
(1) no Seller shall increase the wages or salary of any such
Employee; (2) no Seller shall amend any Employment Agreement, adopt
any new benefit plan or arrangement applicable to any such Employee;
and (3) there has been no (a) material change in the compensation,
benefits, title or responsibilities of any such Employee or (b)
termination or re-assignment of any such Employee; provided,
however, that nothing in this Section 6.1(a)(ix) shall preclude
Sellers or any of their Affiliates from terminating, creating or
modifying any ERISA Plans or Benefit Arrangements which include
employees of other divisions of Sellers or their Affiliates; or
(x) make any change in the accounting methods for any
Purchased Contract or other Purchased Asset or in the manner of
keeping the books and records of the Business or financial
statements relating to the operation of the Business.
(b) Sellers will:
(i) (1) use their reasonable best efforts to maintain
the Purchased Assets in the ordinary course of business in good
operating order and condition, reasonable wear and tear excepted,
and (2) upon any damage, destruction or loss to any material portion
of the Purchased Assets, apply any and all insurance proceeds
received with respect thereto to the repair, replacement and
restoration thereof in accordance
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40
with the historic practices of the Business to the condition of the
Assets before such event;
(ii) use their reasonable best efforts (which shall not
require paying consideration) to obtain, prior to the Closing Date,
all Required Consents;
(iii) take all actions reasonably necessary to be in
compliance with, and to maintain the effectiveness of, all Permits;
(iv) notify Buyer in writing of any action, event,
condition or circumstance, or group of actions, events, conditions
or circumstances, relating to BP, TA, TAFSI or the Business, of
which BP, TA or TAFSI gains knowledge and that results in, a
Material Adverse Effect or a Material Adverse Truckstop Effect, or
of the commencement of any Proceedings seeking to enjoin or rescind
the transactions contemplated hereby, such notification to be
provided to Buyer by BP, TA or TAFSI, as the case may be, promptly
after gaining knowledge of any such action, event, condition or
circumstance, or group thereof;
(v) provide Buyer with a written report (i) by August
31, 1993, (ii) subsequently by the end of each calendar month and
(iii) as soon as possible prior to the Closing, describing: (x) any
proceeding involving more than $50,000, but excluding in any event
garnishments, workers compensation and unemployment compensation or
similar proceedings, by or against BP, TA or TAFSI, as the case may
be, relating to the Business or any of the Purchased Assets, or of
BP, TA or TAFSI receiving any written threat, claim, proceeding,
notice of violation, demand letter, subpoena, that is likely to
result in such a Proceeding, and (y) any breach by BP or TA of any
representation or warranty, or any covenant or agreement, contained
in this Agreement of which Sellers have obtained knowledge;
(vi) pay accounts payable and pursue collection of its
accounts receivable relating to the Business or the Purchased Assets
in the ordinary course of business; and
(vii) comply with all provisions and requirements of the
WARN Act applicable to the
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41
consummation of the transactions contemplated herein.
6.2 TAFSI. (a) TA shall, at the time and in the manner requested by
Buyer, join with Buyer in making a Section 338(h)(10) of the Internal Revenue
Code of 1986, as amended, election with respect to the purchase and sale of the
TAFSI Shares and, in connection therewith (i) shall cause a Department of the
Treasury Form 8023 that has been completed in accordance with Treasury
Regulation Section 1.338(h)(10)-IT to be executed on the Closing Date on behalf
of the affiliated group of corporations, for federal income tax purposes, of
which the TAFSI is a member on the Closing Date and (ii) take such other action
as Buyer shall reasonably request including, without limitation, providing Buyer
with any requested information, and making available and causing appropriate
persons to take any action on behalf of TA, required for the making of a Section
338(h)(10) election in accordance with Treasury Regulation Section
1.338(h)(10)-IT and Department of the Treasury Form 8023.
(b) Subject to the provisions of Section 10.12(b), Sellers
shall be liable for, and shall hold Buyer and TAFSI harmless against, any and
all Taxes due and payable by TAFSI for any taxable year or tax period ending on
or before the Closing Date. Taxes that Sellers shall be liable for and shall
hold Buyer and TAFSI harmless from and against under the preceding sentence
shall include, without limitation, any liability for Taxes that arises because
TAFSI ceases on the Closing Date to be a member of a group filing consolidated
returns of which it had been a member or any and all Taxes due or payable by
TAFSI or by the Buyer resulting from or arising out of the transactions
contemplated by this Agreement.
6.3 CONFIDENTIALITY. Until the Closing, Buyer shall be subject to
the terms and conditions of the Confidentiality Agreement, as if an original
party thereto. The Confidentiality Agreement shall terminate upon the occurrence
of the Closing as to the Purchased Assets, but shall survive the Closing with
respect to Excluded Assets or Excluded Liabilities.
6.4 ACCESS TO RECORDS AND FILES. BP shall have the right for a
period of seven (7) years, unless during that period BP notifies Buyer of an
audit by the federal, state or local revenue authorities to which any Purchased
Records pertain, in which case access to such Purchased Records will be
permitted until such time as Buyer is notified of the conclusion of the audit
proceeding, fol lowing the Closing Date to have reasonable access, during normal
business hours and upon reasonable prior notice, to
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42
such books, records and accounts, correspondence, and employment records and
other similar information as are transferred to Buyer pursuant to the terms of
this Agreement and which the Buyer has retained possession of for the limited
purposes of concluding BP's involvement in the Business prior to the Closing
Date or otherwise with respect to the Excluded Assets or Excluded Liabilities;
PROVIDED, HOWEVER, that nothing set forth herein shall obligate Buyer to provide
Sellers or any of their attorneys, agents, employees, accountants or other
representatives with access to any information that is protected by the
attorney-client privilege or any similar privilege. Nothing contained herein
shall impose any obligation upon Buyer to retain any such books and records. All
information obtained by BP and its authorized representatives pursuant to this
Section 6.4 shall be kept confidential by BP and shall not be used by it for any
purpose other than concluding its involvement in the Business prior to the
Closing Date or otherwise managing Excluded Assets or Excluded Liabilities.
6.5 PUBLIC ANNOUNCEMENTS. The parties hereto agree that prior to the
Closing they will not make any dis closures to any Person (other than
Franchisees) regarding the existence or contents of this Agreement or
negotiations relating to the transactions contemplated herein or cause to be
publicized in any manner whatsoever by releases or otherwise any aspect or
proposed aspect of the transactions contemplated herein without prior written
notice to and approval of, which shall not be unreasonably withheld, the other
parties hereto, unless such party reasonably concludes that such release of
information is required by Applicable Law or necessary in order to obtain
Required Consents and the parties hereto cannot reach agreement upon a mutually
acceptable form of release. Notwithstanding the foregoing, the parties hereto
may, on a confidential basis, advise their respective Affiliates agents,
accountants, attorneys and prospective financing sources (including any Fran
chisees) with respect to the contents of this Agreement and the transactions
contemplated herein.
6.6 NO SHOPPING. From the date hereof until the earlier of the
Closing Date or the termination of this Agreement in accordance with its terms,
each of BP, TA and TAFSI shall not, and shall cause each of their Affiliates not
to, through any officer, director, employee or agent or otherwise, solicit,
initiate, participate in any negotiation or discussion or enter into any
agreement in respect of, or cooperate with, by furnishing any non-public
information concerning, affording access to, the Business or otherwise, any
Acquisition Proposal (as hereinafter defined) pertaining to the Business. The
term "Acquisition Proposal" means any proposal (other than a proposal by Buyer)
for the acquisi-
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43
tion of all or any portion of the assets comprising the Business or for a
merger, consolidation or other business combination pursuant to which any other
person would acquire the Business or any substantial interest therein or any
material portion of the Purchased Assets (or portion thereof).
6.7 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each party will use all rea sonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under Applicable Law to consummate the transac tions contemplated by
this Agreement. BP, TA, TAFSI and Buyer agree to execute and to deliver such
other documents, certificates, agreements and other writings, including
instruments of transfer with respect to the Purchased Assets, and to take such
other actions as may be necessary or desirable in order to consummate or
implement expedi tiously the transactions contemplated by this Agreement,
provided that BP, TA nor TAFSI is obligated to pay consideration to obtain any
consents, nor to assume or guaranty any Liabilities.
6.8 COOPERATION IN LITIGATION. Each party will fully cooperate with
the other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter against or by such party relat
ing to or arising out of the conduct of the Business or the Purchased Assets
prior to or after the Closing Date (other than litigation arising out of the
transactions contemplated by this Agreement). Such cooperation shall include
making relevant employees available for interviews, deposition or trial
testimony without subpoena.
6.9 CERTAIN FILINGS. Sellers and Buyer shall cooperate with one
another in determining whether any action by or in respect of, or filing with,
any Governmental Authority or with respect to any Required Permit Approval is
required or reasonably appropriate, or any action, consent, approval or waiver
from any party to any Contract is required or reasonably appropriate, in
connection with the consummation of the transactions contemplated by this Agree
ment; PROVIDED, HOWEVER, that BP, TA, TAFSI and Buyer retain the right to make
any filings required by Applicable Law. Subject to the terms and conditions of
this Agreement, BP, TA, TAFSI and Buyer shall seek to timely obtain any such
actions, consents, approvals or waivers and shall furnish all information
required in connection therewith. Without limiting the foregoing, (i) BP, TA,
TAFSI and Buyer shall each promptly complete and file all reports and forms, and
respond to all requests or further requests for additional information, as may
be required or authorized under the HSR
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44
Act and (ii) BP, TA, and TAFSI will comply with all provi sions and requirements
of the WARN Act applicable to the consummation of the transactions contemplated
herein, including any such provisions and requirements applicable to any
termination of the employment of any of Sellers' employees. None of the
provisions in this Section 6.9 abrogate or limit in any way any of the
representations, warranties and covenants made by BP, TA or TAFSI in any of the
other provisions in this Agreement.
6.10 ADMINISTRATION OF ACCOUNTS.
(a) All accounts receivable paid in the ordinary course by any
third party in the name of or to Buyer in connection with the operation of the
Business on or prior to the Closing Date shall be held by Buyer in trust for the
benefit of BP and, promptly upon receipt by Buyer of any such payment, Buyer
shall forward to BP such monies, checks, instruments or other payments without
right of set off. BP, TA and TAFSI hereby authorize Buyer to open any and all
mail addressed to TA or TAFSI (if delivered to Buyer) if received on or after
the Closing Date.
(b) All accounts receivable paid in the ordinary course by any
third party in the name of or to BP in connection with the operation of the
Business after the Closing Date shall be held by BP in trust for the benefit of
Buyer and, immediately upon receipt by BP of any such pay ment, BP shall forward
to Buyer such monies, checks, instru ments or other payments without right of
set off. Buyer hereby authorizes BP to open any and all mail addressed to Buyer
(if delivered to Sellers) if received on or after the Closing Date.
6.11 TITLE INSURANCE; ENCUMBRANCES. If, at any time on or prior to
the Closing Date, Buyer obtains title reports or surveys showing, or otherwise
learns of, any Encumbrance on any parcel of Real Property that is not a
Permitted Encumbrance, Sellers will, immediately upon receipt of notice from
Buyer of such Encumbrance (or immediately upon Sellers' obtaining knowledge of
such Encumbrance, whichever occurs first), use their reasonable best efforts to
cause title to such Real Property to be cleared of such Encumbrance on or prior
to the Closing Date; PROVIDED, HOWEVER, that if such Encumbrance relates to or
is in connection with indebtedness of any Seller or any Affiliate of any Seller
or any other Person, Seller will cause the indebtedness to be paid in full and
the Encumbrance to be discharged, or cause First American Title Insurance
Company, or such other title insurance company Buyer deems acceptable to insure
against such Encumbrance,
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45
and/or take all actions necessary to remove such Encumbrance.
If Sellers are unable to cure or remove any such Encumbrance,
Sellers and Buyer shall attempt to reach a mutually acceptable solution during
the next twenty (20) days and in the absence of such a solution Sellers shall
notify Buyer in writing and Buyer shall have ten (10) days from receipt of such
notice to either waive its objection to such Encumbrance or invoke the
provisions of Section 6.19.
Buyer agrees to use its reasonable best efforts to obtain any title
reports and/or surveys as soon as practicable following execution of this
Agreement. Buyer shall promptly deliver to Seller copies of any and all such
title reports and/or surveys obtained by Buyer.
6.12 EMPLOYEES AND BENEFITS.
(a) EMPLOYMENT. Buyer shall offer to employ, effective as of
the Effective Time, substantially all of the full-time and regular part-time
Employees of the Business who are general managers, division managers,
distribution center employees, hourly employees, profit center managers or
assistant profit center managers and at least 80% of the full-time and regular
part-time corporate staff employees as listed on Section 6.12 (a) of the
Disclosure Schedule on such terms and conditions with respect to compensation
and benefits as Buyer may determine; PROVIDED, HOWEVER, that nothing in this
Agreement shall be construed (i) to limit the right of Buyer, in its sole
discretion, to terminate the employment of any such individual or individuals,
for cause or otherwise, at any time after the Closing Date or (ii) to obligate
Buyer to offer employment to any individual who is receiving long-term
disability benefits as of the Closing Date or who in Buyer's sole judgment is
reasonably likely to commence receiving such benefits, or who is on a leave of
absence as of the Closing Date for any reason.
(b) SELLERS' PLANS.
(i) GENERAL. Effective as of the Closing Date, the Affected
Employees shall cease to actively participate (including but not limited to
cessation of benefit accruals) in the employee benefit plans, programs and
policies of Sellers (the "Sellers' Benefit Plans"). Buyer shall assume no
obligation or liability with respect to any of the Sellers' Benefit Plans,
except that Buyer shall provide such information as any Seller may from time to
time reasonably request in order to administer Sellers' Benefit Plans.
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(ii) PENSION PLAN. BP America Inc. presently maintains the BP
America Retirement Accumulation Plan for the benefit of certain of the Employees
of the Business and other employees of BP Group. Sellers shall cause said plan
to fully vest the Affected Employees participating in said plan in their
benefits accrued under such plan as of the Closing Date.
(iii) SAVINGS PLANS.
a) BP America Inc. presently maintains the BP America
Capital Accumulation Plan for the benefit of certain of the Employees of
the Business and other employees of BP Group. Sellers shall cause said
plan to fully vest the Affected Employees participating in said plan in
their account balances under said plan as of the Closing Date.
b) BP America Inc. presently maintains the BP America
DirectSave Plan for the benefit of certain of the hourly Employees of the
Business and other employees of Sellers. Sellers shall cause said plan to
fully vest the Employees of the Business participating in said plan in
their account balances under such plan as of the Closing Date.
c) BP America Inc. presently maintains the BP America
Partnership Savings Plan for the benefit of certain of the Employees of
the Business and other employees of Sellers. Sellers shall cause said plan
to fully vest the Employees of the Business participating in said plan in
their account balances under such plan as of the Closing Date.
(c) BUYER PLANS. Buyer shall establish, effective as of the Closing
Date, one or more group medical and dental insurance plan or plans for the
Affected Employees (and their dependents), which plan or plans shall have such
terms and conditions as Buyer, in its sole discre tion, shall determine. Buyer
shall inform Sellers of the terms and conditions of each such plan as soon as
possible after they have been determined. Affected Employees will generally
receive credit for service with Sellers prior to the Closing Date for purposes
of eligibility for participa tion under any medical and dental benefit plans,
and levels of benefits under any vacation policy or plan, which Buyer may
establish or contribute to by or on behalf of any Affected Employee (and his
dependent and beneficiary, if applicable) in accordance with the terms and
conditions of any such plan established or contributed to by Buyer; PROVIDED,
HOWEVER, that nothing in this Agreement shall be construed to limit the ability
of Buyer to modify, amend or terminate any benefits (including medical and
dental bene fits) provided to any Affected Employee (or his dependent or
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47
beneficiary) at any time after the Closing Date for any reason or to obligate
Buyer to pay any vacation benefits arising out of or relating to service with
either Seller.
(d) PREEXISTING CONDITIONS. The Sellers shall have the right on or
prior to August 31, 1993 to amend this Agreement to include herein a
representation to be made by Sellers as follows: "The number and severity of
claims made by Employees of the Business under the Sellers' group medical plan
during the twelve month period ending June 30, 1993 (the "Prior Year") did not,
after appropriate adjustment for changes in the size of the workforce,
materially increase from the number and severity of such claims in the twelve
month period immediately preceding the Prior Year." In the event that Sellers
elect to include such representation in this Agreement and such representation
is not breached, Buyer's group medical plan shall include a waiver of
preexisting conditions limitations for any Affected Employee for claims incurred
after such employee's completion of twelve months of service with Buyer.
(e) NO THIRD-PARTY RIGHTS. Nothing herein expressed or implied shall
confer upon any employee (including any Employee or any Affected Employee),
former employee, dependent, beneficiary or legal representative thereof, any
right of any nature or kind whatsoever under or by reason of this Agreement,
including, without limitation, any right to employment or continued employment
for any specified period.
6.13 INVENTORY.
(a) INVENTORY SALE. Sellers shall sell to Buyer and Buyer
shall purchase directly from Sellers all Inventory. The sale of Inventory at the
Real Properties shall be effective as of the Effective Time. Any such items
which are owned by third parties shall be excluded from Inventory.
(b) PRICE. Buyer shall pay to BP at the time and in the manner
hereinafter set forth, by wire transfer of immediately available funds, a total
amount for the Inventory at or in transit to the Real Properties purchased
directly by Buyer in accordance with the values set forth in Section 6.13(b) of
the Disclosure Schedule. If, for any reason, Buyer neglects to pay Sellers for
any Inventory in transit, Buyer shall be responsible to either pay Sellers for
such Inventory if Sellers have already paid the vendor, or, shall pay the vendor
directly if the vendor has not yet been paid.
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(c) INVENTORY AND CASH CALCULATION. The total amount payable
for Inventory and cash on hand shall be determined as follows:
(i) ESTIMATED INVENTORY AND CASH AMOUNTS. Not earlier
than five (5) days prior to the Closing Date, Sellers shall prepare and
submit to Buyer a schedule setting forth Sellers' good faith estimate of
the total amount payable for the Inventory at or in transit to each Real
Property being conveyed to Buyer (the "Estimated Inventory Amount") and
the cash on hand at the Real Properties, and Buyer shall pay the Estimated
Inventory Amount and estimate of cash on hand to BP at Closing
(collectively, the "Closing Payment").
(ii) TAKING OF INVENTORY. Not earlier than the day after
the Closing Date, Sellers shall take or cause to be taken an inventory of
all items of Inventory at or in transit to each Real Property being
conveyed to Buyer (the "Closing Inventory") as follows:
(1) HYDROCARBON INVENTORY. The hydrocarbon
Inventory shall be measured and valued in accordance with the
procedures described in Section 6.13(c)(ii)(1) of the Disclosure
Schedule.
(2) NON-HYDROCARBON INVENTORY. The non-hydrocarbon
Inventory shall be measured and valued in accordance with the
procedure described in Section 6.13(c)(ii)(2) of the Disclosure
Schedule.
(iii) CONFIRMATION. Buyer and its representatives shall
have the right to attend and observe the measurement of the Inventory. The
Closing Inventory shall be confirmed by a representative of Buyer who
attends and observes the physical measurement of Inventory.
(iv) CLOSING INVENTORY AND CASH AMOUNTS. Within thirty
(30) days after the Closing Date, Sellers shall prepare or cause to be
prepared a statement of the total amount payable for Inventory, (the
"Closing Inventory Amount,")(and the Closing Inventory Amount, reduced by
$60,000, is hereafter referred to as the "Adjusted Closing Inventory
Amount")), and cash on hand at or in transit to the Real Properties on the
Closing Date and BP shall send such statement to Buyer, together with
appropriate supporting calculations and documentation. Calculation of the
Adjusted Closing Inventory Amount shall include a reconciliation of the
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49
inventory count taken after the Closing and the inventory existing at the
Effective Time based on sales and purchase receipts between the Effective
Time and the time of the inventory count. If the Adjusted Closing
Inventory Amount and cash on hand amount is greater than the Closing
Payment, then the difference shall be paid by Buyer to BP within ten (10)
Business Days after Buyer's receipt of such statement. If the Adjusted
Closing Inventory Amount and cash on hand amount is less than the Closing
Payment, then the difference shall be paid by BP to Buyer within ten (10)
Business Days after Sellers' sending of such statement. Any amounts unpaid
within the time periods set forth above shall begin to accrue interest at
the Reference Rate, which interest shall be added to and paid with such
amounts.
(d) DISAGREEMENT NOTICE. If Buyer does not file a Disagreement
Notice as provided in this Section 6.13(d) with BP, the statement reflecting the
Closing Inventory Amount and cash on hand amount shall become final and binding.
(i) If Buyer disagrees with the said statement, it may,
within ten (10) Business Days of receipt, deliver a notice to BP (the
"Disagreement Notice"), setting forth its calculation of the Closing
Inventory Amount and cash on hand and specifying, in reasonable detail,
those items or amounts in the statement as to which Buyer disagrees and
the reasons for such disagreement. Buyer shall be deemed to have agreed
with all items and amounts contained in statement other than those
specified in any such Disagreement Notice.
(ii) If a Disagreement Notice is delivered pursuant to
this Section 6.13(d), the parties shall, during the ten (10) Business Days
following such delivery, use their best efforts to reach agreement on the
disputed items or amounts in order to determine the Closing Inventory
Amount, which shall not be more favorable to Sellers than reflected in the
statement nor more favorable to Buyer than shown in the calculations
delivered by Buyer in the Disagreement Notice. If the parties cannot agree
within thirty (30) Business Days, this Agreement and the disputed items
and amounts will be submitted to the New York office of independent
nationally recognized accountants without material financial relationship
to either Buyer or any Seller for determination of the Adjusted Closing
Inventory Amount and amount of cash on hand. In making such calculation,
said accountants shall consider only
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50
those accounting items or calculation of the amounts in the statement as
to which Buyer has disagreed. The accountants shall not be called upon to
render any determination on disputes which involve taking evidence from
non-accounting experts or on matters on which an accounting firm would
normally seek an opinion of legal counsel as part of its audit procedures.
Unless the parties agree otherwise, the accountants shall not be called
upon to determine questions of law. The accountants shall not create or
establish any reserves for any reason and shall be limited to physically
counting Inventory and cash, and reviewing the valuation of the Inventory
in accordance with Section 6.13(c) and the calculations related thereto.
The accountants shall deliver to BP and Buyer, as promptly as practicable,
a written report setting forth their determination of the Adjusted Closing
Inventory Amount. Such report shall be final, conclusive and binding upon
the parties, and shall not be subject to appeal to any court or tribunal.
Each party will bear its own expenses, except that the said accountants'
fee will be shared equally by the parties.
(iii) Within five (5) Business Days of the determination
of the Adjusted Closing Inventory Amount, the applicable party will make a
payment in accordance with the provisions of Section 6.13(c)(iv).
6.14 COOPERATION WITH RESPECT TO FINANCING.
(a) Sellers will cooperate with Buyer in connection with the
obtaining of the financing referred to in Section 7.2(i) hereof and in the
preparation of one or more offering memoranda for the private offering of debt
or equity securities to be issued by Buyer (collectively, the "Offering
Material") by furnishing to Buyer all information reasonably requested by Buyer
relating to such financing or the preparation of the Offering Material.
(b) In connection with the preparation of the Offering
Material, Sellers will assist in the prepara tion of all historical information
requested by Buyer with respect to the Business or the Purchased Assets for
inclusion in such Offering Material, provided such infor mation is available to
Sellers without unreasonable expense, including, without limitation, (i) a
description of the Business and properties thereof, and the legal proceedings
with respect to, the Business or the Purchased Assets and (ii) financial
information with respect to the Business or the Purchased Assets, including,
without limitation, financial statements, selected financial data and supple
mentary financial information, management's discussion and
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51
analysis of financial condition and results of operations and disagreements with
accountants on accounting and financial disclosure, if any.
(c) Sellers shall not be required to provide any information
(i) that is protected by the attorney-client privilege or any similar privilege,
(ii) relating to employees whom the Buyer has decided not to hire, (iii)
relating to income taxes of the BP Group, (iv) primarily related to the Excluded
Assets or the Excluded Liabilities or (v) protected by confidentiality
obligations of the Sellers to third parties, unless waived by such third
parties.
(d) Sellers and their agents do not repre sent the accuracy or
completeness of, and shall have no liability with respect to errors or omissions
in, any information provided to Buyer or its agents pursuant to this Section
6.14, except to the extent caused by the intentional or reckless acts of a
"control person" of Sellers (as "control person" is defined in the federal
securities laws).
(e) Buyer shall keep Sellers fully apprised of all material
developments relating to the Buyer's financing of the acquisition of the
Business.
6.15 RECENT FINANCIAL STATEMENTS. Prior to the Closing Date, BP
agrees to timely prepare and deliver to Buyer financial statements comparable to
those delivered pursuant to Section 4.5 hereof for any quarter or year which
ends on a date subsequent to June 30, 1993.
6.16 SCHEDULE UPDATES. Sellers shall, not less than three (3) days
prior to the Closing Date, provide a notice showing the changes to the
Disclosure Schedule (the "Update Notice") necessary to reflect facts or events
occurring, or learned by Sellers, after the date of this Agreement. Sellers'
representations and warranties in this Agreement shall be deemed amended by the
contents of the Update Notice.
6.17 ASSISTANCE WITH ACCOUNTS RECEIVABLE. Buyer will provide BP
after the Closing Date with such assistance as BP may reasonably request in
collecting accounts receivable of the Business retained by BP, including,
without limitation: (i) giving BP access to records; (ii) assisting in the
resolution of any warranty claims or contract disputes raised by account
debtors; and (iii) allowing BP to bring suit in the name of TA (at BP's
expense); PROVIDED, HOWEVER, that Buyer shall not be required to bring
Proceedings against any such debtor.
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52
6.18 FINANCING. Buyer will use its reasonable best efforts to
obtain the necessary financing for the purchase of the Business.
6.19 PROPERTIES. Without diminishing or impairing any rights of the
parties contained elsewhere in this Agreement or in any other Agreement,
document or certificate delivered pursuant hereto, in the event that one or more
of the Company Truckstops (the "Non-Conveyable Properties") included in the
Purchased Assets cannot be conveyed by Sellers to Buyer (whether as a result of
a title defect, environmental matter, condemnation, destruction or otherwise),
the Sellers and the Buyer shall enter into negotiations with respect to the
conveyance of the Purchased Assets to the Buyer other than the Non-Conveyable
Properties at a purchase price to be agreed upon by the Sellers and the Buyer.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 The obligations of the parties to consummate the transactions
contemplated hereby shall be subject to the fulfillment, at or prior to the
Closing Date, of the following conditions:
(a) NO ACTION OR PROCEEDING. No Proceeding shall be pending or
threatened before any Governmental Authority which presents a material
risk of the restraint or prohibition of the transactions contemplated by
this Agreement or the obtaining of material Damages or other relief in
connection therewith.
(b) COMPLIANCE WITH LAW. There shall have been obtained all
permits, approvals and consents of Governmental Authorities which counsel
for the parties may reasonably deem necessary or appropriate so that
consummation of the transactions contemplated by this Agreement will be in
compliance with Applicable Law, including, without limitation, the
permits, approvals and consents listed in Sections 4.4 and 5.3, but
excluding any Required Permit Approvals.
7.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated hereby shall be, at the option of
Buyer, subject to the fulfillment, at or prior to the Closing Date, of the
following additional conditions:
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53
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of BP and TA contained in this Agreement, the Environmental
Agreement and the Ancillary Agreements, as supplemented pursuant to
Section 6.16 shall be true and correct in all material respects on the
Closing Date with the same effect as if made on the Closing Date. There
shall have been no material adverse change in the Sellers' representations
and warranties by virtue of Sellers supplementing the Schedules pursuant
to Section 6.16. Sellers shall have delivered to Buyer a certificate in
the form of the attached Exhibit M to such effect signed on their behalf
by the President or any Vice President of each of Seller to the foregoing
effect and that delivered pursuant to such certificate is a true, correct
and complete copy of all of the Scheduled Contracts.
(b) SELLERS' PERFORMANCE. Each of BP's or TA's obligations to
be performed on or before the Closing Date pursuant to the terms of this
Agreement or the Environmental Agreement shall have been duly performed in
all material respects on or before the Closing Date. Each of BP and TA
shall have delivered to Buyer a certificate to such effect in the form of
the attached Exhibit N signed on their behalf by the President or any Vice
President of each of BP and TA, as the case may be.
(c) ANCILLARY AGREEMENTS. Sellers shall have each executed
each of the Ancillary Agreements to which they are parties and TAFSI shall
have executed the TAFSI Assumption Agreement.
(d) OPINION OF BP'S COUNSEL. Buyer shall have been furnished
at the Closing with an opinion of George J. Dunn or the associate general
counsel or chief counsel of BP America Inc., dated the Closing Date, in
the form of Exhibit K.
(e) ADDITIONAL CLOSING DOCUMENTS OF SELLER. Buyer shall have
received at the Closing the following documents, dated the Closing Date:
(i) copies, certified by the Secretary or an Assistant
Secretary of each of BP or TA, as the case may be, of resolutions of
the Board of Directors of each of BP or TA or the Executive
Committee thereof authorizing the execution, delivery and
performance of this Agreement and all other agreements, documents
and instruments
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54
relating hereto and the consummation of the transactions
contemplated hereby; and
(ii) special warranty deeds (or their equivalent in each
applicable state) in proper statutory form for recording, duly
executed and acknowledged by BP and TA covering the Owned Real
Property to be conveyed to Buyer pursuant to this Agreement; and
(iii) such further instruments of sale, transfer,
conveyance, assignment or delivery covering the Purchased Assets or
any part thereof as Buyer may reasonably require to assure the full
and effective sale, transfer, conveyance, assignment or delivery to
it of the Purchased Assets to be transferred to Buyer under this
Agreement, none of which shall expand any of Sellers' liabilities
under this Agreement; and
(iv) the other documents to be delivered to Buyer
pursuant to Section 3.1.
(f) REQUIRED PERMIT APPROVALS. All Required Permit Approvals
identified in Section 7.2(f) of the Disclosure Schedule shall have been
obtained without the imposition of any conditions that are or would become
applicable to the Business, the Purchased Assets, Buyer or any Franchisee,
which Buyer in good faith reasonably determines would be materially
burdensome upon the Business, the Purchased Assets, Buyer or any
Franchisee or Buyer's conduct of business after the Closing. All such
Required Permit Approvals shall be in effect, and no Proceeding shall have
been instituted or threatened by any Governmental Authority with respect
thereto as to which, in Buyer's good faith opinion, there is a material
risk of a determination that would terminate the effectiveness of, or
otherwise materially and adversely modify the terms of, any such Required
Permit Approval.
(g) REQUIRED CONTRACTUAL CONSENTS. All Required Contractual
Consents identified in Section 7.2(g) of the Disclosure Schedule shall
have been obtained in written instruments reasonably satisfactory to
Buyer.
(h) TITLE TO REAL PROPERTY. Title to the Real Property being
transferred to Buyer hereunder shall have been cleared of any Encumbrances
which are not Permitted Encumbrances.
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55
(i) FINANCING. All conditions precedent set forth in the
documents relating to the funding of any debt and equity the proceeds of
which Buyer shall use to effectuate the acquisition of the Purchased
Assets shall have been fulfilled and the Persons committed to providing
such funding shall be prepared to do so concurrently with the Closing.
(j) MATERIAL ADVERSE EFFECT. There shall not have occurred any
event, occurrence, development or state of circumstances or facts or
change in the Assets or the Business (including any damage, destruction or
other casualty loss) affecting the Business or any Asset which has had or
which may reasonably be expected to have, either alone or together with
all such events, occurrences, developments, states of circumstances or
facts or changes, a Material Adverse Effect.
7.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligations of the
Sellers to consummate the transactions contemplated hereby shall be, at the
option of BP, subject to the fulfillment, at or prior to the Closing Date, of
the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of Buyer contained in this Agreement or in any document
delivered pursuant hereto shall be true and correct in all material
respects on the Closing Date with the same effect as if made on the
Closing Date. Buyer shall have delivered to BP a certificate in the form
of Exhibit O to such effect, signed on its behalf by the President or any
Vice President of Buyer.
(b) PERFORMANCE OF COVENANTS. Each of the obligations of Buyer
to be performed on or before the Closing Date pursuant to the terms of
this Agreement shall have been duly performed in all material respects on
or before the Closing Date. Buyer shall have delivered to BP a certificate
in the form of Exhibit P to such effect, signed on its behalf by the
President or any Vice President of Buyer.
(c) ANCILLARY AGREEMENTS. Buyer shall have executed the
Ancillary Agreements to which it is a party.
(d) OPINION OF BUYER'S COUNSEL. BP shall have been furnished
with an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to
Buyer, dated the Closing Date, addressed to BP in the form of Exhibit Q.
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(e) ADDITIONAL CLOSING DOCUMENTS OF BUYER. BP shall have
received at the Closing the following documents, each dated the Closing
Date:
(i) copies, certified by the Secretary or an Assistant
Secretary of Buyer, of resolutions of its Board of Directors or the
Executive Committee thereof authorizing the execution and delivery
of this Agreement and all other agreements, documents or instruments
relating hereto and the consummation of the transactions
contemplated hereby; and
(ii) confirmation of the wire transfer to be delivered by
Buyer at the Closing pursuant to Section 2.5(i) hereof.
(f) REQUIRED CONTRACTUAL CONSENTS. All Required Contractual
Consents identified in Section 7.2(g) of the Disclosure Schedule shall
have been obtained in written instruments reasonably satisfactory to BP.
(g) REQUIRED PERMIT APPROVALS. All Required Permit Approvals
identified in Section 7.2(f) of the Disclosure Schedule shall have been
obtained.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLER. Except for indemnification with
respect to Environmental Liabilities, which shall be governed exclusively by the
Environmental Agreement, BP shall indemnify and hold harmless Buyer, Buyer's
Affiliates and their respective officers, directors, employees and agents
(collectively, the "Buyer Indemnitees") in respect of any and all Damages
reasonably incurred by any Buyer Indemnitee, whether paid or payable, as a
result of or otherwise in connection with each and all of the following:
(a) any breach of any representation or warranty made by BP or
TA in this Agreement or any Ancillary Agreement;
(b) the breach of any covenant, agreement or obligation of any
Seller contained in this Agreement or any Ancillary Agreement;
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(c) any misrepresentation contained in any certificate
furnished by BP or TA pursuant to this Agreement;
(d) the ownership, use or operation of the Purchased Assets by
Sellers or the conduct of the Business by the Sellers on or prior to the
Closing Date;
(e) any failure of Buyer to obtain the protections afforded by
compliance with the notification requirements of the bulk sale, bulk
transfer and similar laws in force in the jurisdictions in which such laws
may be applicable to Sellers or the transactions contemplated by this
Agreement;
(f) the Excluded Liabilities;
(g) any Liability arising under the WARN Act with respect to
the termination by Sellers or any of their Affiliates or ERISA Affiliates
of any employee of BP, TA or TAFSI;
(h) employment (or termination of employment) of the Employees
through the Closing Date;
(i) those Taxes for which Seller is responsible;
(j) except for Liabilities which Buyer expressly agrees to pay
pursuant to Section 10.12 hereof, any Liability with respect to any tax
liabilities of any and all kinds arising out of the ownership, operation
or possession of the Business, the Purchased Assets or Excluded Assets
prior to the Effective Time, and, except as expressly provided else where
in this Agreement, any obligation of BP, TA or TAFSI or any consolidated
group of which BP, TA or TAFSI is or was a member with respect to any and
all taxes, including, without limitation, any debts, liabilities,
obligations or commitments for any income, excise, tax, youth, gross
receipts, franchise, employment, payroll related or property tax of any
sort, and any deficiencies, assessments, charges, interest and penalties
associated therewith, imposed upon BP, TA or TAFSI or any consolidated
group of which BP, TA or TAFSI is or was a member by the United States,
any taxing authority outside the United States or any State or local
instrumentality or authority within the United States, relating to,
accrued for, applicable to or arising from in the period as of, prior to
or after the Effective Time;
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(k) any claim pursuant to the PMPA or any similar or related
federal or state statute or regulation arising out of or resulting from
(i) the ownership, administration use or operation of the Purchased Assets
by the Sellers or the conduct of the Business by the Sellers on or prior
to the Closing Date or (ii) the execution and delivery of this Agreement
or the sale of any of the Purchased Assets to the Buyer; and
(l) any Liabilities of TAFSI other than liabilities of TAFSI
under each of the Scheduled Contracts to which it is a party in effect on
the Closing Date, and the Liabilities of TAFSI under the Assigned Permits
to be performed after the Closing Date.
8.2 INDEMNIFICATION BY BUYER. Except for indemnification with
respect to Environmental Liabilities, which shall be governed exclusively by the
Environmental Agreement, Buyer shall indemnify and hold harmless BP, BP's
Affiliates and their respective officers, directors, employees and agents
(collectively the "BP Indemnitees") in respect of any and all Damages reasonably
incurred by any BP Indemnitee, whether paid or payable, as a result of or in
connection with each and all of the following:
(a) any breach of any representation or warranty made by Buyer
in this Agreement or any Ancillary Agreement;
(b) the breach of any covenant, agreement or obligation of
Buyer contained in this Agreement or any Ancillary Agreement;
(c) any misrepresentation contained in any certificate
furnished by Buyer pursuant to this Agreement;
(d) the Assumed Liabilities;
(e) the ownership, use or operation of the Purchased Assets or
the conduct of the Business by Buyer subsequent to the Closing Date;
(f) any claim pursuant to the PMPA or any similar or related
federal or state statute or regulation arising out of or resulting from
the ownership, administration use or operation of the Purchased Assets or
the conduct of the Business by the Buyer after the Closing Date; and
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(g) Buyer's actual violation of any employment law or tortious
conduct with respect to the Employees in its employee selection process
and the terms and conditions of its employment offers.
8.3 DEFENSE OF CLAIMS. Whenever any claim shall arise for
indemnification hereunder, the party entitled to indemnification (the
"Indemnified Party") shall promptly notify the other party (the "Indemnifying
Party") of the claim and, when known, the facts constituting the basis for such
claim. The Indemnifying Party will not be obligated to indemnify the Indemnified
Party with respect to such portion of the claim as to which (and only to the
extent to which) the Indemnifying Party's ability to defend has been prejudiced
by the Indemnified Party's failure to provide prompt notice of a claim. The
Indemnifying Party may, upon written notice to the Indemnified Party within 30
calendar days of receipt of the notice specified in the first sentence of this
paragraph, assume the defense of any such claim, or any discrete portion of a
claim if the Indem nifying Party acknowledges to the Indemnified Party the
Indemnified Party's right to indemnity pursuant hereto in respect of the
entirety of such claim, or the relevant portion. If the Indemnifying Party
assumes the defense of any such claim, the Indemnifying Party shall select
nationally recognized counsel or counsel reasonably acceptable to the
Indemnified Party to conduct the defense of such claim, and shall take
reasonable steps in the defense or settlement thereof. If the Indemnifying Party
shall have assumed the defense of any claim in accordance with this Section 8.3,
the Indemnifying Party shall be authorized to consent to a settlement of, or the
entry of any judgment arising from, any such claim, without the prior written
consent of the Indemnified Party; PROVIDED, HOWEVER, that the Indemnifying Party
shall pay or cause to be paid all amounts arising out of such settlement or
judgment concurrently with the effectiveness thereof; PROVIDED, FURTHER, that
the Indemnifying Party shall not be authorized to encumber any of the assets of
the Indemnified Party or to agree to any restriction that would apply to the
Indemnified Party, or to any other Buyer or BP Indemnitee, as applicable, or to
its conduct of business or to any other Buyer or BP Indemnitee, as applicable,
or to their conduct of business; and PROVIDED, FURTHER, that if such settlement
does not contain a complete release of the Indemnified Party with respect to
such claim, the Indemnifying Party shall continue to be obligated to indemnify
the Indemnified Party with respect to such claim. The Indemnified Party shall be
entitled to participate in (but not control) the defense of any such action,
with its own counsel and at its own expense. The Indemnified Party shall, and
shall cause each of its Affiliates, officers, employees, consultants and
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agents and each other Buyer or BP Indemnitee, as applicable, to cooperate fully
with the Indemnifying Party in the defense of any claim pursuant to this Section
8.3. If the Indemnifying Party does not assume the defense of any claim
resulting therefrom in accordance with the terms of this Section 8.3, the
Indemnified Party may defend against such claim in such manner as it may
reasonably deem appropriate, including settling such claim after giving notice
of the same to the Indemnifying Party, on such terms as the Indemnified Party
may reasonably deem appropriate.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the parties in Articles IV and V and in any instrument or
document furnished in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of the parties hereto and shall
expire on the second anni versary of the Closing Date, except (i) as to any
matter as to which a claim is submitted in writing to the Indemnifying Party
prior to such second anniversary and identified as a claim for indemnification
pursuant to this Agreement, (ii) the inaccuracy of any representation or
warranty arising out of the fraud or willful misconduct of the senior management
of Sellers or Buyer, which representation and warranty shall survive until sixty
(60) days following the expiration of the applicable statute of limitations,
including extensions thereof and (iii) any inaccuracy in the representations or
warranties set forth in Sections 4.8 and 5.5 of this Agreement, which
representations and warranties shall survive until the expiration of sixty (60)
days following the applicable statute of limitations, including extensions
thereof. The covenants of Sellers and Buyer hereunder shall survive until the
expiration of any applicable statute of limitations. No claim or action for
indemnity pursuant to Section 8.1 or 8.2 hereof for breach of any representation
or warranty shall be asserted or maintained by any party hereto after the
expiration of such representation or warranty pursuant to the first sentence of
this Section 8.4 except for claims made in reasonable detail in writing prior to
such expiration and actions (whether instituted before or after such expiration)
based on any claim made in writing prior to such expiration.
8.5 LIMITATIONS ON INDEMNIFICATION FOR BREACHES
OF REPRESENTATIONS AND WARRANTIES.
(a) No amount shall be recoverable for Damages under
Paragraphs (a) and (c) of Section 8.1 unless and only to the extent that Damages
claimed by the Buyer Indemnitees under Paragraphs (a) and (c) of Section 8.1
exceeds $500,000 (the "Sellers' Basket"), and then only for the excess over the
Sellers' Basket. Notwithstanding the
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foregoing sentence, indemnification under Paragraphs (a) and (c) of Section 8.1
may be claimed with respect to all Damages resulting from, and full recovery
shall be made for, (i) the inaccuracy of any representation or warranty set
forth in Section 4.8, (ii) the failure of Sellers to disclose in the Disclosure
Schedule any Contracts which are required by this Agreement to be disclosed
therein and (iii) the inaccuracy of any representation or warranty arising out
of the willful misconduct of the senior management of BP.
(b) No amount shall be recoverable for Damages under
paragraphs (a) and (c) of Section 8.2 unless and only to the extent that Damages
claimed by the Seller Indemnitees under paragraphs (a) and (c) of Section 8.2
exceeds $100,000 (the "Buyer's Basket"), and then only for the excess over the
Buyer's Basket. Notwithstanding the foregoing sentence, indemnification under
paragraphs (a) and (c) of Section 8.2 may be claimed with respect to all Damages
resulting from, and full recovery shall be made for, (i) the inaccuracy of any
representation or warranty set forth in Section 5.5 and (ii) the inaccuracy of
any representation or warranty arising out of the willful misconduct of the
senior management of the Buyer.
8.6 CAP. The Indemnifying Party's obligations to indemnify the
Indemnified Party under this Agreement, the Ancillary Agreements (but not the
Environmental Agreement) or for any matter in connection herewith or therewith,
(except to the extent expressly provided otherwise in the Environmental
Agreement), shall in no event exceed $92,000,000 (the "Cap"), any Damages in
excess of the Cap being deemed waived by the Indemnified Party.
8.7 LIMITATION ON DAMAGES. The amount of Damages recoverable by an
Indemnified Party under this Agreement shall: (i) with respect to claims arising
out of the sale of the Inventory, exclude consequential damages; (ii) with
respect to claims other than those arising out of the sale of the Inventory,
exclude special damages (within the meaning of American List Corporation v. U.S.
News and World Report, Inc., 550 N.Y.S. 2d 590) (a) arising from covenants,
obligations, representations, events of default and similar obligations in
Buyer's debt and equity financing agreements or (b) that should not have been
reasonably foreseeable by the parties at the time this Agreement was entered
into; and (iii) in all cases, exclude punitive damages; provided, however, that
nothing in this Section 8.7 shall limit recovery of amounts paid or payable by
an Indemnified Party to a third party.
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8.8 EXCLUSIVE REMEDIES.
(a) The Buyer agrees, on behalf of itself and the Buyer
Indemnitees, that any claim or demand against Sellers, their Affiliates, their
employees, officers, directors and agents (collectively for the purpose of this
Section 8.8(a) "Seller") arising out of or relating to this Agreement, the
transactions contemplated herein, or the Business must be brought only under
this Section 8 and subject to the procedures and limitations herein. Nothing in
this Agreement is intended to limit any claims Buyer, its Affiliates or the
Buyer Indemnitees may have against prior owners of the Business or the Real
Property.
(b) Sellers agree, on behalf of themselves and the BP
Indemnitees, that any claim or demand against Buyer, its Affiliates, its
employees, officers, directors and agents (collectively for the purpose of this
Section 8.8 "Buyer") arising out of or relating to this Agreement, the
transactions contemplated herein, or the Business must be brought only under
this Section 8 and subject to the procedures and limitations herein. Nothing in
this Agreement is intended to limit any claims Sellers, their Affiliates or the
Seller Indemnitees may have against prior owners of the Business or the Real
Property.
8.9 INSURANCE. Buyer acknowledges that none of Sellers' insurance
policies will transfer to Buyer. Buyer and its successors agree not to file,
without the prior consent of Sellers, such consent not to be unreasonably
withheld, a claim against any insurance policy of any Seller or any Affiliates
providing coverage for any period prior to the Closing Date.
ARTICLE IX
TERMINATION
9.1 GROUNDS FOR TERMINATION. This Agreement may
be terminated at any time prior to the Closing:
(i) by mutual written agreement of Sellers and Buyer;
(ii) by Buyer, in the event Sellers materially breach this
Agreement, and fail to correct such breach in all material respects within
ten (10) days of receipt of notice from Buyer specifying such breach in
reasonable detail;
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(iii) by BP, in the event Buyer materially breaches this
Agreement, and fails to correct such breach in all material respects
within ten (10) days of receipt of notice from Sellers specifying such
breach in reasonable detail;
(iv) by either Buyer or BP if the Closing shall not have been
consummated by December 31, 1993, or such later date as mutually agreed to
in writing by Buyer and Sellers (the "Termination Date"); PROVIDED,
HOWEVER, that neither Buyer nor Seller may terminate this Agreement
pursuant to this clause (iv) if the Closing shall not have been
consummated by the Termination Date by reason of the failure of such party
to perform in all material respects any of its cove nants or agreements
contained in this Agreement;
(v) by BP, if at any time BP, in its sole and absolute
discretion, determines that it is not satisfied with the progress which
Buyer has made in obtaining the financing necessary to consummate the
transactions contemplated hereby;
(vi) by BP, if on or prior to September 10, 1993 Buyer has not
delivered to BP a written commitment letter executed by one or more
commercial banks evidencing such banks' commitment to provide financing to
the Buyer in an amount not less than $75,000,000 in connection with the
transactions contemplated hereby; or
(vii) by BP or the Buyer, if on or prior to August 22, 1993, the
Sellers and the Buyer have not executed the amendment to this Agreement
contemplated by Section 10.13 hereof.
If this Agreement is terminated by mutual consent or other than by
reason of a party's default, then neither party shall have a claim for Damages
as a result of the termination. A party rightfully terminating this Agreement as
a result of the other party's material breach shall retain any claim it may have
for Damages arising from such breach.
ARTICLE X
MISCELLANEOUS
10.1 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other
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64
communication hereunder shall be deemed duly given (i) if personally delivered,
when so delivered, (ii) if mailed, two Business Days after having been sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, (iii) if given by telex
or telecopier, once such notice or other communication is transmitted to the
telex or telecopier number specified below and the appropriate answer back or
telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (ii) above or (iv) if sent through a reputable overnight delivery service
in circumstances to which such service guarantees next day delivery, the day
following being so sent:
If to BP, TA or TAFSI, to:
BP Exploration & Oil Inc.
200 Public Square
Cleveland, Ohio 44114-2375
Attn: Real Estate Manager
Telecopier:
Copy to: BP Exploration & Oil Inc.
200 Public Square
Cleveland, Ohio 44114-2375
Attn: Corporate Secretary
Telecopier: 216/586-4535
If to Buyer, to: T.S. Network Corp.
c/o The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Louis J. Mischianti
Telecopier: (212) 318-1360
Copy to: The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Louis J. Mischianti
Telecopier: (212) 318-1360
Copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attn: Stuart I. Oran, Esq.
Telecopier: (212) 757-3990
Either party may give any notice, request, demand, claim or other
communication hereunder using any other means
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65
(including ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the individual for whom it is
intended. Either party may change the address to which notices, requests,
demands, claims and other communications hereunder are to be delivered by giving
the other party notice in the manner herein set forth.
10.2 AMENDMENTS; WAIVERS; REMEDIES.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by Buyer and Sellers, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by either party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent occurrence.
No single or partial exercise by either party in exercising any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
10.3 EXPENSES. Sellers will pay any and all expenses associated with
obtaining consents (including, without limitation, the consent of Burger King)
to the assignment of any Contracts to the Buyer. Sellers shall also pay the
Permit Costs. (As used herein, "Permit Costs" means those amounts to be paid to
any Governmental Authority in connection with the transfer of any Permit to
Buyer or Buyer obtaining a substitute or replacement Permit; pro vided, that
Permit Costs shall not include any amounts paid to any Governmental Authority
which are in the nature of a bonding requirement or similar requirement.) The
Sellers, on the one hand, and the Buyer, on the other hand, shall share equally
the fees and expenses of counsel retained by the management of the Business (the
"Management"); provided that any such fees and expenses in excess of $50,000
shall be borne by the Management. The costs, fees and expenses of obtaining
surveys and title insurance and the costs, fees and expenses of recording
mortgages on the Real Property shall be borne by the Buyer. Except as otherwise
provided herein, all costs, fees and expenses incurred in connection with this
Agreement shall be paid by the party incurring the same.
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66
10.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
10.5 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the internal laws (and not the conflict of laws) of the
State of New York; PROVIDED, HOWEVER, that the validity of the conveyance of
Real Property shall be governed by the law of the state in which the Real
Property is situated.
10.6 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto.
10.7 ENTIRE AGREEMENT. This Agreement, together with the
Confidentiality Agreement (including the documents, schedules and exhibits
referred to herein which are hereby incorporated by reference), constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, understandings and negotiations, both
written and oral, between the parties with respect to the subject matter of this
Agreement.
10.8 JURISDICTION. Each of the parties hereto irrevocably submits to
the jurisdiction of any state or federal court sitting in the County of New
York, State of New York, in any action or proceeding arising out of or relating
to this Agreement, agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court, or to contest the jurisdiction
(in rem or in personam) or power or decision of such court over or pertaining to
the party or with respect to the subject matter in any other court within or
without the United States other than appropriate appellate courts. Each of the
parties hereto irrevocably waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of the other party hereto with respect
thereto.
10.9 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
10.10 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any Person, place
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67
or circumstance, shall be held by a court of competent jurisdiction to be
invalid, unenforceable or void, the remainder of this Agreement and such
provisions as applied to other Persons, places and circumstances shall remain in
full force and effect only if, after excluding the portion deemed to be
unenforceable, the remaining terms shall pro vide for the consummation of the
transactions contemplated hereby in substantially the same manner as originally
set forth at the later of the date this Agreement was executed or last amended.
10.11 CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against either
party. Whenever required by the context, any gender shall include any other
gender, the singular shall include the plural and the plural shall include the
singular. The headings contained in this Agreement are for reference purposes
only and shall not effect in any way the meaning or interpretation of this
Agreement. Whenever the word "including" is used in this Agreement, it shall be
deemed to mean "including, without limitation," "including, but not limited to"
or other words of similar import such that the items following the word
"including" shall be deemed to be a list by way of illustration only and shall
not be deemed to be an exhaustive list of applicable items in the context
thereof.
10.12 TAXES.
(a) PAYMENT OF TRANSFER AND SALES TAXES AND FEES. All Taxes
imposed on the transactions contemplated hereby, including any sales and use
Taxes (including personal property sales and use Taxes) and any real property
transfer, conveyance, documentary, stamp and recording Taxes or charges, shall
be borne by Sellers. Subject to the immediately preceding sentence, as to any
special or general assessments against any of the Purchased Assets which are
payable in installments, Buyer shall be responsible for all assessments which
relate to periods after the Effective Time. In the event the use by Buyer of any
of the Purchased Assets qualifies for exemption from otherwise applicable taxes
covered under this section, Buyer shall provide Seller with all appropriate
exemption certificates in support of such exemption.
(b) TAXES AND ASSESSMENTS. All real estate and personal
property taxes and assessments for which Sellers, and not a third party, are
liable accruing prior to the Closing Date shall be prorated (based on the most
recent available tax statement and latest tax valuation) as of the
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68
Closing Date. If the Closing Date occurs before the tax rate is fixed for the
then current year, the proration of the corresponding taxes shall be estimated
on the basis of the tax rate for the last preceding year applied to the latest
assessed valuation. Buyer shall be responsible for making all real estate and
personal property tax and assessment payments due and payable after the Closing
Date. Sellers' estimated accrued liability (to the Closing Date) for such taxes
and assessments due and payable after the Transfer Date shall be a credit
against the amount payable at Closing by Buyer. In the event the tax rate for
the year of the Closing Date differs from that used to estimate the proration of
the real estate and personal property taxes, Sellers and Buyer agree to adjust
such proration upon receipt of the next tax statement issued.
(c) OTHER TAXES. (i) Except as otherwise provided in
Paragraphs (a) and (b) of this SECTION 10.12, Sellers shall be responsible for
and shall pay all Taxes accrued or ultimately imposed upon any part of the
Purchased Assets and Inventory on the basis of taxable events or activities or
in connection with the ownership, use or operation of any part of the Purchased
Assets and Inventory prior to the Closing Date, and Buyer shall be responsible
for and shall pay all Taxes accrued or ultimately imposed upon any part of the
Purchased Assets and Inventory on the basis of taxable events or activities or
in connection with the ownership, use or operation thereof after the Closing
Date. Buyer shall reimburse BP for all federal, state and local taxes listed in
Section 10.12 of the Disclosure Schedule that have been paid by BP on any
Inventory transferred to Buyer pursuant to this Agreement and for which
reimbursement to Buyer shall be made by the ultimate purchaser of the Inventory.
(d) REFUNDS. With respect to any pending or subsequently filed
claim for refund of Taxes on or in respect of periods ending on or prior to the
Closing Date only, or any suit or suits for refund of such taxes, Buyer agrees
that Sellers will retain complete discretion to prosecute, settle or abandon on
behalf of Sellers Group each of such claims or suits at Sellers' expense.
(i) Buyer further agrees to provide Sellers with all
reasonable cooperation on obtaining such refund and to make the records
and personnel available to assist Sellers or any counsel designated by
Sellers to prosecute any such claim or suit for refund.
(ii) In the event that any refund of Taxes is received
by the Buyer in respect of periods
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ending on or prior to the Closing Date, Buyer will promptly pay to Sellers
an amount equal to such refund plus any interest received on such refund.
(e) ASSISTANCE AND RECORDS. Buyer shall provide Sellers with
assistance as Sellers may reasonably request in connection with the preparation
of tax returns required to be filed by Sellers, any audit or other examination
by any taxing authority, any judicial or administrative proceedings relating to
liability for Taxes, or any claim for refund in respect of such Taxes.
(i) Sellers will retain complete discretion in
conducting and resolving any audit, administrative or judicial proceeding
with respect to periods ending on or before the Closing Date relating to
Taxes. Buyer will promptly notify Sellers of any such audit, proposed
adjustment or related matter that could affect Sellers' tax liability.
(ii) In accordance with Section 6.4, Buyer will upon the
request of Sellers, provide any records or information which may be
relevant to such return, audit, examination, proceeding or claim.
(f) Such assistance shall include making employees available
to Sellers and their counsel, providing additional information and explanation
of any material to be provided, furnishing to or permitting the copying by
Sellers or their counsel, of any records, returns, schedules, documents, work
papers or other relevant materials which might reasonably be expected to be used
in connection with such return, audit, examination, proceeding or claim.
(g) Sellers agree to reimburse Buyer for all out-of-pocket
costs which Buyer may reasonably incur pursuant to this SECTION 10.12(C).
(h) UTILITIES, RENTS AND OTHER CHARGES. Utilities, rents, and
any other charges for which Sellers, and not a third party, are liable relating
to any part of the Assets or in connection with the use or operation thereof
shall be prorated between Sellers and Buyer as of the Closing Date. To the
extent that prorations can be calculated or estimated on or before the Closing
Date, any amounts owed by either party shall be paid to the other party as an
adjustment to the Closing Amount payable by Buyer. Calculations of any other
prorations shall be made as soon as possible, but in no event later than ninety
(90) days after Closing, and any remaining adjustment obligations shall be paid
promptly upon demand. Any amounts unpaid within five (5) Business Days after
demand shall begin to
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accrue interest at the Reference Rate, which shall be added to and paid with
such amounts. Buyer shall be obligated for rents, utilities or other charges
related to the Assets attributable to periods from and including the Closing
Date.
10.13 EXHIBIT AND SCHEDULES. As of the date of this Agreement, the
Sellers and Buyer have not agreed to the form of the Exhibits and Schedules
hereto. The Sellers and the Buyer will attempt to agree upon an amendment to the
Agreement pursuant to which the form of such Exhibits and Schedules (other than
Section 4.9 of the Disclosure Schedule, as to which the amendment shall specify
a date by which the parties shall agree upon Section 4.9 of the Disclosure
Schedule) and any qualifications of representa tive are agreed upon by the
Sellers and Buyer and become a part of this Agreement. In the event that the
Sellers and the Buyer do not execute such an amendment on or prior to August 22,
1993 each of Sellers and the Buyer shall have the right to terminate this
Agreement as provided in Section 9.1(vii).
10.14 NO THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
provision hereof (including, without limitation, Section 6.12 hereof) is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
10.15 NO INDUCEMENTS. Neither Sellers nor the Buyer has made any
promises or inducements in connection with this Agreement, the Business or the
Purchased Assets except as expressly set forth in this Agreement, and neither
Sellers nor the Buyer may rely on any such alleged promises or inducements which
are not expressly set forth in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Asset
Purchase Agreement to be duly executed by their respective authorized officers
or representatives as of the day and year first above written.
BP EXPLORATION & OIL INC.
By: /s/ H.T. Bubb
------------------------------------------
Name: H.T. Bubb
----------------------------------------
Title: Vice President, Strategic Development
---------------------------------------
TRUCKSTOPS CORPORATION OF AMERICA INC.
By: /s/ H.T. Bubb
------------------------------------------
Name: H.T. Bubb
----------------------------------------
Title: Vice President, Strategic Development
---------------------------------------
T.S. NETWORK CORP.
By: /s/ Louis J. Mischianti
------------------------------------------
Name: Louis J. Mischianti
----------------------------------------
Title: President
---------------------------------------
EXHIBIT 10.7
AMENDMENT NO. 1
TO THE ASSET PURCHASE AGREEMENT
-------------------------------
AMENDMENT NO. 1, dated as of December 10, 1993, to the Asset
Purchase Agreement, dated as of July 22, 1993 (the "Asset Purchase Agreement"),
by and among BP Exploration & Oil Inc., an Ohio corporation ("BP"), Truckstops
Corporation of America ("TA," and together with BP, collectively, the "Sellers")
and TA Operating Corporation, a Delaware corporation (together with its
successors and assigns, the "Buyer").
Pursuant to Sections 10.2(a) and 10.13 of the Asset Purchase
Agreement, Buyer and Sellers desire to amend the Asset Purchase Agreement as set
forth herein. Capitalized terms used herein but not otherwise defined have the
respective meanings assigned to such terms in the Asset Purchase Agreement.
Accordingly, the parties hereby agree as follows:
1. AMENDMENT OF THE NAME OF TA. The Asset Purchase Agreement is
hereby amended by substituting "Truckstops Corporation of America" for each
reference to "Truckstops Corporation of America Inc."
2. AMENDMENT OF SECTION 1.1. The definitions set forth in Section
1.1 of the Asset Purchase Agreement are hereby amended:
(a) by deleting, in its entirety, the definitions of
"Trademark License Agreement".
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2
(b) by adding the following definitions to the foregoing
Section 1.1:
"Supplemental Agreement" means the Supple mental Agreement in
the form of Exhibit I.
"Jobber Agreement" means the Jobber Agreement in the form of
Exhibit R.
"Fuel Consignment Agreement" means the Fuel Supply Consignment
Agreement in the form of Exhibit S.
(c) by deleting the definition of "Ancillary Agreements" in
its entirety and substituting in lieu thereof the following definition:
"Ancillary Agreements" means, collectively, (i) the
Non-Competition Agreement, (ii) the Credit Card Agreement, (iii) the
Services Agreement, (iv) the Office Lease, (v) the Assignment and
Assumption Agreement, (vi) the TAFSI Assumption Agreement, (vii) the
Software License Agreement, (viii) the Jobber Agreement, (ix) the
Supplemental Agreement, (x) the Fuel Supply Agreement and (xi) the Fuel
Consignment Agreement.
3. AMENDMENT OF SECTION 2.1(i). Section 2.1(i) of the Asset Purchase
Agreement is hereby amended by inserting the words "and 4.9(d)(i)" immediately
after the reference to Section 4.9(c) contained in Section 2.1(i).
4. AMENDMENT OF SECTION 2.1(iii). Section 2.1(iii) of the Asset
Purchase Agreement is hereby amended by deleting such Section 2.1(iii) in its
entirety and substituting in lieu thereof the following:
(iii) all items of inventory primarily relating to the
Business notwithstanding how classified in Sellers' financial records,
including all hydro carbon inventories for use or sale (including
gasoline, diesel fuel, motor oil, automobile transmission fluid,
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3
anti-freeze and motor oil and fuel additives) and all non-hydrocarbon
inventories of food, beverages, tires, batteries and accessories and other
merchandise owned by Sellers, including, without limitation, all raw
materials, work-in-process, finished goods and samples, whether at the
Real Properties, including the Distri bution Center, or in transit to any
Real Property (collectively "Inventory"), other than fuel located at the
Consigned Truckstops ("Consigned Fuel") as identified in the Fuel
Consignment Agreement, which will be purchased after the Closing Date in
accordance with the terms of the Fuel Consignment Agreement and all
supplies and stores intended for consumption by the Business rather than
for resale, including, without limitation, paper towels, toilet paper and
cleaning supplies, whether at the Real Properties, including the
Distribution Center, or in transit to any Real Property (collectively
"Supplies");
5. AMENDMENT OF SECTION 2.5. Section 2.5(i) of the Asset Purchase
Agreement is hereby amended by deleting such Section 2.5(i) in its entirety and
substituting in lieu thereof the following:
(i) at the Closing, Buyer shall pay (i) to BP, by wire
transfer of immediately available funds, the sum of $81,000,000, and (ii)
to The British Petroleum Company p.l.c., the sum of $9,000,000
representing the consideration paid by Buyer under the terms of the
Non-Competition Agreement.
6. AMENDMENT OF SECTION 4.6. Section 4.6 of the Asset Purchase
Agreement is hereby amended by deleting "June 30, 1993" and replacing it with
"September 30, 1993".
7. AMENDMENT OF SECTION 4.7. Section 4.7 of the Asset Purchase
Agreement is hereby amended by deleting "June 30, 1993" and replacing it with
"September 30, 1993".
8. AMENDMENT OF SECTION 4.13(A). Section 4.13(a) of the Asset
Purchase Agreement is hereby amended by deleting the last sentence of Section
4.13(a) in its
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4
entirety and substituting in lieu thereof: "(The Agreements set forth in
Section 4.13(a) of the Disclosure Schedule are referred to as the "Scheduled
Contracts")."
9. AMENDMENT OF SECTION 4.18(E). Section 4.18(e) is hereby amended
by deleting clauses (i) and (ii) thereof and replacing them with the following:
(i) a list of full-time and part-time active employees on July 31, 1993;
and (ii) by means of the monthly report specified in Section 6.1(b)(v), to
the best of Sellers' knowledge, a list of full-time and part-time
employees whose employment has terminated since July 31, 1993 at each such
location and the date of each such termination.
10. AMENDMENT OF SECTION 4.21(A). Section 4.21(a) of the Asset
Purchase Agreement is hereby amended by deleting the first sentence thereof and
replacing it with the following:
Section 4.21(a) of the Disclosure Schedule sets forth a copy of the
current generic Uniform Franchise Offering Circular for the Business.
11. AMENDMENT OF SECTION 6.12(C). Section 6.12(c) of the Asset
Purchase Agreement is hereby amended by deleting the first sentence of such
Section 6.12(c) in its entirety and substituting in lieu thereof the following:
Buyer shall establish, effective as of January 1, 1994, one or more group
medical and dental insurance plan or plans for the Affected Employees (and
their dependents) which plan or plans shall have such terms and conditions
as Buyer, in its sole discretion, shall determine.
12. AMENDMENT OF SECTION 6.13(B). Section 6.13(b) of the Asset
Purchase Agreement is hereby amended by
<PAGE>
5
deleting such Section 6.13(b) in its entirety and substituting in lieu thereof
the following:
(b) PRICE. Buyer shall pay to BP at the time and in the manner
hereinafter set forth, by wire transfer of immediately available funds, a
total amount for the Inventory at or in transit to the Real Properties
purchased directly by Buyer in accordance with the values set forth in
Section 6.13(b) of the Disclosure Schedule. If, for any reason, Buyer
neglects to pay Sellers for any Inventory in transit, Buyer shall be
responsible to either pay Sellers for such Inventory if Sellers have
already paid a third party for such Inventory or Buyer shall pay such
third party if Sellers have not already paid such third party.
13. ADDITION OF SECTION 6.20. The Asset Purchase Agreement is hereby
amended by adding thereto a new Section 6.20 which shall read as follows:
SECTION 6.20. KUHN. Sellers agree that Edwin P. Kuhn ("Kuhn")
shall be eligible to continue participation in the applicable Sellers'
employee group medical plan under COBRA pursuant to the applicable plan's
enrollment provisions by paying the applicable contributions (as may be
adjusted from time to time) during the 18-month period following the
Closing Date and the full retiree and Seller contributions (as may be
adjusted from time to time) between the end of the 18-month period (or any
longer period required by law) at such time as he would have fulfilled the
eligibility requirements under that plan had his employment with Sellers
continued. Thereafter, he may participate in the applicable Sellers'
retiree group medical plan in accordance with its terms. If he is eligible
for employee or retiree group medical coverage from a subsequent employer,
he must participate in his subsequent employer's coverage in order to
participate in Sellers' retiree group medical coverage (Sellers' coverage
would be secondary to the subsequent employer's primary coverage,
irrespective of anything to the contrary in the subsequent employer's
plan). Notwithstanding the above, Sellers reserve the right to modify or
terminate any retiree group medical plan at any time. Sellers further
agree that Kuhn may elect to continue his dental benefits for up to 18
months following the Closing Date by paying the applicable contributions
(as may be adjusted from time to time). Sellers agree that Kuhn will
continue to receive from
<PAGE>
6
Sellers' life insurance coverage equal to one times his annual base pay at
no cost to him for 18 months following the Closing Date. Sellers and Buyer
agree that Buyer shall not assume any liability relating to any such
coverage for Kuhn, except as expressly provided in this Agreement.
14. ADJUSTMENT OF THE ADJUSTED CLOSING INVENTORY AMOUNT. A reserve
of $225,000 for Wheeler-Ridge margin issues will be set forth on the statement
of Hydrocarbon Inventory prepared pursuant to Section 6.13(c)(ii)(1) of the
Disclosure Schedule, and will be deducted in calculating the Adjusted Closing
Inventory Amount pursuant to Section 6.13(c)(iv) of the Agreement.
15. AMENDMENT OF SECTION 7.2(F). Section 7.2(f) of the Asset
Purchase Agreement is hereby amended by deleting such section in its entirety
and replacing it with the following:
(f) MATERIAL REQUIRED PERMIT APPROVALS. All Material Required
Permit Approvals shall have been obtained without the imposition of any
conditions that are or would become applicable to the Business, the
Purchased Assets, Buyer or any Franchisee, which Buyer in good faith
reasonably determines would be materially burdensome upon the Business,
the Purchased Assets, Buyer or any Franchisee or Buyer's conduct of
business after the Closing. All such Material Required Permit Approvals
shall be in effect, and no Proceeding shall have been instituted or
threatened by any Governmental Authority with respect thereto as to which,
in Buyer's good faith opinion, there is a material risk of a determination
that would terminate the effectiveness of, or otherwise materially and
adversely modify the terms of, any such Material Required Permit
Approvals.
16. AMENDMENT OF SECTION 7.2(G). Section 7.2(g) of the Asset
Purchase Agreement is hereby amended by deleting such section in its entirety
and replacing it with the following:
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7
(g) MATERIAL REQUIRED CONTRACTUAL CONSENTS. Except for any Required
Contractual Consents the failure to obtain which would not have a Material
Adverse Effect or a Material Adverse Truckstop Effect, all Required
Contractual Consents shall have been obtained in written instruments
reasonably satisfactory to Buyer.
16.5 AMENDMENT OF SECTIONS 7.3(F) AND (G). Section 7.3(f) and
(g) are hereby revised to read as follows:
(f) REQUIRED CONSENTS. All Material Required Consents and all
Material Required Permit Approvals, shall have been obtained without any
conditions which would, in Seller's good faith opinion, expose Seller to a
material risk of liability.
17. AMENDMENT OF SECTION 8.4. Section 8.4 of the Asset Purchase
Agreement is hereby amended by (a) deleting "and" immediately prior to "(iii)"
in the first sentence thereof and replacing it with ",", (b) adding the
following immediately prior to the period ending said first sentence:
and (iv) to the extent Damages are incurred by a Lender Party (as
hereinafter defined), any inaccuracy of the representation and
warranty set forth in the second sentence of Section 4.9(a) of the
Agreement arising out of or relating to any of the matters listed in
clauses 2-4 of Section 4.9(a) of the Disclosure Schedule, which
representation and warranty shall, with respect to any such
inaccuracy, survive until the expiration of sixty (60) days
following the applicable statute of limitations
and (c) adding the following sentence immediately after said first sentence:
As used herein, the term "Lender Party" shall mean any of (a) the
Collateral Agent, any Lender, the Fronting Bank, the Swingline
Lender and any Senior Note Purchaser (as each such term is defined
in that certain Credit Agreement (the "Credit Agreement") dated as
of December 9, 1993 by and among Buyer, Chemical Bank and certain
other
<PAGE>
8
parties, but only to the extent any such party has succeeded to the
interest of Buyer (or any part thereof) under this Agreement; (b)
the successors and assigns of the parties covered by the foregoing
clause (a); (c) any successor to or assign of Buyer's interest (or
any part thereof) under this Agreement that succeeded to or was
assigned such Buyer's interest by purchasing any of the Real
Properties described in clauses 2-4 of Section 4.9(a) of the
Disclosure Schedule at a foreclosure sale, or by being given a
deed-in-lieu-of-foreclosure to any such Real Property, in connection
with any of the loans covered by the Credit Agreement and the Senior
Note Purchase Agreement (as defined in the Credit Agreement) and (d)
the successors and assigns of the parties identified in the
foregoing clause (c).
18. AMENDMENT OF SECTION 8.5. Section 8.5 of the Asset Purchase
Agreement is hereby amended by (i) deleting "and" immediately prior to "(iii)"
in the second sentence thereof and replacing it with "," and (ii) adding the
following immediately prior to the period ending said second sentence:
and (iv) to the extent Damages are incurred by a Lender Party, any
inaccuracy of the representation and warranty set forth in the
second sentence of Section 4.9(a) of this Agreement arising out of
or relating to any of the matters listed in clauses (2)-(4) of
Section 4.9(a) of the Disclosure Schedule.
19. EXHIBITS AND SCHEDULES. Pursuant to Section 10.13 of the Asset
Purchase Agreement, attached hereto are the form of Exhibits and Schedules as
agreed to by the Buyer and the Sellers. Notwithstanding the last sentence of
Section 10.13 of the Asset Purchase Agreement or Section 9.1(vii) of the Asset
Purchase Agreement, neither Buyer nor Sellers shall have any right to terminate
the Asset Purchase Agreement pursuant to Section 9.1(vii).
<PAGE>
9
20. PURCHASE PRICE ALLOCATION. Buyer and Sellers agree that the
purchase price shall be allocated in accordance with Exhibit A.
21. GUARANTIES. The parties acknowledge that certain third parties
have provided guaranties, letters of credit or deposits (collectively,
"Guaranties") to secure payment of amounts owed by certain customers (the
"Primary Obligors") of the Business. The parties intend that both Sellers and
Buyer be entitled to the benefits of the Guaranties in the event of nonpayment
by or insolvency of a Primary Obligor; Sellers with respect to the retained
accounts receivable and other Excluded Assets ("Pre-Closing Obligations"), and
Buyer with respect to accounts receivable and other rights to payment created
after the Closing Date ("Post-Closing Obligations"). In the event of nonpayment
or insolvency of a Primary Obligor, Sellers and Buyer will cooperate in
collecting on the Guaranties. If the value of the Pre-Closing Obligations owed
by such Primary Obligor exceeds the value of the Post-Closing Obligations,
Sellers will control the collection process under the relevant Guaranty;
otherwise, Buyer will control the collection process. In either case, the party
controlling collection will act in a commercially reasonable manner and will
keep the other informed of the process of collection. In the event the net
proceeds, after costs of collection, are less than the sum of the Pre-Closing
Obligations and the Post-Closing Obligations then owing from the Primary
Obligor, the
<PAGE>
10
net proceeds will be shared pro rata in relation to the ratio of the amounts
owing.
22. REBATE. For the period from the Closing Date through January 5,
1994, BP will pay Buyer a fee (the "Transition Fee") for diesel fuel: sold (i)
to Buyer under the Fuel Supply Agreement; and (ii) on consignment to third
parties by Buyer as agent for Seller under the Fuel Consign ment Agreement.
Subject to the cap set forth below, the Transition Fee will equal the difference
between the terminal based price of product and the weighted average of the
(OPIS (Low) Quotation less one half cent ($0.005) per gallon) appropriate to
each terminal. The Transition Fee shall be paid on or before January 25, 1994,
and shall equal:
Gallons sold times (BP Terminal price - (OPIS (Low) -
$0.005))
The Transition Fee shall in no event exceed Two Hundred Eighteen
Thousand Dollars ($218,000).
23. COUNTERPARTS. This Amendment No. 1 may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed by their respective
<PAGE>
11
authorized officers as of the day and year first above written.
BP EXPLORATION & OIL INC.
By: /s/ David J. Atton
-------------------------------------
Name: David J. Atton
Title: Vice President
TRUCKSTOPS CORPORATION OF AMERICA
By: /s/ David J. Atton
-------------------------------------
Name: David J. Atton
Title: Attorney-in-Fact
TA OPERATING CORPORATION
By: /s/ Rowan G.P. Taylor
-------------------------------------
Name: Rowan G.P. Taylor
Title: Vice President & Assistant Secretary
EXHIBIT 10.8
ENVIRONMENTAL AGREEMENT
This ENVIRONMENTAL AGREEMENT is entered into as of November 23, 1992
by and between Union Oil Company of California, a California corporation
("Seller"), and National Auto/Truckstops, Inc., a Delaware corporation (together
with its successors and assigns, "Buyer").
WHEREAS, Buyer and Seller are entering into certain asset purchase
agreements of even date herewith (the "Purchase Agreement" and the "California
Purchase Agreements"), and Buyer and Seller desire to set forth their respective
obligations with respect to environmental matters in connection therewith.
NOW, THEREFORE, in consideration of their mutual covenants, the
aforementioned parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein without definition
shall have the meanings ascribed to them in the Purchase Agreement. For purposes
of this Environ mental Agreement, the following terms shall have the mean ings
respectively ascribed below:
(a) The "ACQUISITION COST" shall have the meaning ascribed
to it in Section 3(f) hereof.
(b) The "A/TS NETWORK" means (i) the A/TS Network (as defined
in the Purchase Agreement) and (ii) the Excluded Locations (as defined in the
Purchase Agreement).
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2
(c) "AUTO/TRUCKSTOP" means a location in the A/TS Network,
including the associated Real Property and Acquisition Assets.
(d) "BUYER INDEMNITEES" means Buyer, Buyer's Affiliates and
their respective officers, directors, employees and agents, in their capacity as
such.
(e) "DAMAGES" means all demands, claims, actions or causes of
action, assessments, losses, damages, costs, expenses, liabilities, judgments,
awards, fines, sanctions, penalties, and charges, and amounts paid or payable in
settlement, including (y) interest on cash disbursements in respect of each of
the foregoing at the lesser of the Reference Rate in effect from time to time
and the maximum interest rate permitted by law, compounded monthly, from the
date each such cash disbursement is made until the Person incurring the same
shall have been indemnified in respect thereof and (z) reasonable costs, fees
and expenses of attorneys, experts, accountants, appraisers, consultants,
witnesses, investigators and any other agents of such Person.
(f) "ENVIRONMENT" means navigable waters, waters of the
contiguous zone, ocean waters, natural resources, surface waters, groundwater,
drinking water supply, land surface, subsurface strata, ambient air, both inside
and outside of buildings and structures, and plant and animal life on earth.
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3
(g) "ENVIRONMENTAL ACTION" means any Proceeding, notice,
order, agreement or evaluation by any Governmental Authority or other Person as
to whether Environmental Damages of any kind exist or may be sought arising out
of or relating to the ownership or operation of the A/TS Network or the
ownership, use or condition of the Acquisition Assets on or prior to the Closing
Date.
(h) "ENVIRONMENTAL COMPLIANCE ACTION" means any expenditure or
action necessary to cause any USTs, or any other pollution control equipment,
structure, device, plan or process, or any other equipment, structure, device,
plan or process subject to regulation pursuant to Environmental Laws, located at
any parcel of Real Property in the A/TS Network, to be in compliance with
applicable Environmental Laws in effect at the Closing Date.
(i) "ENVIRONMENTAL CONSULTANTS" shall have
the meaning ascribed to it in Section 3(d) hereof.
(j) "ENVIRONMENTAL DAMAGES" means any Damages imposed or
incurred by, under or pursuant to Environmental Laws in effect as of the Closing
Date; PROVIDED, HOWEVER, that with respect to conditions requiring Remedial
Action by Seller pursuant to Section 4(a), it means any Damages imposed or
incurred by, under or pursuant to Environmental Laws in effect as of the
Sign-Off Date.
(k) "ENVIRONMENTAL LAWS" means federal, state, local and
foreign laws, principles of common law, regulations and codes, as well as
orders, decrees, judgments
<PAGE>
4
or injunctions issued, promulgated, approved or entered thereunder, relating to
pollution or protection of the Environment.
(l) "HAZARDOUS SUBSTANCE" means any toxic substance or waste,
pollutant, hazardous substance or waste, contaminant, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste,
radioactive substance or waste, or any constituent of any such substance or
waste, including without limitation any such substance regulated under or
defined by any Environmental Law.
(m) "INDEPENDENT CONSULTANT" shall have the meaning ascribed
to it in Section 8 hereof.
(n) "MATERIAL ENVIRONMENTAL DAMAGES" means Environmental
Damages, individually or in the aggregate, in excess of $50,000.
(o) "PERMIT" means any approval, registration, authorization,
certificate, certificate of occupancy, consent, license, order or permit or
other similar authorization of or with any Governmental Authority (or any other
Persons) necessary for the operation of the Acquisition Assets or the business
of the A/TS Network in substantially the same manner as currently operated by
Seller and in compliance with applicable Environmental Laws, or affecting or
relating in any way to the business of the A/TS Network, including (i) any such
permit or approval relating to the transportation, storage or sale of any
<PAGE>
5
petroleum product or the discharge of by-products or waste material into a
public waste discharge system and (ii) any registration, approval or exemption
required under any state or federal franchise, business opportunity or similar
law.
(p) "PHASE I ENVIRONMENTAL AUDITS" means Phase I environmental
audits of the A/TS Network and the Real Property performed by ENSR at the
request of Buyer and Seller, in order to identify conditions likely to give rise
to Environmental Damages relating to or arising out of the operations or
conditions of the A/TS Network and the Real Property on or prior to the Closing
Date.
(q) "PHASE II ENVIRONMENTAL AUDITS" shall have the meaning
ascribed to it in Section 3(b) hereof.
(r) "RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the Environment or into or out of any property, including the
movement of Hazardous Substances through or in the air, soil, surface water,
groundwater or property.
(s) "REMEDIAL ACTION" means all actions, whether undertaken
pursuant to judicial or administrative order or otherwise, reasonably necessary
to comply with applicable Environmental Laws, to (A) clean up, remove, treat,
cover or in any other way adjust Hazardous Substances in the Environment; (B)
prevent or control the Release of Hazardous Substances so that they do not
migrate or endanger or threaten to endanger public health or welfare or the
<PAGE>
6
indoor or outdoor Environment; or (C) perform remedial studies, investigations,
restoration and post-remedial studies, investigations and monitoring on, about
or in any real property.
(t) "SIGN-OFF DATE" shall have the meaning ascribed to it in
Section 4(c).
(u) "USTS" means any underground or aboveground storage tanks
or related piping or dispensers.
2. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. To Seller's
knowledge, Seller hereby represents and warrants to Buyer as follows:
(a) Except as set forth in Schedule 2(a), the ownership and
operation of the A/TS Network and the ownership, use and condition of the
Acquisition Assets are in compliance with Environmental Laws, with the exception
of instances of noncompliance which are not, in the aggregate, reasonably likely
to result in Material Environmental Damages;
(b) Except as set forth in Schedule 2(b), Seller holds all
Permits required pursuant to Environmental Laws for ownership, and Seller and
the Operators, collectively, hold all Permits required pursuant to Environmental
Laws for operation, of the A/TS Network and the Acquisition Assets, with the
exception of any failures to hold any such Permits which are not, in the
aggregate, reasonably likely to result in Material Environmental Damages; all
such Permits are in full force and effect, no
<PAGE>
7
action to revoke or modify any of such Permits is pending, and the ownership and
operation of the A/TS Network and the ownership, use and condition of the
Acquisition Assets are in compliance with all terms and conditions thereof, with
the exception of instances of noncompliance which are not, in the aggregate,
reasonably likely to result in Material Environmental Damages;
(c) Except as set forth in Schedule 2(c), Seller has not
received any notification, whether direct or indirect, that the A/TS Network or
the Acquisition Assets are or may be subject to any Environmental Action;
(d) Except as set forth in Schedule 2(d), the A/TS Network and
the Acquisition Assets are not subject to any obligation pursuant to
Environmental Laws to perform Remedial Action; and
(e) Except as set forth in Schedule 2(e), the ownership and
operation of the A/TS Network and the Acquisition Assets are not reasonably
likely to be subject to Material Environmental Damages arising out of the
presence of Hazardous Substances on, in or under any location which is not part
of the A/TS Network.
3. ENVIRONMENTAL AUDITS.
(a) Phase I Environmental Audits of the A/TS Network and the
Real Property have been conducted by ENSR.
(b) Phase II environmental audits of the A/TS Network and the
Real Property shall be undertaken after the Closing Date by the Environmental
Consultants in
<PAGE>
8
accordance with the Phase II Scope of Work set forth as Schedule A hereto (the
"Phase II Environmental Audits").
(c) The costs of conducting the Phase II Environmental Audits
shall be borne as follows: (i) Buyer shall pay one-half of the cost of the Phase
II Environmental Audits up to $500,000, but in no event shall Buyer pay more
than $500,000 toward the cost of the Phase II Environmental Audits; and (ii)
Seller shall pay the remainder of the cost of the Phase II Environmental Audits.
The Environmental Consultants shall provide copies of the Phase II Environmental
Audits and all other reports, notices, test results and other communications
simultaneously to Buyer and Seller.
(d) The selection of the environmental consultants which shall
undertake each of the Phase II Environmental Audits (the "Environmental
Consultants") shall be determined by agreement of Seller and Buyer, which shall
jointly direct the Environmental Consultants in the conduct of the Phase II
Environmental Audits. In the event that the Seller and Buyer cannot agree on the
selection of an Environmental Consultant, each of the Seller and Buyer shall
select an environmental consultant, and those environmental consultants together
shall select the Environmental Consultant.
(e) Phase II Environmental Audits of each of the
Auto/Truckstops in the A/TS Network must be completed within seven (7) years of
the Closing Date, and Phase II
<PAGE>
9
Environmental Audits of a minimum of fourteen (14) Auto/Truckstops in the A/TS
Network must be completed during each year of that seven year period (each year
will be deemed to terminate on the anniversary of the Closing Date); PROVIDED,
HOWEVER, that the Phase II Environmental Audits for all Auto/Truckstops at which
steel underground storage tanks are located must be completed by December 31,
1996.
(f) If Seller proposes to perform any Environmental Compliance
Action and/or Remedial Action at any parcel of Real Property pursuant to a
remediation plan which will result in the cessation of all or substantially all
of the operations of the truckstop at that parcel of Real Property for a period
in excess of ninety (90) days, or if implementation of any such Environmental
Compliance Action and/or Remedial Action does result in the cessation of all or
substantially all of the operations of the truckstop at that parcel of Real
Property for a period in excess of ninety (90) days, Buyer shall have the option
to cause Seller to acquire from Buyer Buyer's interest in such parcel of Real
Property and in the related Acquisition Assets for the fair market value of the
same (giving due consideration to all relevant factors including, without
limitation, the replacement cost of the interest in the parcel of Real Property
and related Acquisition Assets), as determined by a qualified appraiser who is a
member of the Appraisal Institute, selected by mutual agreement of the parties
hereto (or, if the parties cannot agree, selected by
<PAGE>
10
the American Arbitration Association), calculated without diminution of the fair
market value on the basis of the estimated cost of any Remedial Action or
Environmental Compliance Action required pursuant to applicable Environmental
Laws or any other likely Environmental Damages (the "Acquisition Cost").
(g) If Seller reacquires from Buyer pursuant to Section 3(f)
an interest in any parcel of Real Property and related Acquisition Assets, at
such time as Seller has accomplished (i) all Remedial Action as is necessary to
achieve compliance with applicable Environmental Laws in effect as of the
Sign-Off Date (as that term is defined in Section 4(c)), including without
limitation the reduction of concentrations of Hazardous Substances to levels
which are below any levels or standards contained in any applicable
Environmental Laws in effect as of the Sign-Off Date, and (ii) all Environmental
Compliance Action as is necessary to achieve compliance with applicable
Environmental Laws in effect as of the Closing Date, Seller shall obtain either
(x) a written statement by a Governmental Authority with jurisdiction over the
condition to the effect that compliance with applicable Environmental Laws has
been achieved and no further action is required, or (y) a certification of an
independent engineer mutually acceptable to Buyer and Seller to the same effect,
for each and every Remedial Action and Environmental Compliance Action required
by applicable Environmental Laws at such parcel of Real
<PAGE>
11
Property, and, for each such parcel of Real Property, a certification of an
independent engineer mutually acceptable to Buyer and Seller to the effect that
the Hazardous Substances remaining on the parcel of Real Property will not cause
that parcel of Real Property to be subject to a restriction on use or transfer
pursuant to Environmental Laws. Upon receipt of all such statements and/or
certifications with respect to such parcel of Real Property, Seller shall
promptly so notify Buyer, and Buyer shall have the option, for a period of
ninety (90) days from receipt of such notice, to repurchase the interest in such
parcel of Real Property and related Acquisition Assets for the Acquisition Cost,
PROVIDED, HOWEVER, that, if Buyer repurchases the interest in such parcel of
Real Property and related Acquisition Assets, Seller shall remain obligated to
indemnify Buyer pursuant to Section 5 of this Environmental Agreement with
respect to the parcel of Real Property and related Acquisition Assets in the
same manner as if the interest in such parcel of Real Property and related
Acquisition Assets had not been reacquired by Seller pursuant to Section 3(f).
(h) All taxes resulting from the transactions contemplated by
Sections 3(f) and 3(g), including any sales and use taxes and any real property
transfer taxes, shall be borne by Seller.
4. Covenant to Undertake Remedial
ACTION AND ENVIRONMENTAL COMPLIANCE ACTION.
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12
(a) In the event that the Phase I Environmental Audits or the
Phase II Environmental Audits identify any conditions with respect to which any
Remedial Action or Environmental Compliance Action is required by applicable
Environmental Laws at or in the vicinity of any parcel of Real Property in the
A/TS Network (including the Excluded Locations), then, as to such conditions,
Seller shall, as promptly as is reasonably practicable and, with respect to
Environmental Compliance Actions, no later than ninety days after the Buyer and
Seller have agreed, or the Independent Consultant has determined, that such
Environmental Compliance Action is required, (i) undertake such Remedial Action
as is necessary to achieve compliance with applicable Environmental Laws in
effect as of the Sign-Off Date, including without limitation the reduction of
concentrations of Hazardous Substances to levels which are below any levels or
standards contained in any applicable Environmental Laws in effect as of the
Sign-Off Date, and (ii) undertake such Environmental Compliance Action as is
necessary to achieve compliance with applicable Environmental Laws in effect as
of the Closing Date; PROVIDED, HOWEVER, that any interest in a parcel of Real
Property which has been repurchased by Seller pursuant to Section 3(f) shall not
be subject to the requirements of this Section except as otherwise provided
herein; and, PROVIDED, FURTHER, that Section 5, rather than this Section 4,
shall apply in the event that Buyer has failed to operate
<PAGE>
13
the relevant Auto/Truckstop in a manner consistent with the operation of the
Auto/Truckstop prior to the Closing Date and such failure has resulted in a
Release of Hazardous Substances which materially increases the scope or extent
of the required Environmental Compliance Action or Remedial Action.
(b) After the Closing Date, Buyer and Seller each shall have
the right to determine whether notice to any Governmental Authority or any other
Person is required by applicable Environmental Laws with respect to conditions
identified in the Phase I Environmental Audits or the Phase II Environmental
Audits and each shall promptly notify the other of any determination that such
notice is required; and (ii) shall determine by agreement whether the conduct of
any Remedial Action or Environmental Compliance Action is required by applicable
Environmental Laws with respect to conditions identified in the Phase I
Environmental Audits or the Phase II Environmental Audits. In all other
respects, Seller shall have the exclusive right to manage and control all
actions undertaken pursuant to Section 4(a), subject to the other terms of this
Environmental Agreement.
(c) With respect to each condition requiring Remedial Action
or Environmental Compliance Action by Seller pursuant to Section 4(a), Seller
shall be required to deliver to Buyer either (i) a written statement by a
Governmental Authority with jurisdiction over the condition to the effect that
compliance with applicable Environmental
<PAGE>
14
Laws has been achieved and no further action is required, or (ii) a
certification of an independent engineer, mutually acceptable to Buyer and
Seller, to the same effect, and, in either case, a certification of an
independent engineer, mutually acceptable to Buyer and Seller, to the effect
that the Hazardous Substances remaining on the relevant parcel of Real Property
will not cause that parcel of Real Property to be subject to a restriction on
use or transfer pursuant to Environmental Laws. The date on which such written
statement of a Governmental Authority and/or certification of an independent
engineer is received by Buyer shall be the "Sign-Off Date."
(d) If the Phase I Environmental Audits or the Phase II
Environmental Audits identify conditions at any parcel of Real Property which
require Remedial Action which entails removal of any USTs, (i) to the extent
that the USTs cannot be reinstalled in a manner and condition which is in
compliance with Environmental Laws, Seller shall bear the cost of the
replacement USTs, and (ii) to the extent that the USTs can be reinstalled in a
manner and condition which is in compliance with Environmental Laws, Buyer shall
have the option, at its own expense, to provide replacement USTs.
5. SELLER'S ENVIRONMENTAL INDEMNIFICATION.
Seller hereby agrees that it shall indemnify,
defend and hold harmless the Buyer Indemnitees in respect of any and all
Environmental Damages incurred by any Buyer Indemnitee as a result of or
otherwise in connection with
<PAGE>
15
any condition existing on or before the Closing Date on, under, in or about any
of the Real Property or resulting from the ownership or operation of the A/TS
Network on or before the Closing Date (irrespective of whether any such
condition is identified in the Phase I Environmental Audits or the Phase II
Environmental Audits), including, without limiting the generality of the
foregoing, all such Environmental Damages arising out of or relating to (a) any
breach of any representation or warranty made by Seller in this Environmental
Agreement, or (b) the breach of any covenant, agreement or obligation of Seller
contained in this Environmental Agreement.
6. INDEMNIFICATION PROCEDURE.
(a) Whenever any claim shall arise for indemnification
hereunder, the Buyer Indemnitee shall promptly notify Seller of the claim and,
when known, the facts constituting the basis for such claim. If the Buyer
Indemnitee fails to provide Seller with such notice prior to the time at which
Seller's ability to defend against such claim is prejudiced by the failure to
provide such notice, Seller will not be obligated to indemnify the Buyer
Indemnitee with respect to such portion of the claim as to which Seller's
ability to defend has been prejudiced by such failure. Seller may, upon written
notice to the Buyer Indemnitee within 30 calendar days of receipt of the notice
specified in the first sentence of this paragraph, assume the defense of any
such claim if Seller acknowledges to the
<PAGE>
16
Buyer Indemnitee Buyer Indemnitee's right to indemnity pursuant hereto in
respect of the entirety of such claim. If Seller assumes the defense of any such
claim, Seller shall select counsel reasonably acceptable to the Buyer Indemnitee
to conduct the defense of such claim, shall take all steps necessary in the
defense or settlement thereof and shall at all times diligently and promptly
pursue the resolution thereof. If Seller shall have assumed the defense of any
claim in accordance with this Section, Seller shall be authorized to consent to
a settlement of, or the entry of any judgment arising from, any such claim,
without the prior written consent of the Buyer Indemnitee; PROVIDED, HOWEVER,
that Seller shall pay or cause to be paid all amounts arising out of such
settlement or judgment concurrently with the effectiveness thereof; PROVIDED,
FURTHER, that any Remedial Action undertaken by Seller in connection with the
defense of any such claim shall be in accordance with the requirements of
Section 4 hereof (including, without limitation, the requirement that such
Remedial Action be taken as is necessary to achieve compliance with applicable
Environmental Laws in effect as of the Sign-Off Date); PROVIDED, FURTHER, that
Seller shall not be authorized to encumber any of the assets of the Buyer
Indemnitees or to agree to any restriction that would apply to or affect any of
the Buyer Indemnitees, or its conduct of business; AND PROVIDED, FURTHER, that a
condition to any such settlement shall be a complete and unconditional
<PAGE>
17
release of the Buyer Indemnitee with respect to such claim. The Buyer Indemnitee
shall be entitled to participate in (but not control) the defense of any such
action, with its own counsel and at its own expense; PROVIDED, HOWEVER, that the
Buyer Indemnitee will not unilaterally communicate with the Persons or
Governmental Authorities which have made or will decide such claim or interfere
with the Seller's defense of such action, and will cooperate and consult with
Seller with respect to such Buyer Indemnitee's participation in the defense of
such action. Buyer shall, and shall cause each of its Affiliates, officers,
employees, consultants and agents and each other Buyer Indemnitee to, cooperate
fully with Seller in the defense of any claim pursuant to this Section. If
Seller does not assume the defense of any claim resulting therefrom in
accordance with the terms of this Section, the Buyer Indemnitee may defend
against such claim in such manner as it may deem appropriate, including settling
such claim after giving notice of the same to Seller, on such terms as the Buyer
Indemnitee may deem appropriate; PROVIDED, HOWEVER, that nothing in this Section
shall limit Seller's right to defend itself against any claim by a Governmental
Authority or any other Person other than the Buyer arising out of or relating to
the subject matter of any such claim for indemnification.
(b) Seller shall not be obligated to provide indemnification
pursuant to this Environmental Agreement with respect to matters or conditions
for which Buyer has
<PAGE>
18
not provided notice of a claim for indemnification pursuant to Section 6(a)
hereof before the eleventh anniversary of the Closing Date; PROVIDED, HOWEVER,
that any claim for indemnification pursuant to this Environmental Agreement
which concerns matters or conditions at an Auto/Truckstop may be timely
asserted, and Seller shall be obligated to provide indemnification with respect
thereto, by notice provided at any time before the later of (i) the eleventh
anniversary of the Closing Date, or (ii) the latest Sign-Off Date for any
Environmental Compliance Actions or Remedial Actions undertaken pursuant to
Section 4 of this Environmental Agreement at the Auto/Truckstop which is the
subject of the claim for indemnification.
(c) Notwithstanding any other provision hereof, the right of
the Buyer to indemnification pursuant to this Environmental Agreement shall not
be diminished in any way by the knowledge of the Buyer, and/or its failure to
inform Seller, prior to the Closing Date of conditions giving rise to
Environmental Damages which are otherwise indemnifiable pursuant to this
Environmental Agreement.
7. COOPERATION, ACCESS, REASONABLENESS.
(a) Buyer and Seller shall cooperate with respect to the
undertaking of their mutual obligations pursuant to this Environmental
Agreement, including providing one another reasonable access to relevant records
and officers and employees with knowledge of the matters at issue, and shall
inform one another in reasonably prompt
<PAGE>
19
fashion of all significant developments concerning conditions or actions giving
rise to claims for indemnification hereunder.
(b) Seller and its representatives shall have the right, at
reasonable times and upon reasonable prior notice, to enter the parcels of Real
Property in the A/TS Network for the purpose of undertaking activities relating
to its obligations pursuant to this Environmental Agreement.
(c) All activities relating to the parties' obligations
pursuant to this Environmental Agreement must be undertaken in a manner in which
a prudent business person acting in a commercially reasonable manner would
undertake such work, minimizing interruptions of operations at the relevant
parcel of Real Property in the A/TS Network.
(d) Nothing in this Environmental Agreement shall prevent
Buyer from (i) taking any reasonable and prudent interim measures in the event
of an imminent and substantial endangerment to human health, welfare or the
Environment, without prejudice to Buyer's right to seek indemnification therefor
under this Environmental Agreement, (ii) taking any reasonable action for which
Buyer does not elect to seek indemnification, in whole or in part, under this
Agreement and (iii) taking any action required or directed by any Governmental
Authority of competent jurisdiction, without prejudice to Buyer's right to seek
indemnification therefor under this Environmental Agreement.
<PAGE>
20
8. DISPUTE RESOLUTION. If a dispute arises between the parties
hereto and that dispute cannot be resolved within a reasonable period of time,
either party hereto may notify the other party that the dispute is to be
submitted to arbitration. In the event that notice of submission of the dispute
to arbitration is provided by either party, the parties jointly shall select an
environmental consultant or engineer reasonably qualified to arbitrate disputes
arising under Environmental Laws (the "Independent Consultant"). The Independent
Consultant shall have the right to obtain the assistance of qualified legal
counsel in arbitrating the dispute, if the Independent Consultant determines
that such assistance is necessary. Notwithstanding any other provision hereof,
the parties hereto shall each bear one-half of the cost of the Independent
Consultant and its legal counsel, if any. If the parties hereto cannot agree on
an Independent Consultant, they shall apply to the American Arbitration
Association for the appointment of an Independent Consultant. The Independent
Consultant shall establish an expedited procedure for hearing and resolving the
dispute. Unless the parties hereto agree otherwise, the Independent Consultant
shall be required to render a decision resolving the dispute, with a written
opinion stating the reasons therefor, no more than 60 days after the Independent
Consultant is retained. The decision of the Independent Consultant shall be
final and binding and a court of
<PAGE>
21
competent jurisdiction may enter judgment thereon. The dispute resolution
procedures of this Section 8 shall constitute the exclusive remedy of the
parties hereto with respect to any disputes arising out of this Environmental
Agreement.
9. CONFLICT WITH PURCHASE AGREEMENT. This Environmental Agreement is
intended to modify and supplement certain of the terms of the Purchase Agreement
with respect to Seller's obligations to Buyer. In the event of any conflict or
ambiguity between the Purchase Agreement and this Environmental Agreement, the
provisions of this Environmental Agreement shall control.
10. OTHER RIGHTS. All rights and remedies of Buyer hereunder shall
be cumulative and are expressly in addition to those now or hereafter existing
under the Purchase Agreement, or at law or in equity, any of which alone or
together may be fully exercised by Buyer.
11. FURTHER ASSURANCES. Each party agrees to execute additional
instruments and documents and do all such further things as may reasonably be
requested by the other in order to carry out the intent of this Environmental
Agreement.
12. WAIVERS AND AMENDMENTS.
(a) Any provision of this Environmental Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Buyer and Seller, or in the case of a
<PAGE>
22
waiver, by the party against whom the waiver is to be effective.
(b) No waiver by either party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights existing by virtue of any prior or subsequent occurrence.
No single or partial exercise by either party of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
13. NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given (i) if personally
delivered, when so delivered, (ii) if mailed, two Business Days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth below, (iii) if
given by telecopier, once such notice or other communication is transmitted to
the telecopier number specified below and the appropriate answer back or
telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed
<PAGE>
23
in accordance with the provisions of clause (ii) above or (iv) if sent through a
reputable overnight delivery service in circumstances in which such service
guarantees next day delivery, the day following being so sent.
(a) if to Seller, to:
Union Oil Company of California
911 Wilshire Boulevard
Suite 1410
Los Angeles, California 90017
Attention: A.J. Eliskalns
and by telecopy to: (213) 977-5835
with a copy to:
Union Oil Company of California
1201 West 5th Street
Los Angeles, California 90017
Attention: W. Thomas Skok
and by telecopy to: (213) 977-7827
(b) If to Buyer, to:
National Auto/Truckstops, Inc.
c/o Unocal Petroleum Products and
Chemicals Division
1650 East Golf Road
Schaumburg, Illinois 60196-1088
Attention: William Osborne
and by telecopy to: (708) 330-5835
with a copy to:
The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Louis J. Mischianti
and by telecopy to: (212) 318-1360
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
<PAGE>
24
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Stuart I. Oran, Esq.
and by telecopy to: (212) 757-3990
Either party may give any notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
individual for whom it is intended. Either party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
14. MISCELLANEOUS. This Environmental Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Environmental Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. In the
event of a transfer by Buyer of all or any portion of its interest in the A/TS
Network, Buyer may assign this Environmental Agreement, to the extent that it
relates to the interest transferred, to any one or more persons, firms or
entities which are successors to such interest, including any successor to the
ownership of any of the Acquisition Assets, upon notice to, but without the
consent of, Seller. Buyer
<PAGE>
25
shall also be permitted to assign any or all of its rights hereunder to one or
more of its lenders. This Environmental Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors in
interest and assigns by operation of law or otherwise. This Environmental
Agreement shall be construed and interpreted in accordance with the laws of the
State of California.
15. SEVERABILITY, ETC. If any provision of this Environmental
Agreement, or the application thereof to any person, place or circumstance,
shall be held by a court of competent jurisdiction to be invalid, unenforceable
or void, the remainder of the Agreement and such provisions as applied to other
Persons, places and circumstances shall remain in full force and effect. This
Environmental Agreement shall be a continuing agreement, and without limiting
the above, shall survive satisfaction of the conditions of the Environmental
Agreement. The remedies of Buyer hereunder are not intended to be exclusive of
any other right or remedy now or hereafter existing under or existing at law, in
equity, or by statute, any of which alone, or together, may be fully exercised
by Buyer.
16. POWER AND AUTHORITY. Each party to the Environmental Agreement
hereby certifies that it: (i) is a corporation duly formed, validly existing and
in good standing under the laws of the state of its incorporation; (ii) has full
power and authority to execute this Environmental Agreement and any and all
documents which may
<PAGE>
26
be related thereto; and (iii) has, to the extent necessary, obtained
authorization from its Board of Directors to execute this Environmental
Agreement. The undersigned representative(s) of each party certifies that he or
she is fully authorized by the party whom he or she represents to enter into the
terms and conditions of this Environmental Agreement and to bind legally such
party to this Environmental Agreement.
17. JURISDICTION. Each of the parties hereto irrevocably submits to
the jurisdiction of any state or federal court sitting in the County of Los
Angeles, State of California, in any action or proceeding arising out of or
relating to this Environmental Agreement, agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court, and
agrees not to contest the jurisdiction (IN REM or IN PERSONAM) or power or
decision of such court over or pertaining to the party or with respect to the
subject matter in any court within or without the United States other than
appropriate appellate courts. Each of the parties hereto irrevocably waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
the other party hereto with respect thereto.
18. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in
<PAGE>
27
the construction or interpretation hereof. All references to a Section include
all subparts hereof.
19. CONSTRUCTION. The language used in this Environmental Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against
either party. Whenever required by the context, any gender shall include any
other gender, the singular shall include the plural and the plural shall include
the singular. Whenever the word "including" is used in this Environmental
Agreement, it shall be deemed to mean "including, without limitation,"
"including, but not limited to" or other words of similar import such that the
items following the word "including" shall be deemed to be a list by way of
illustration only and shall not be deemed to be an exhaustive list of applicable
items in the context thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Environmental Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
UNION OIL COMPANY OF CALIFORNIA
By: /s/ Neal E. Schmale
-------------------------------
Name: Neal E. Schmale
-----------------------------
Title: Sr. Vice President
----------------------------
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Louis J. Mischianti
-------------------------------
Name: Louis J. Mischianti
Title: Treasurer
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ Hugh D. Schmieder
-------------------------------
Name: Hugh D. Schmieder
Title: Vice President
EXHIBIT 10.9
ENVIRONMENTAL AGREEMENT
This ENVIRONMENTAL AGREEMENT is entered into as of July 22, 1993 by
and among BP Exploration & Oil Inc., an Ohio corporation ("BP"), Truckstops
Corporation of America Inc., a Delaware corporation ("TA," and together with BP,
"Seller"), and T.S. Network Corp., a Delaware corporation (together with its
successors and assigns, "Buyer").
WHEREAS, Buyer and Seller are entering into an asset purchase
agreement of even date herewith (the "Asset Purchase Agreement"), and Buyer and
Seller desire to set forth their respective obligations with respect to
environmental matters in connection therewith.
NOW, THEREFORE, in consideration of their mutual covenants, the
aforementioned parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used herein without definition
have the meanings ascribed to them in the Asset Purchase Agreement. For purposes
of this Environmental Agreement, the following terms shall have the meanings
respectively ascribed below:
(a) "A/TS NETWORK means the Real Property and Purchased Assets
comprising a national auto/truckstop network.
(aa) "AUTO/TRUCKSTOP" means a location in the A/TS Network,
including the associated Real Property and Purchased Assets.
(b) "BUYER INDEMNITEES" means Buyer, Buyer's Affiliates and
their respective officers, directors, employees and agents, in their capacity as
such.
<PAGE>
2
(c) "ENVIRONMENT" means navigable ocean waters, natural
resources, surface waters, groundwater, drinking water supply, land surface,
subsurface strata and ambient air both inside and outside of buildings and
structures.
(d) "ENVIRONMENTAL ACTION" means any Proceeding, notice,
order, agreement or evaluation by any Governmental Authority or other Person as
to whether Environmental Damages of any kind exist or may be sought arising out
of or relating to the ownership or operation of the A/TS Network or the
ownership, use or condition of the Purchased Assets on or prior to the Closing
Date.
(e) "ENVIRONMENTAL COMPLIANCE ACTION" means any activity
reasonably necessary to cause any Storage Tank Systems, any pollution control
equipment, structure, device, plan or process, or any other equipment,
structure, device, plan or process subject to regulation pursuant to
Environmental Laws, located at any parcel of Real Property in the A/TS Network,
to be in compliance with applicable Environmental Laws in effect at the Closing
Date.
(f) "ENVIRONMENTAL CONSULTANTS" shall have the meaning
ascribed to it in Section 3(b) hereof.
(g) "ENVIRONMENTAL DAMAGES" means any Damages imposed or
incurred by, under or pursuant to Environmental Laws in effect as of the Closing
Date; PROVIDED, HOWEVER, that with respect to conditions requiring Remedial
Action by Seller pursuant to Section 4(a), it means any Damages imposed or
incurred by, under or pursuant to Environmental Laws in effect as of the
Sign-Off Date.
(h) "ENVIRONMENTAL LAWS" means federal, state and local laws,
principles of common law, regulations and codes, as well as orders, decrees,
<PAGE>
3
judgments or injunctions issued, promulgated, approved or entered thereunder,
relating to pollution or protection of the Environment.
(i) "HAZARDOUS SUBSTANCE" means any toxic substance or waste,
pollutant, hazardous substance or waste, contaminant, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste, or any
toxic or hazardous constituent of any such substance or waste, including without
limitation any such substance regulated under or defined by any Environmental
Law.
(j) "INDEPENDENT CONSULTANT" shall have the meaning
ascribed to it in Section 8 hereof.
(k) "MATERIAL ENVIRONMENTAL DAMAGES" means Environmental
Damages, individually or in the aggregate, in excess of $250,000 in the
aggregate.
(l) "PERMIT" means any approval, registration, authorization,
certificate, certificate of occupancy, consent, license, order or permit or
other similar authorization of or with any Governmental Authority required by
applicable Environmental Laws in effect on or prior to the Closing Date for the
ownership or operation of the Purchased Assets or the business of the A/TS
Network.
(m) "PHASE I ENVIRONMENTAL AUDITS" means audits of the A/TS
Network and the Real Property performed by and on behalf of Sellers in
accordance with the Phase I scope of work attached hereto as Exhibit A.
(n) "PHASE II ENVIRONMENTAL AUDITS" means assessments of
the A/TS Network and the Real Property in accordance with the Phase II scope of
<PAGE>
4
work attached hereto as Exhibit B, as modified to incorporate any additional
work recommended at individual Auto/Truckstops by the Phase I Environmental
Audits.
(o) "RELEASE" means any spilling, leaking, emitting, pumping,
injecting, discharging, escaping, leaching or disposing of Hazardous Substances
into the Environment.
(p) "REMEDIAL ACTION" means all activities, whether undertaken
pursuant to judicial or administrative order or otherwise, reasonably necessary
to comply with applicable Environmental Laws, to investigate, monitor and, if
required, clean up, remove, treat, cover or in any other way adjust Hazardous
Substances in the Environment but excluding Environmental Compliance Action.
There can be more than one Remedial Action at a Real Property.
(q) "SELLER INDEMNITEES" means Seller, Seller's Affiliates and
their respective officers, directors, employees and agents, in their capacity as
such.
(r) "SELLER'S KNOWLEDGE" or "knowledge of any Seller"
means the actual knowledge of any of the following persons: J.R. Rocco,
R.K. Purvis, R.J. Ress, J.F. Cullen, R.K. Morris, Harrison T. Bubb, Keith A.
McCabe, Peter D. Wilbur, Ed Kuhn or Jim George.
(s) "SIGN-OFF DATE" shall have the meaning ascribed to it in
Section 4(c).
(t) "STORAGE TANK SYSTEMS" means any system of one or more
underground or aboveground storage tanks and any related piping.
2. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. To Seller's
knowledge, Seller hereby represents and warrants to Buyer as follows:
<PAGE>
5
(a) Except as set forth in Schedule 1, the ownership and
operation of the A/TS Network and the ownership and use of the Purchased Assets
are in substantial compliance with Environmental Laws, with the exception of
instances of noncompliance which are not reasonably likely to result in Material
Environmental Damages;
(b) Except as set forth in Schedule 2, Seller holds all
Permits, with the exception of any failures to hold any such Permits which are
not reasonably likely to result in Material Environmental Damages; all such
Permits are in full force and effect, no action to revoke or modify any of such
Permits is pending, and the ownership and operation of the A/TS Network and the
ownership and use of the Purchased Assets are in compliance with all terms and
conditions thereof, with the exception of instances of noncompliance which are
not reasonably likely to result in Material Environmental Damages;
(c) Except as set forth in Schedule 3, Seller has not received
any notification, whether direct or indirect, that the A/TS Network or the
Purchased Assets are or may be subject to any Environmental Action or any
obligation pursuant to Environmental Laws to perform Remedial Action, or subject
to Material Environmental Damages, arising out of the presence of Hazardous
Substances on, in or under any location which is not part of the A/TS Network.
3. ENVIRONMENTAL AUDITS.
(a) Phase I Environmental Audits of the A/TS Network and the
Real Property have been or will be conducted prior to the Closing Date.
<PAGE>
6
(b) Phase II Environmental Audits of the A/TS Network and the
Real Property have been or will be conducted prior to the Closing Date by an
environmental consultant, chosen by the Seller from a list of environmental
consultants agreed to by Buyer and Seller (hereinafter, the "Environmental
Consultant"); PROVIDED, HOWEVER, that Phase II Environmental Audit activities
will not be performed at any area of any Auto/Truckstop at which Seller is
performing Remedial Action pursuant to the requirements of any Governmental
Authority as of the time of the Phase II Environmental Audit of the
Auto/Truckstop.
(c) The costs of conducting the Phase I Environmental Audits
and Phase II Environmental Audits shall be borne by Seller. Seller shall have
sole responsibility for the direction of Environmental Consultants in the
conduct of the Phase II Environmental Audits. Seller shall promptly provide to
Buyer copies of the Phase I and Phase II Environmental Audits and all associated
sampling data, notices, test results, draft reports and correspondence with any
Governmental Authority. Phase I and Phase II Audit Reports shall be provided to
Buyer no less than 14 days prior to the Closing Date.
4. Covenant to Undertake Remedial Action
AND ENVIRONMENTAL COMPLIANCE ACTION.
(a) In the event that the Phase I Environmental Audits or the
Phase II Environmental Audits identify any conditions with respect to which any
Remedial Action or Environmental Compliance Action is required by applicable
Environmental Laws at any parcel of Real Property, then, as to such conditions,
Seller shall, as promptly as is reasonably practicable, (i) undertake such
Remedial
<PAGE>
7
Action as is necessary to achieve compliance with applicable Environmental Laws
in effect as of the Sign-Off Date; and (ii) undertake such Environmental
Compliance Action as is necessary to achieve compliance with applicable
Environmental Laws in effect as of the Closing Date; provided that Section 7(b),
rather than this Section 4(a) shall apply, according to its terms, to a Remedial
Action being performed by Seller in the event that Buyer has failed to operate
the relevant Auto/Truckstop in a manner consistent with the operation of the
Auto/Truckstop prior to the Closing Date and in accordance in material respects
with applicable Environmental Laws in effect after the Closing Date and such
failure has resulted in a Release of Hazardous Substances.
(b) Seller shall have the exclusive right to manage and
control all Remedial Actions and Environmental Compliance Actions (collectively
"Actions") undertaken pursuant to Section 4(a), subject to the requirements of
this Environmental Agreement.
(c) With respect to each condition requiring Remedial Action
by Seller pursuant to Section 4(a), Seller shall deliver to Buyer either (i) a
written statement by a Governmental Authority with jurisdiction over the
condition to the effect that compliance with applicable Environmental Laws has
been achieved or no further action is required under applicable Environmental
Laws, or (ii) a certification of an independent consultant, mutually acceptable
to Buyer and Seller to the same effect. The date on which such written statement
of a Governmental Authority and/or certification of an independent consultant is
received by Buyer shall be the "Sign-Off Date" for the Remedial Action in issue.
<PAGE>
8
(d) If Remedial Action entails the removal of all or any part
of any otherwise sound Storage Tank System, Seller shall restore that portion of
the Storage Tank System in compliance with Environmental Laws, provided that
Buyer shall have the option, at its own expense, to modify the Storage Tank
System.
5. STORAGE TANK SYSTEM TESTING.
(a) TESTING STORAGE TANKS. Seller, at Seller's expense, shall
conduct a tightness test of any underground storage tank and associated piping
("UST System"), which is in use on the Real Properties relating to the storage
or dispensing of motor fuel, heating fuel or used oil, PROVIDED, HOWEVER, that
Seller shall not be obligated to perform a tightness test on any UST System that
has been tightness tested during the 6-month period prior to the Closing Date.
Seller shall use reasonable efforts to test UST Systems at sites comprised
primarily of steel tanks within 3 months prior to Closing. Tightness tests on
any UST System shall be performed in accordance with the requirements of 40 CFR
Part 280. At least fourteen (14) business days prior to the Closing Date, Seller
shall furnish to Buyer copies of the test results and any study reports(s).
(b) RIGHTS TO REPAIR, REPLACE OR REMOVE.
(i) FAILED FIBERGLASS TANKS: If any fiberglass tank
does not test tight at any Real Property, Seller will, at its option,
either repair or remove and replace any such failed fiberglass tank with a
like-kind tank in accordance with applicable Environmental Laws.
(ii) If Seller chooses to repair said tank, such
repair shall be done in accordance with applicable Environmental Laws and
in
<PAGE>
9
accordance with manufacturer specifications. Upon completion of any tank
repair, Seller shall cause the tank again to be tightness tested and shall
furnish copies of the test results to Buyer. If test results indicate that
a repaired tank cannot be suitably repaired, Seller shall replace the tank
with a like-kind tank.
(iii) FAILED FIBERGLASS PIPING: If any fiberglass
piping does not test tight at any Property, Seller will, at its option,
either repair or replace any such failed fiberglass piping with like-kind
piping.
(A) If Seller chooses to replace said piping, such
replacement shall be done in accordance with applicable
Environmental Laws and in accordance with manufacturer
specifications.
(B) If Seller chooses to repair said piping, such
repair shall be done in accordance with applicable Environmental
Laws and in accordance with manufacturer specifications. Upon
completion of any piping repair, Seller shall cause the piping to
again be tightness tested and shall furnish copies of the test
results to Buyer. If test results indicate that repaired piping
cannot be suitably repaired, Seller shall replace the repaired
piping with like-kind piping.
(iv) FAILED STEEL TANKS: If any steel tank does not
test tight at any Real Property, Seller will, at its option, either repair
or remove and replace any such failed steel tank in accordance with
applicable Environmental Laws.
<PAGE>
10
If Seller chooses to replace a steel tank, replacement shall be done
with a tank of Seller's choosing in accordance with applicable
Environmental Laws and in accordance with manufacturer specifications. If
Buyer requests the replacement of an otherwise sound steel tank at a Real
Property, the upgrade of any tank at a Real Property, or the installation
of a replacement tank at a different location on a Real Property, Buyer
shall bear the additional cost of replacing the otherwise sound tank,
upgrading the tank or relocating the tank field. Buyer shall reimburse
Seller within thirty (30) days after receipt of Seller's request for
payment and invoices. This payment provision shall survive any termination
of the Asset Purchase Agreement, in whole or as it relates to a specific
Auto/Truckstop.
(v) FAILED STEEL PIPING: If any steel piping does not
test tight at any Real Property, Seller will replace such failed steel
piping with like-kind piping in accordance with applicable Environmental
Laws and in accordance with manufacturer specifications. If Buyer requests
the replacement of all piping at a Real Property or the upgrade of piping
or relocation of replacement piping to a different location on a Real
Property, Buyer shall bear the additional cost of replacing the
non-leaking piping, relocating the piping and/or upgrading the piping.
Buyer shall reimburse Seller within thirty (30) days after receipt of
Seller's request for payment and invoices. This payment provision shall
survive any termination of the Asset Purchase Agreement, in whole or as it
relates to a specific Auto/Truckstop.
<PAGE>
11
6. STEEL UST SYSTEMS REPLACEMENT. All steel UST Systems known to
Seller to be located on a Property are identified on Schedule 4. Those steel UST
Systems that test tight will be conveyed to Buyer pursuant to the provisions of
the Asset Purchase Agreement. After the Closing, Buyer shall comply with all
Environmental Laws applicable to Buyer in respect of such steel UST Systems,
including without limitation any required removal, replacement or closure of
such UST Systems. Buyer shall provide to Seller a copy of any such closure
report within thirty (30) business days after receipt thereof. Buyer shall
provide Seller with at least thirty (30) days' notice prior to removing such
tanks. Seller and/or its representative shall have the right to be present on a
property doing any tank removal pursuant to this Section.
7. CONTAMINATION DISCOVERED AFTER CLOSING.
(a) THIRD-PARTY CONTAMINATION. If, after the Closing Date,
contamination requiring Remedial Action is discovered at a Real Property
(whether from on-site or off-site), the Party discovering such contamination
shall promptly notify the other Party and shall report the source of any
identified Release to the appropriate Governmental Authorities. Buyer and Seller
shall cooperate in all testing and investigation necessary to establish the
source of, and responsible party with respect to, the cost of Remedial Action
caused by such contamination. Buyer and Seller agree to cooperate with each
other in either's efforts to seek reimbursement from third parties of costs
associated with such Release. If the investigation demonstrates that the
Hazardous Substances requiring Remedial Action existed on the Real Property
prior to the Closing Date, Seller shall have responsibility for such
<PAGE>
12
occurrence, including the costs of the investigation referred to in this
paragraph. Otherwise, Buyer shall have responsibility for such occurrence,
including the costs of the related investigation referred to in this paragraph.
Otherwise, Buyer shall have responsibility for such occurrence, including the
costs of the related investigation referred to in this paragraph.
(b) CONTAMINATION BY BUYER. If, after the Closing Date but
before Seller has completed a Remedial Action pursuant to this Environmental
Agreement at a Real Property, or before Buyer has taken over responsibility for
such Remedial Action, Buyer's operations cause a Release of any Hazardous
Substance requiring reporting under Environmental Laws at such Real Property,
the Party discovering such Release shall promptly notify the other Party. Buyer
shall act promptly to minimize the effects of such Release. Buyer shall hire at
Buyer's expense a consultant mutually acceptable to Seller to assess the effect
of such Release on any Remedial Action at the Real Property. In addition, the
consultant will estimate the remaining costs of completing the Remedial Action
that would have been incurred had there been no new Release (the "Original Cost
of Completion"), as well as the additional cost of completing the Remedial
Action caused by the new Release (the "Revised Cost of Completion"). In the
event that Buyer and Seller are unable to agree upon these estimates, either may
seek prompt resolution of the dispute pursuant to Paragraph 12 of this
Agreement. In the event that the Revised Cost of Completion exceeds the Original
Cost of Completion, Seller shall pay to Buyer the present value of the Original
Cost of Completion. In exchange for such payment, Buyer shall take over
responsibility for the original Remedial Action and the Remedial Action caused
<PAGE>
13
by the new Release (the "Expanded Remedial Action"), and shall provide to Seller
a release of liability for the costs of completing the Expanded Remedial Action.
By acceptance of such payment and/or execution of any such release, Buyer shall
be deemed to have accepted responsibility for the Expanded Remedial Action as
set forth above. In the event that the Original Costof Completion exceeds the
Revised Cost of Completion, Buyer will pay Seller the present value of the
Revised Cost of Completion, Seller will retain responsibility for completion of
the Expanded Remedial Action, and Seller will provide Buyer with a release of
liability for the cost of completing the Expanded Remedial Action.
8. SELLER'S ACCESS AFTER CLOSING. For purposes of this Agreement,
Seller's access to the Real Property after Closing shall be subject to the
following terms and conditions. For purposes of this Section, "Owner" shall
refer to Buyer and/or its designated representative and "Licensee" shall refer
to Seller and/or its designated representative.
(a) Owner will permit access to and entry upon a Real Property
to Licensee as necessary to conduct and complete Actions pursuant to this
Environmental Agreement.
(b) Except in the event of an emergency, Licensee shall
provide Owner with at least five (5) business days' notice prior to beginning
any drilling, construction, and equipment installation, as well as other
activity that may disrupt normal business operations on a Real Property.
(c) Owner shall use its best efforts not to unreasonably
interfere with the Licensee while Licensee exercises its rights of ingress and
egress to
<PAGE>
14
perform the Actions. Licensee shall use its best efforts to perform the Action
in a manner which minimizes disruption to Owner's business activities and to the
Real Property.
(d) Promptly upon completion of an Action, Licensee shall
restore the Real Property to substantially the condition which existed
immediately prior to the commencement of the Action, and said restoration is to
be completed to Owner's reasonable satisfaction.
(e) Sellers shall promptly provide to Owner copies of all
scopes of work, final reports, correspondence with any Governmental Authority,
and sampling data related to, or which result from, any Actions on a Real
Property. Owner shall provide to Licensee copies of any correspondence with or
between Owner and any applicable Governmental Authority which involves or
relates to any matters described in this Environmental Agreement or which could
impact Licensee's Actions at any Real Property.
(f) Prior to and during an Action, Licensee shall take all
steps which are reasonably necessary to prevent injury to persons or damage to
property resulting from or in any way connected with the Action.
(g) Licensee shall indemnify and hold harmless the Owner
against any Damages incurred by Owner, and any liens and encumbrances that may
be filed or attach against a Real Property, in connection with Actions that
Licensee performs on a Real Property. No contractor, subcontractor, material
man, agent, officer, director or employee of the Licensee shall have any right
to a lien against a Real Property or any part thereof for any work, labor or
materials furnished to
<PAGE>
15
Licensee for the Actions performed on a Real Property, unless otherwise mandated
by applicable law.
(h) After Closing, Licensee's right of access to a Real
Property shall terminate when (i) Owner assumes responsibility for the Remedial
Action at such Real Property, or (ii) Licensee completes the Actions at such
Real Property pursuant to this Environmental Agreement.
(i) Buyer will pay any and all costs, claims, rents or charges
which Seller may incur if access to a Real Property is not granted in accordance
with this Environmental Agreement.
(j) Owner agrees to be responsible and reimburse Licensee for
any damage or loss that Owner, its employees, agents, invitees, lessees,
occupants of a Real Property, contractors, successors or assigns cause, whether
sole, joint or concurrent, to any test or monitoring well, remediation equipment
and/or associated piping, or any other property or equipment installed or
otherwise used by Licensee.
9. SELLER'S ENVIRONMENTAL INDEMNIFICATION.
(a) Subject to the limitations contained herein, Seller hereby
agrees to indemnify, defend and hold harmless the Buyer Indemnitees in respect
of any and all Environmental Damages incurred by any Buyer Indemnitee as a
result of or otherwise in connection with the Release and subsequent migration
of Hazardous Substances on or before the Closing Date on, under, in or about any
of the Real Property, or resulting from the ownership or operation of the A/TS
Network and the Purchased Assets on or before the Closing Date, irrespective of
whether any such condition is identified in the Phase I Environmental Audits or
the Phase II
<PAGE>
16
Environmental Audits, including, without limiting the generality of the
foregoing, all such Environmental Damages arising out of or relating to (a) any
breach of any representation or warranty made by Seller in this Environmental
Agreement or (b) the breach of any covenant, agreement or obligation of Seller
contained in this Environmental Agreement.
(b) Subject to the limitations contained herein, Buyer hereby
agrees to indemnify, defend and hold harmless the Seller Indemnitees in respect
of any and all Environmental Damages incurred by any Seller Indemnitees as a
result of or otherwise in connection with the Release of any Hazardous Substance
after the Closing Date on, under, in or about any of the Real Property or
resulting from the ownership or operation of the A/TS Network and the Purchased
Assets after the Closing Date, including, without limiting the generality of the
foregoing, all such Environmental Damages arising out of or relating to (a) any
breach of any representation or warranty made by Buyer in these Provisions, or
(b) the breach of any covenant, agreement or obligation of Buyer contained in
these Provisions, provided, however, that Buyer shall have no obligation to
indemnify Seller for any Environmental Damages with respect to which Seller has
agreed to indemnify Buyer, as set forth in Section 9(a) hereof.
10. INDEMNIFICATION PROCEDURE.
(a) Whenever any claim shall arise for indemnification
hereunder, the party seeking indemnification (the "Indemnitee") shall promptly
notify the other party (the "Indemnitor") of the claim and, to the extent known,
the facts constituting the basis for such claim. If an Indemnitor's ability to
defend against a
<PAGE>
17
suit, action, notice, demand or proceeding by a Governmental Authority or third
party ("Proceeding") is prejudiced by the failure or delay in providing such
notice, the Indemnitor will not be obligated to indemnify the Indemnitee with
respect to such portion of the liability arising from the Proceeding as to which
the Indemnitor's ability to defend has been prejudiced by such failure or delay.
An Indemnitor may, upon written notice to the Indemnitee within 30 calendar days
of receipt of a notice in respect of a Proceeding, assume the defense of any
such Proceeding if the Indemnitor acknowledges the Indemnitee's right to
indemnify pursuant hereto in respect of the entirety of such Proceeding. If an
Indemnitor assumes the defense of any such Proceeding, the Indemnitor shall
select counsel reasonably acceptable to the Indemnitee to conduct the defense of
such Proceeding, shall take all steps necessary in the defense or settlement
thereof and shall at all times diligently and promptly pursue the resolution
thereof. If an Indemnitor shall have assumed the defense of any Proceeding in
accordance with this Section, the Indemnitor shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any such Proceeding,
without the prior written consent of the Indemnitee; PROVIDED, HOWEVER, that the
Indemnitor shall pay or cause to be paid all amounts arising out of such
settlement or judgment concurrently with the effectiveness thereof; PROVIDED,
FURTHER, that any Remedial Action undertaken by Seller in connection with the
defense of any such Proceeding in which Seller is acting as an Indemnitor shall
be in accordance with the requirements of Section 4 hereof (including, without
limitation, the requirement that such Remedial Action be taken as is necessary
to achieve compliance with applicable Environmental Laws in effect as of the
Sign-Off Date); PROVIDED, FURTHER,
<PAGE>
18
that an Indemnitor shall not be authorized to encumber any of the assets of any
Indemnitee or to agree to any restriction that would apply to or affect the
Indemnitee, or its conduct of business; AND PROVIDED, FURTHER, that a condition
to any such settlement shall be a complete and unconditional release of the
Indemnitee with respect to such Proceeding. An Indemnitee shall be entitled to
participate in (but not control) the defense of any such Proceeding, with its
own counsel and at its own expense; PROVIDED, HOWEVER, that the Indemnitee will
not unilaterally communicate with the Persons or Governmental Authorities which
have initiated or will decide such Proceeding or interfere with the Indemnitor's
defense of such action, and will cooperate and consult with the Indemnitor with
respect to such Indemnitee's participation in the defense of such Proceeding. An
Indemnitee shall, and shall cause each of its Affiliates, officers, employees,
consultants and agents and each other Indemnitee to, cooperate fully with the
Indemnitor in the defense of any Proceeding pursuant to this Section. If an
Indemnitor does not assume the defense of any Proceeding accordance with the
terms of this Section, the Indemnitee may defend against such Proceeding in such
manner as it may deem appropriate, including settling such Proceeding after
giving notice of the same to the Indemnitor, on such terms as the Indemnitee may
deem appropriate; PROVIDED, HOWEVER, that nothing in this Section shall limit an
Indemnitor's right to defend itself against any claim by a Governmental
Authority or any other Person other than the Indemnitee arising out of or
relating to the subject matter of any such claim for indemnification.
(b) Whenever a Buyer Indemnitee becomes aware of a
condition on, in, about or under the Real Properties for which Seller is
obligated to
<PAGE>
19
provide indemnification hereunder in the absence of a Proceeding, Buyer shall
promptly provide Seller with notice of such condition. Seller may, upon written
notice to the Buyer Indemnitee within 30 calendar days, assume responsibility
for the performance of such Remedial Action or Environmental Compliance Action
as is necessary to address the condition identified in the notice.
(c) An Indemnitor shall not be obligated to provide
indemnification pursuant to this Environmental Agreement with respect to matters
or conditions for which the Indemnitee has not provided notice of a claim for
indemnification pursuant to Section 10(a) hereof before the eleventh anniversary
of the Closing Date; PROVIDED, HOWEVER, that Seller shall have no obligation to
provide indemnification with respect to Environmental Compliance Actions unless
a notice of claim is provided to Seller before the third anniversary of the
Closing Date; and further PROVIDED, HOWEVER, that any claim for indemnification
pursuant to this Environmental Agreement relating to a condition addressed by a
Remedial Action pursuant to Section 4 hereof may be timely asserted by notice
provided before the
later of (i) the eleventh anniversary of the Closing Date, or (ii) the Sign-Off
Date for such Remedial Action.
(d) Seller's obligation to indemnify Buyer in respect of
Environmental Compliance Actions shall be subject to the Cap established by
Section 8.6 of the Asset Purchase Agreement.
(e) As used in this Section, as the context may require,
Indemnitee means either Buyer Indemnitees or Seller Indemnitees.
<PAGE>
20
(f) LIMITATION ON DAMAGES. The amount of Damages recoverable
by an Indemnitee under this Agreement shall exclude punitive damages; provided,
however, that nothing herein shall preclude an Indemnitee from recovering (i)
punitive damages if the Indemnitee demonstrates a willful breach of this
Agreement by the Indemnitor or (ii) amounts paid or payable by an Indemnitee to
a third party.
(g) EXCLUSIVE REMEDIES.
(i) The Buyer agrees, on behalf of itself and the Buyer
Indemnitees, that any claim or demand against Sellers, their Affiliates,
their employees, officers, directors and agents (collectively, for the
purpose of this Section 10(g), "Seller") arising out of or relating to
Environmental Liabilities must be brought only under this Environmental
Agreement and subject to the procedures and limitations herein. Nothing in
this Environmental Agreement is intended to limit any claims Buyer, its
Affiliates or the Buyer Indemnitees may have against prior owners of the
Business or the Real Property.
(ii) Sellers agree, on behalf of themselves and the BP
Indemnitees, that any claim or demand against Buyer, its Affiliates, its
employees, officers, directors and agents (collectively, for the purpose
of this Section 10(g), "Buyer") arising out of or relating to
Environmental Liabilities must be brought only under this Environmental
Agreement and subject to the procedures and limitations herein. Nothing in
this Agreement is intended to
<PAGE>
21
limit any claims Sellers, their Affiliates or the Seller Indemnitees may
have against prior owners of the Business or the Real Property.
11. COOPERATION, ACCESS, REASONABLENESS.
(a) Buyer and Seller shall cooperate with respect to the
undertaking of their mutual obligations pursuant to this Environmental
Agreement, including providing one another reasonable access to relevant records
and officers and employees with knowledge of the matters at issue, and shall
inform one another in reasonably prompt fashion of all significant developments
concerning conditions or actions giving rise to claims for indemnification
hereunder.
(b) All activities relating to the parties' obligations
pursuant to this Environmental Agreement must be undertaken in a manner in which
a prudent business person acting in a commercially reasonable manner would
undertake such work, minimizing interruptions of operations at the Real
Property.
(c) Nothing in this Environmental Agreement shall prevent
Buyer from (i) taking any reasonable and prudent interim measures in the event
of an imminent and substantial endangerment to human health, welfare or the
Environment, without prejudice to Buyer's right to seek indemnification therefor
under this Environ mental Agreement, (ii) taking any reasonable action for which
Buyer does not elect to seek indemnification, in whole or in part, under this
Agreement and (iii) taking any action lawfully required or directed by any
Governmental Authority of competent jurisdiction, without prejudice to Buyer's
right to seek indemnification therefor under this Environmental Agreement.
<PAGE>
22
12. DISPUTE RESOLUTION. If a dispute arises between the parties
hereto and that dispute cannot be resolved within a reasonable period of time,
either party hereto may notify the other party that the dispute is to be
submitted to arbitration. In the event that notice of submission of the dispute
to arbitration is provided by either party, the parties jointly shall select an
environmental consultant or engineer reasonably qualified to arbitrate such
dispute (the "Independent Consultant"). The Independent Consultant shall have
the right to obtain the assistance of legal counsel mutually acceptable to Buyer
and Seller in arbitrating the dispute, if the Independent Consultant determines
that such assistance is necessary. Notwithstanding any other provision hereof,
the parties hereto shall each bear one-half of the cost of the Independent
Consultant and its legal counsel, if any. If the parties hereto cannot agree on
an Independent Consultant, they shall apply to the American Arbitration
Association for the appointment of an Independent Consultant. The Independent
Consultant shall establish an expedited procedure for hearing and resolving the
dispute. Unless the parties hereto agree otherwise, the Independent Consultant
shall be required to render a decision resolving the dispute, with a written
opinion stating the reasons therefor, no more than 60 days after the Independent
Consultant is retained. The decision of the Independent Consultant shall be
final and binding and a court of competent jurisdiction may enter judgment
thereon. The dispute resolution procedures of this Section 12 shall constitute
the exclusive remedy of the parties hereto with respect to any disputes arising
out of this Environmental Agreement.
13. CONFLICT WITH PURCHASE AGREEMENT. This Environmental
Agreement is intended to modify and supplement certain of the terms of the
Purchase
<PAGE>
23
Agreement with respect to the matters described herein. In the event of any
conflict or ambiguity between the Purchase Agreement and this Environmental
Agreement, the provisions of this Environmental Agreement shall control.
14. OTHER RIGHTS. All rights and remedies of any party hereunder
shall be cumulative and are expressly in addition to those now or hereafter
existing under the Purchase Agreement, or at law or in equity, any of which
alone or together may be fully exercised by either party.
15. FURTHER ASSURANCES. Each party agrees to execute additional
instruments and documents and do all such further things as may reasonably be
requested by the other in order to carry out the intent of this Environmental
Agreement.
16. WAIVERS AND AMENDMENTS.
(a) Any provision of this Environmental Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Buyer and Seller, or in the case of a
waiver, by the party against whom the waiver is to be effective.
(b) No waiver by either party of any default, misrepresenta
tion or breach of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default, misrepresentation
or breach of warranty or covenant hereunder or affect in any way any rights
existing by virtue of any prior or subsequent occurrence. No single or partial
exercise by either party of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
<PAGE>
24
17. NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given (i) if personally
delivered, when so delivered, (ii) if mailed, two Business Days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth below, (iii) if
given by telecopier, once such notice or other communication is transmitted to
the telecopier number specified below and the appropriate answer back or
telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (ii) above or (iv) if sent through a reputable overnight delivery service
in circumstances in which such service guarantees next day delivery, the day
following being so sent.
(a) If to Seller, to:
BP Exploration & Oil Inc.
200 Public Square
Room 18-R
Cleveland, Ohio 44114-2375
Attention: Director, Environmental Resources
Management
and by telecopy to: 216/586-8222
with a copy under separate cover to:
BP Exploration & Oil Inc.
200 Public Square
Room 39-B
Cleveland, Ohio 44114-2375
Attention: Director, Environmental Legal
Services
and by telecopy to: 216/586-4535
<PAGE>
25
(b) If to Buyer, to:
T.S. Network Corp.
c/o The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Louis J. Mischianti
and by telecopy to: 212/318-1360
with a copy to:
The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Louis J. Mischianti
and by telecopy to: 212/318-1360
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Gaines Gwathmey, Esq.
and by telecopy to: 212/757-3990
Either party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Either party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
<PAGE>
26
18. MISCELLANEOUS. This Environmental Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Environmental Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. This
Environ mental Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors in interest and assigns by
operation of law or otherwise. This Environmental Agreement shall be construed
and interpreted in accordance with the laws of the State of New York.
19. ASSIGNMENT. In the event of a transfer by Buyer of all or any
portion of its interest in the A/TS Network, Buyer may assign this Environmental
Agreement without the consent of Seller, to the extent that it relates to the
interest transferred, to any one or more persons, firms or entities which are
successors to such interest, including any successor to the ownership of any of
the Acquisition Assets. Buyer shall provide at least thirty days' notice to
Seller prior to the assignment. Any assignee of Buyer shall be required to
assume responsibility for all Buyer's obligations hereunder. Notwithstanding the
foregoing, Buyer shall also be permitted to assign any or all of its rights
hereunder to one or more of its lenders.
20. SEVERABILITY. If any provision of this Environmental Agreement,
or the application thereof to any person, place or circumstance, shall be held
by a court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of the Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect.
<PAGE>
27
21. POWER AND AUTHORITY. Each party to the Environmental Agreement
hereby certifies that it: (i) is a corporation duly formed, validly existing and
in good standing under the laws of the state of its incorporation; (ii) has full
power and authority to execute this Environmental Agreement and any and all
documents which may be related thereto; and (iii) has, to the extent necessary,
obtained authorization from its Board of Directors to execute this Environmental
Agreement. The undersigned representative(s) of each party certifies that he or
she is fully authorized by the party whom he or she represents to enter into the
terms and conditions of this Environmental Agreement and to bind legally such
Party to this Environmental Agreement.
22. JURISDICTION. Each of the parties hereto irrevocably submits to
the jurisdiction of any state or federal court sitting in the County of New
York, State of New York, in any action or proceeding arising out of or relating
to this Environ mental Agreement, agrees that all claims in respect of the
action or proceeding may be heard and determined in any such court, and agrees
not to contest the jurisdiction (IN REM or IN PERSONAM) or power or decision of
such court over or pertaining to the party or with respect to the subject matter
in any court within or without the United States other than appropriate
appellate courts. Each of the parties hereto irrevocably waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of the other
party hereto with respect thereto.
23. CONSTRUCTION. The language used in this Environmental
Agreement will be deemed to be the language chosen by the parties hereto to
express
<PAGE>
28
their mutual intent, and no rule of strict construction shall be applied against
either party. Whenever required by the context, any gender shall include any
other gender, the singular shall include the plural and the plural shall include
the singular. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the word "including" is used in this Agreement, it
shall be deemed to mean "including, without limitation," "including, but not
limited to" or other words of similar import such that the items following the
word "including" shall be deemed to be a list by way of illustration only and
shall not be deemed to be an exhaustive list of applicable items in the context
thereof.
<PAGE>
29
IN WITNESS WHEREOF, the parties hereto have caused this
Environmental Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
BP EXPLORATION & OIL INC.
By: /s/ H.T. Bubb
------------------------------------------
Name: H.T. Bubb
----------------------------------------
Title: Vice President, Strategic Development
---------------------------------------
TRUCKSTOPS CORPORATION OF AMERICA INC.
By: /s/ H.T. Bubb
------------------------------------------
Name: H.T. Bubb
----------------------------------------
Title: Vice President, Strategic Development
---------------------------------------
T.S. NETWORK CORP.
By: /s/ Louis J. Mischianti
------------------------------------------
Name: Louis J. Mischianti
----------------------------------------
Title: President
---------------------------------------
EXHIBIT 10.10
AMENDMENT NO. 1 TO ENVIRONMENTAL AGREEMENT
------------------------------------------
Amendment No. 1, dated as of December 10, 1993 to the Environmental
Agreement entered into as of July 22, 1993 (the "Environmental Agreement") by
and among BP Exploration & Oil Inc., an Ohio corporation ("BP"), Truckstops
Corporation of America Inc., a Delaware corporation ("TA", and together with BP,
"Seller") and TA Operating Corporation, a Delaware corporation (formerly known
as T.S. Network Corp. and together with its successors and assigns, "Buyer").
Buyer and Seller desire to amend the Environmental Agreement as set
forth in this Amendment No. 1.
NOW, THEREFORE, the parties hereto agree as follows:
1. AMENDMENT OF SECTION 2. Section 2 of the Environmental Agreement
is hereby amended by adding to the end of Section 2 a new subsection (d) which
shall read as follows:
(d) There are no circumstances or conditions that are
reasonably likely to result in Material Environmental Damages in connection with
an application for renewal of a Material Permit which has not expired on or
before the Closing Date.
2. AMENDMENT OF SECTION 9. Section 9 of the Environmental Agreement
is hereby amended by adding to the end of the heading of Section 9 the phrase
"and Post-Closing
<PAGE>
2
Permit Transfers" and by adding to Section 9 a new Section 9(c) which shall read
as follows:
(c) (i) After the Closing Date, Sellers shall continue to maintain
the validity and full force and effect of any Material Permits (as that term is
defined in the Asset Purchase Agreement) required pursuant to Environmental Laws
with respect to which Material Required Permit Approvals (as that term is
defined in the Asset Purchase Agreement) have not been obtained, until such
Material Required Permit Approvals are obtained.
(ii) (A) For any Material Permits required pursuant to
Enviromental Laws for which a renewal application has been submitted on or
before the Closing Date, Sellers shall take all reasonable actions to obtain
Material Required Permit Approvals within a reasonable period of time after the
Closing Date.
(B) With respect to any Material Permits required
pursuant to Environmental Laws which have expired on or before the Closing Date
and for which a renewal application has been submitted on or before the Closing
Date, Seller shall be solely responsible for the costs of any equipment upgrades
or additions or process changes or modifications or studies (including, but not
limited to, pre-certification studies) necessary to obtain the renewal of such
Material Permits and any such equipment upgrades or additions or process changes
or modifications shall be in a form reasonably consistent in the circumstances
with those
<PAGE>
3
in the auto/truckstop industry as of the Closing Date; PROVIDED, HOWEVER, that
costs incurred as a result of any changes in laws, guidelines or policies of
general application adopted on or after the Closing Date shall be Buyer's
responsibility.
(iii) For any Material Permits required pursuant to Environmental
Laws which are in full force and effect and do not have a renewal application
pending on the Closing Date, Sellers shall take all reasonable actions to obtain
Material Required Permit Approvals within a reasonable time after the Closing
Date and without the imposition of any new or modified conditions that are or
would be applicable to the Business, the Purchased Assets, Buyer or any
Franchisee which are materially burdensome upon the Business, the Purchased
Assets, Buyer or any Franchisee or Buyer's future conduct of business. Seller
shall cause the terms of the Material Permits required pursuant to Environmental
Laws and transferred pursuant to the Material Required Permit Approvals to be in
all material respects identical to the terms of the Material Permits in effect
immediately prior to the Closing Date. Seller shall indemnify Buyer with respect
to all costs and expenses of any equipment upgrades or additions or process
changes or modifications or studies (including, but not limited to,
pre-certification studies) reasonably required to comply with any new or
modified conditions imposed in connection with the transfer of such Material
Permits, PROVIDED, HOWEVER, that Buyer shall be responsible for all costs and
expenses reasonably required to comply with any new or modified conditions in
such Material Permits imposed as a result of any changes in Environmental Laws
adopted on or after the Closing Date or any changes in policy or guidelines of
general application of any Governmental Authority adopted on or after the
Closing Date or any changes in Auto/Truckstop operations on or after the Closing
Date.
3. ADDITION OF SECTION 9A. The Environmental Agreement is hereby
amended by adding thereto a new Section 9A which shall read as follows:
9A. COLUMBIA, NEW JERSEY, SANITARY WASTEWATER TREATMENT. Seller
hereby agrees to undertake all Environmental Compliance Actions and other
activities necessary to develop a system for the treatment of sanitary
wastewater at the Columbia, New Jersey auto/truckstop which (A) is a customary,
appropriate and reasonably cost-efficient form of sanitary wastewater treatment,
in light of standards for wastewater treatment in the Network and in the
auto/truckstop industry in general, and (B) complies in all respects with
applicable Environmental Laws.
4. AMENDMENT OF SECTION 19. Section 19 of the Environmental
Agreement is hereby amended by adding to the end of Section 19 the following
language:
Seller hereby agrees to the granting by Buyer of security interests in its
rights, titles and interests in the Environmental Agreement to Buyer's
Lenders.
Any lender of the Buyer may reassign any or all of the rights under this
Environmental Agreement assigned to it by the Buyer to:
(1) any successor to the rights and obligations
of Chemical Bank, as "Collateral Agent";
(2) any "Lender" or "Senior Note Purchaser" and
any of their respective successors and assigns;
(3) any purchaser or transferee (including Chemical or any other
Lender or Senior Note Purchaser) of any Real Property (as defined)
at a judicial or non-judicial sale or other foreclosure proceeding
or by deed or assignment in lieu of foreclosure and to any such
purchaser's or transferee's purchasers, transferees, successors or
assigns.
<PAGE>
4
5. FULL FORCE AND EFFECT. Except as amended hereby, the
Environmental Agreement continues in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to
be duly executed by their respective authorized officers as of the day and year
first above written.
BP EXPLORATION & OIL INC.
By: /s/ David J. Atton
-------------------------------------
Name: David J. Atton
Title: Vice President
TRUCKSTOPS CORPORATION OF AMERICA
By: /s/ David J. Atton
-------------------------------------
Name: David J. Atton
Title: Attorney-in-Fact
TA OPERATING CORPORATION
By: /s/ Rowan G.P. Taylor
-------------------------------------
Name: Rowan G.P. Taylor
Title: Vice President &
Assistant Secretary
EXHIBIT 10.11
NONCOMPETITION AGREEMENT
------------------------
This Noncompetition Agreement (the "Agreement") is made and entered
into as of April 13, 1993 by and between Union Oil Company of California, a
California corporation ("Seller"), and National Auto/Truckstops, Inc., a
Delaware corporation ("Buyer").
RECITALS
WHEREAS, Seller, through its national auto/truckstop network (the
"A/TS Network"), has been engaged in the business of owning and operating a
national auto/truckstop network (the "Business");
WHEREAS, the A/TS Network sells gasoline, petroleum distillates and
other petroleum products and related goods and services to trucks operating
throughout the United States on the United States interstate highway system,
including certain national and regional fleet customers;
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as
of November 23, 1992, by and between Seller and Buyer (the "Asset Purchase
Agreement"), Buyer is purchasing on the date hereof from Seller the goodwill and
substantially all of the assets of the A/TS Network (the
"Acquisition");
WHEREAS, Buyer would not have entered into the Asset Purchase
Agreement if Seller had not agreed to execute this Noncompetition Agreement;
WHEREAS, Buyer intends to carry on the Business formerly conducted
by Seller;
WHEREAS, concurrently with the execution of this Agreement, the
parties hereto are entering into a Trademark License Agreement, dated as of the
date hereof (the "Trademark License Agreement"), pursuant to which Seller is
licensing to Buyer the right to use the Marks and the Service Marks (as such
terms are defined in the Trademark License Agreement) in connection with the
operation of the Business;
WHEREAS, the goodwill of the Business and the value of Buyer's
rights under the Trademark License Agreement would be adversely affected if
Seller were to compete with Buyer in the Business; and
<PAGE>
2
WHEREAS, Seller understands and acknowledges that Seller's execution
and delivery of this Agreement is a material inducement and condition precedent
to the consummation of the Acquisition and the execution of the Trademark
License.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings set forth below. Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Trademark License Agreement.
"Buyer's Facility" means any Designated Facility owned, leased or
sub-leased by or to Buyer that uses the Marks and/or the Service Marks.
"Card Lock Facility" means an attended or unattended resale fueling
facility with one or more card-activated dispensers targeting local commercial
fleet customers.
"Excluded Facility" means a retail motor fuel facility that on the
Closing Date (as defined in the Asset Purchase Agreement) uses the Marks but
which is not sold or assigned to Buyer pursuant to the Asset Purchase Agreement
or any of the six separate California Purchase Agreements dated as of November
23, 1992.
"Prohibited Facility" means:
(a) an Auto/Truckstop;
(b) a Fuel Stop located within two (2) miles of the center
line of an Interstate Highway, or within twenty-five
(25) miles of any Buyer's Facility;
(c) a retail motor fuel facility (including but not limited
to a Card Lock Facility) that is not a Designated
Facility but which:
(i) is located outside the PAD V Area, and either (A)
within an SMSA and within two (2) miles of a
Buyer's Facility, or (B) outside an SMSA
<PAGE>
3
and within ten (10) miles of a
Buyer's Facility; or
(ii) is located within the PAD V Area (excluding
California) and either (A) within an SMSA and
within one (1) mile of a Buyer's Facility, or (B)
outside an SMSA and within five (5) miles of a
Buyer's Facility; or
(iii) is located within California and within one (1)
mile of a Buyer's Facility, measured along the
Interstate Highway or any street, highway or road
upon which such Buyer's Facility is located;
PROVIDED, HOWEVER, that in no case shall
an Excluded Facility be a Prohibited
Facility.
"SMSA" means a Standard Metropolitan Statistical area, as defined in
the Trademark License Agreement.
"Southeastern Area" shall mean the following states: Alabama,
Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South
Carolina, Tennessee and Virginia.
"Territory" means the lower 48 contiguous states of the United
States of America, including each and every county, city and other political
subdivision thereof. The parties hereto agree that this definition of
"Territory" shall be deemed to include each and every county located in the
Territory as if fully set forth herein.
2. NONCOMPETITION.
(a) For a period of 10 years commencing on the date hereof
(the "Term"), without the prior written approval of Buyer, Seller shall not, and
will cause its Affiliates not to, directly or indirectly, (i) own, manage,
control, operate or otherwise participate, franchise or assist in the business
of any Prohibited Facility located in the Territory, (ii) own, manage, control,
operate, be connected with as an employee or consultant for any Person owning,
managing, controlling, operating or otherwise participating or assisting in the
business of any Prohibited Facility located in the Territory, or (iii) license,
franchise or otherwise authorize any Person (other than Buyer and its licensees)
to conduct business under the marks Pure, Protech or Firebird or under any of
the Marks (or sell any products or provide any services in connection with the
<PAGE>
marks Pure, Protech or Firebird or the Marks and/or the Service Marks (as such
terms are defined in the Trademark License Agreement)) at any Prohibited
Facility located in the Territory or otherwise utilize any of the Marks and/or
Service Marks or any commercial symbol similar thereto in connection with the
business of any Prohibited Facility located in the Territory; PROVIDED HOWEVER,
that nothing in this Agreement shall prohibit (x) Seller or its licensee or
assignee of the marks Pure or Firebird from licensing the marks Pure and/or
Firebird to any Prohibited Facility in the Southeastern Area at any time after a
date on which Buyer is neither (A) selling motor fuel at any Auto/Truckstop or
Fuel Stop in the Southeastern Area under one or more of the Marks nor (B)
prominently displaying one or more of the Marks at any Auto/Truckstop or Fuel
Stop in the Southeastern Area and (y) Seller's jobbers, distributors and
marketers from selling products other than motor fuel to any Prohibited
Facility.
(b) During the Term, Seller shall not, and will cause its
Affiliates not to, directly or indirectly, materially expand any Excluded
Facility that is an Auto/Truckstop or a Fuel Stop owned or operated by Seller or
its Affiliates or otherwise materially alter the products and/or services sold
by or through any such Excluded Facility; PROVIDED, HOWEVER, that nothing in
this Section 2 shall prohibit Seller or its Affiliates from repairing or
replacing any existing structures, fixtures or other assets of such an Excluded
Facility, damaged or worn by reason of casualty or wear and tear, with
comparable structures, fixtures or other assets.
3. NONSOLICITATION. During the Term, Seller shall not, and will
cause its Affiliates not to, directly or indirectly, either for its own account
or for the account of any other Person, solicit, entice, persuade, induce or
attempt to solicit, entice, persuade or induce any employee, agent, client or
customer of the Business or Buyer to terminate, alter or refrain from extending
or renewing any contractual or other relationship of such employee, agent,
client or customer with the Business or Buyer; PROVIDED, HOWEVER, that nothing
in this Section 3 shall prohibit Seller or its Affiliates from engaging in any
form of generalized advertising that does not directly target or involve the
direct solicitation of any employee, agent, client or customer of the Business
or Buyer.
4. SEVERABILITY; SEPARATE COVENANTS. If any provision of this
Agreement shall be invalid or unenforce- able for any reason and to any extent,
the remainder of this Agreement shall not be affected thereby, but shall be
enforced to the greatest extent permitted by law. Without limiting the
generality of the foregoing, the covenants
<PAGE>
5
contained in this Agreement shall be deemed to consist of a series of separate
covenants, one for each state included within the Territory. Seller expressly
acknowledges and agrees that the character, duration and geographic scope of the
covenants contained in this Agreement are reasonable in light of the
circumstances as they exist on the date hereof. However, should a determination
nonetheless be made by a court or arbitrator at a later date that the character,
duration or geographic scope of the covenants contained in this Agreement is
unreasonable in light of the circumstances as they then exist, then it is the
intention and the agreement of the parties that this Agreement shall be
construed by the court or arbitrator (as applicable) in such a manner as to
impose only those restrictions on the conduct of Seller which are reasonable in
light of the circumstances as they then exist and as are necessary to assure
Buyer of the intended benefit of this Agreement. If, in any judicial proceeding,
a court or arbitrator (as applicable) shall refuse to enforce all of the
separate covenants deemed included herein because, taken together, they are more
extensive than necessary to assure Buyer of the intended benefit of this
Agreement, it is expressly understood and agreed between the parties hereto that
those of such covenants which, if eliminated, would permit the remaining
separate covenants to be enforced in such proceeding shall, for the purpose of
such proceeding, be deemed eliminated from the provisions hereof.
5. ENFORCEMENT OF COVENANTS. The existence of any claim or cause of
action of Seller or any of its Affiliates and entities in which it may be a
joint venturer or a partner against either Buyer or any other Person, whether
predicated on this Agreement, the Asset Purchase Agreement or otherwise, shall
not constitute a defense to the enforcement by Buyer of the covenants and
agreements contained herein.
6. INJUNCTIVE RELIEF. The parties hereto acknowledge and agree that
the remedies at law for any breach of this Agreement are and will be inadequate,
and in the event of a breach or threatened breach by Seller of the provisions of
this Agreement, Buyer shall be entitled to an injunction or injunctions
restraining Seller from soliciting or interfering with employees, agents,
clients or customers of the Business or Buyer, or from disclosing, in whole or
in part, any Confidential Information, or from rendering any services to any
Person to whom such information has been disclosed, or is threatened to be
disclosed, from engaging, participating or otherwise being connection with any
business described in Section 2 hereof or from otherwise violating the
provisions of this Agreement. Seller hereby irrevocably waives any requirement
for the securing or posting of any bond in connection with any such remedy and
<PAGE>
6
agrees to take any further action reasonably required by Buyer to effect such
waiver. Nothing herein contained shall be construed as prohibiting Buyer from
pursuing any other remedies available to Buyer for such breach or threatened
breach, including, without limitation, the recovery of damages from Seller and
indemnification from Seller under Section 7.1 of the Asset Purchase Agreement.
7. SUCCESSORS AND ASSIGNS. Buyer shall have the right to assign any
or all of its rights and obligations hereunder to any of Buyer's Affiliates or
lenders, or to any successor in interest of Buyer whether by merger,
consolidation, purchase of assets, dissolutions, liquidation or otherwise.
8. GOVERNING LAW. This Agreement shall be deemed to consist of a
series of separate agreements, one for each state included within the Territory,
and each such agreement shall be construed and enforced in accordance with and
governed by the laws of such state, without regard to principles of conflicts of
laws.
9. AMENDMENT. This Agreement may be modified or amended only by a
written instrument duly executed by each party hereto.
10. WAIVER. No breach of any covenant, agreement, warranty or
representation shall be deemed waived unless expressly waived in writing by the
party who might assert such breach. No waiver of any right hereunder shall
operate as a continuing waiver or as a waiver of any other right or of the same
or a similar right on another occasion. No failure or delay by Buyer in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof by Buyer, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege of Buyer.
11. ENTIRE AGREEMENT. This Agreement, together with the Asset
Purchase Agreement and the Trademark License Agreement, contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
12. HEADINGS. The headings of each section of this Agreement are for
convenience of reference only and shall not limit, control or otherwise affect
in any way, the meaning thereof.
13. COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original for all
<PAGE>
7
purposes, but all such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized representatives as of the date first
above written.
UNION OIL COMPANY OF CALIFORNIA
By: /s/ A.J. Eliskalns
-------------------------------
Name: A.J. Eliskalns
Title: Vice President
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ James Bauchiero
-------------------------------
Name: James Bauchiero
Title: Vice President and
Chief Financial Officer
EXHIBIT 10.12
NONCOMPETITION AGREEMENT
Noncompetition Agreement (the "Agreement") dated as of December 10,
1993 by and among The British Petroleum p.l.c., an English Company ("BP"), and
TA Operating Corporation, a Delaware corporation ("Buyer").
RECITALS
WHEREAS, BP's subsidiaries, BP Exploration & Oil, Inc., an Ohio
corporation ("BP E&O"), and Truckstops Corporation of America Inc., a Delaware
corporation ("TA" and together with BP E&O, the "Sellers"), have been engaged in
the business of owning and operating a national auto/truckstop network (the
"Business");
WHEREAS, in connection with the Business the Sellers sell gasoline,
petroleum distillates and other petroleum products and related goods and
services to trucks operating throughout the United States, including certain
national and regional fleet customers;
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as
of July 22, 1993, by and among Sellers and Buyer (as such agreement may be
amended from time to time, the "Asset Purchase Agreement"), Buyer is acquiring
(the "Acquisition") on the date hereof from Sellers the goodwill and
substantially all of the assets of the Business;
WHEREAS, Buyer would not have entered into the Asset Purchase
Agreement if BP had not agreed to execute this Noncompetition Agreement;
WHEREAS, Buyer intends to carry on the Business formerly conducted
by Sellers;
WHEREAS, the goodwill of the Business would be adversely affected if
any member of the BP Group (including, without limitation, the Sellers) were to
compete with Buyer in the Business; and
WHEREAS, BP understand and acknowledges that its execution and
delivery of this Agreement is a material inducement and condition precedent to
the consummation of the Acquisition.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth
<PAGE>
2
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby covenant and
agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings set forth below.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"BP Group" means The British Petroleum Company p.l.c. and its direct
and indirect subsidiaries (subsidiary means direct or indirect ownership of 50%
or more of the voting power of such person).
"Jobber Truckstop Facility" means a Truckstop Facility that is owned
or operated by a Person, other than a member of the BP Group, who is authorized
to sell motor fuel in connection with the Marks.
"Marks" mean, collectively, the servicemark and the trademark "BP".
"Person" means any individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or government or other
agency or political subdivision thereof.
"Truck" means any motor vehicle with more than two (2) axles.
"Territory" means the United States of America, including each and
every county, city and other political subdivision thereof. The parties hereto
agree that this definition of "Territory" shall be deemed to include each and
every county located in the Territory as if fully set forth herein.
"Truckstop Facility" means any facility, whether now in existence or
constructed in the future, wherever located, that (A) derives a majority of its
motor fuel revenues from the sale of motor fuel for use by Trucks and (B)
derives a material portion of its revenues from the sale of motor fuel for use
by Trucks and (C) is located within two miles of an interstate highway.
Notwithstanding the foregoing, a facility in existence on the date hereof which
currently sells BP branded motor fuel shall not be deemed to be a Truckstop
Facility.
<PAGE>
3
2. NONCOMPETITION.
(a) For a period of seven (7) years commencing on the date
hereof (the "Term"), without the prior written approval of Buyer, no entity
within the BP Group will (i) own, manage, control, operate or franchise any
Truckstop Facility located in the Territory or (ii) license, franchise or
otherwise authorize any Person (other than Buyer and its licensees) to own,
operate, control or manage a Truckstop Facility under any of the Marks (or sell
any motor fuel in connection with the Marks at any Truckstop Facility located in
the Territory), where, in the case of this clause (ii), such Truckstop Facility
is located either within twenty-five (25) miles or within two (2) interstate
interchanges of one of the eighteen (18) BP-branded truckstop facilities Buyer
is acquiring from Sellers (the "BP-Branded Buyer Truckstop"), a list of which is
set forth on the attached Schedule 1. If a BP-Branded Buyer Truckstop ceases
using the Marks, it will thereafter no longer be deemed to be a BP-Branded Buyer
Truckstop.
(b) Notwithstanding anything in Section 2(a) to the contrary:
(i) the BP Group may consummate (by merger,
consolidation, stock purchase, asset acquisition or otherwise) an acquisition of
the business or assets of any Person (the "Acquired Person"); PROVIDED, that (w)
the principal business of the Acquired Person does not consist of the ownership,
operation, management, franchising or leasing of Truckstop Facilities or the
provision of services or the sale of goods to Trucks or Truck drivers; (x) in
the one year period preceding such acquisition a majority of the consolidated
revenues of the Acquired Person were not derived from the provision of services
or the sale of goods to Trucks or Truck drivers; (y) the number of Truckstop
Facilities owned, operated, managed, franchised or leased by the Acquired Person
does not increase above the number of Truckstop Facilities owned, operated,
managed or leased by the Acquired Person on the date of such acquisition; and
(z) none of the Marks are utilized in connection with the sale of motor fuel at
any Truckstop Facilities owned, operated, managed, franchised or leased by the
Acquired Person;
(ii) in the event of any sale of BP E&O (whether by
merger, consolidation, sale of stock, sale of assets or otherwise) to another
Person (the "Acquiring Person"), the Acquiring Person shall not be bound (but
the BP Group shall continue to be bound) by the provisions of Section 2(a)
hereof; PROVIDED, that prior to consummation of such sale, the Sellers shall
cause the Acquiring Person to expressly agree to not utilize any of the Marks in
any way
<PAGE>
4
in connection with the sale of motor fuel at any Truckstop Facility then or
thereafter owned, operated, managed or leased, directly or indirectly, by the
Acquiring Person; and
(iii) the BP Group may freely license, franchise or
otherwise authorize any Person (other than a member of the BP Group) to own,
operate, control or manage a Jobber Truckstop Facility, and/or to sell motor
fuel in connection with the Marks at a Jobber Truckstop Facility, provided, that
such Jobber Truckstop Facility is neither within twenty-five (25) miles of the
nearest BP-Branded Buyer Truckstop nor is within two interstate interchanges of
the nearest BP-Branded Buyer Truckstop.
3. NONSOLICITATION. During the two year period commencing on the
date hereof, no entity within the BP Group will, directly or indirectly, either
for its own account or for the account of any other Person, solicit, entice,
persuade, induce or attempt to solicit, entice, persuade or induce any
headquarters employee (other than secretaries or other employees with job levels
the same or lower than a secretary's job level) of the Buyer, National
Auto/Truckstops Holdings Corporation ("Holdings") or National Auto/Truckstops,
Inc. ("National") to terminate, alter or refrain from extending or renewing any
contractual or other relationship of such employee with the Buyer, Holdings or
National; PROVIDED, HOWEVER, that nothing in this Section 3 shall prohibit any
member of the BP Group from engaging in any form of generalized advertising that
does not directly target or involve the direct solicitation of any employee of
the Buyer, Holdings or National.
4. PAYMENT. Buyer agrees to pay BP by direct authenticated transfer
to BP's account with Citibank, N.A., New York, A.B.A.# 0210-0008-9 for credit to
Account No. 40550445 the sum of Nine Million United States Dollars
(US$9,000,000) on the Closing Date. Such Nine Million United States Dollar
payment shall be deemed a part of the purchase price to be paid by Buyer to BP
on the Closing Date pursuant to the Asset Purchase Agreement. Such payment will
be made without any deduction or withholding for or on account of any tax.
5. REPRESENTATIONS. BP has provided Buyer with a copy of its Form
1001 (attached as Schedule 2) relating to this Agreement. BP represents that (a)
it is fully eligible for the benefits of the "Other Income" provisions of
Article 5 of the U.S.-U.K. Income Tax Convention (the "Treaty"), with respect to
any payment described in Section 4 hereof and received or to be received by it
in connection with this Agreement, and (b) no such payment is attributable to a
trade or business carried on by it through a permanent establishment in the
Untied States, as defined in Article 5
<PAGE>
5
of the Treaty. BP agrees to indemnify and hold the Buyer harmless from all
costs, penalties, expenses or withholding tax subsequently imposed as a result
of the Buyer's payments to BP under this Agreement or the Purchase Agreement.
6. SEVERABILITY; SEPARATE COVENANTS. If any provision of this
Agreement shall be invalid or unenforceable for any reason and to any extent,
the remainder of this Agreement shall not be affected thereby, but shall be
enforced to the greatest extent permitted by law. Without limiting the
generality of the foregoing, the covenants contained in this Agreement shall be
deemed to consist of a series of separate covenants, one for each state included
within the Territory. Sellers expressly acknowledge and agree that the
character, duration and geographic scope of the covenants contained in this
Agreement are reasonable in light of the circumstances as they exist on the date
hereof. However, should a determination nonetheless be made by a court or
arbitrator at a later date that the character, duration or geographic scope of
the covenants contained in this Agreement is unreasonable in light of the
circumstances as they then exist, then it is the intention and the agreement of
the parties that this Agreement shall be construed by the court or arbitrator
(as applicable) in such a manner as to impose only those restrictions on the
conduct of Sellers which are reasonable in light of the circumstances as they
then exist and as are necessary to assure Buyer of the intended benefit of this
Agreement. If, in any judicial proceeding, a court or arbitrator (as applicable)
shall refuse to enforce all of the separate covenants deemed included herein
because, taken together, they are more extensive than necessary to assure Buyer
of the intended benefit of this Agreement, it is expressly understood and agreed
between the parties hereto that those of such covenants which, if eliminated,
would permit the remaining separate covenants to be enforced in such proceeding
shall, for the purpose of such proceeding, be deemed eliminated from the
provisions hereof.
7. ENFORCEMENT OF COVENANTS. The existence of any claim or cause of
action of Sellers or any of their Affiliates and entities in which it may be a
joint venturer or a partner against either Buyer or any other Person, whether
predicated on this Agreement, the Asset Purchase Agreement or otherwise, shall
not constitute a defense to the enforcement by Buyer of the covenants and
agreements contained herein.
8. SUCCESSORS AND ASSIGNS. Buyer shall have the right to assign any
or all of its rights and obligations hereunder to any of Buyer's Affiliates or
lenders, or to any successor in interest of Buyer whether by merger, consoli-
<PAGE>
6
dation, purchase of assets, dissolutions, liquidation or otherwise.
9. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York without regard to the conflict of laws principles thereof.
10. AMENDMENT. This Agreement may be modified or amended only by a
written instrument duly executed by each party hereto.
11. WAIVER. No breach of any covenant, agreement, warranty or
representation shall be deemed waived unless expressly waived in writing by the
party who might assert such breach. No waiver of any right hereunder shall
operate as a continuing waiver or as a waiver of any other right or of the same
or a similar right on another occasion. No failure or delay by Buyer in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof by Buyer, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege of Buyer.
12. ENTIRE AGREEMENT. This Agreement, together with the Asset
Purchase Agreement, contains the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof.
13. HEADINGS. The headings of each section of this Agreement are for
convenience of reference only and shall not limit, control or otherwise affect
in any way, the meaning thereof.
14. COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when
<PAGE>
7
so executed and delivered shall be an original for all purposes, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Noncompetition Agreement to be executed by their respective authorized
representatives as of the date first above written.
THE BRITISH PETROLEUM COMPANY P.L.C.
By: /s/ David J. Atton
-----------------------------
Name: David J. Atton
Title: Vice President
TA OPERATING CORPORATION
By: /s/ Rowan G.P. Taylor
-----------------------------
Name: Rowan G.P. Taylor
Title: Vice President &
Assistant Secretary
EXHIBIT 10.13
SOFTWARE LICENSE AGREEMENT
--------------------------
(Unocal Agreement No. 09580)
SOFTWARE LICENSE AGREEMENT ("Agreement"), entered into by and
between Union Oil Company of California doing business as Unocal with offices at
376 South Valencia, Brea, California 92621 ("LICENSOR") and National
Auto/Truckstops, Inc., with offices at 1650 E. Golf Road, Schaumburg, Illinois
60196 ("LICENSEE").
WHEREAS, LICENSOR and LICENSEE have entered into an Asset Purchase
Agreement, dated as of November 23, 1992 (the "Asset Purchase Agreement"); and
WHEREAS, each of LICENSOR and LICENSEE is obligated under the Asset
Purchase Agreement to enter into this Agreement; and
WHEREAS, LICENSOR has developed and/or had developed for it a
proprietary software program called Access 76 software comprised of source,
object and executable code as well as related procedural code ("Licensed
Programs"); and
WHEREAS, LICENSOR has developed the Licensed Programs for LICENSOR's
own internal use and LICENSOR has not released the Licensed Programs for general
distribution; and
WHEREAS, LICENSEE desires to acquire the Licensed Programs for its
own internal use; and
WHEREAS, in order to enhance LICENSOR's relationship with LICENSEE,
LICENSOR has agreed to provide a no-charge license to LICENSEE to use the
Licensed Programs in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and promises in this Agreement, LICENSOR and LICENSEE hereby agree as
follows:
ARTICLE I
PURPOSE
1.1 Each capitalized term used herein but not otherwise defined
shall have the respective meaning assigned to it in the Asset Purchase
Agreement.
1.2 LICENSEE voluntarily requests that LICENSOR license the use
of the Licensed Programs to LICENSEE for LICENSEE to use the Licensed Programs
at LICENSEE'S sole risk. LICENSEE acknowledges that the Licensed Programs are
not
<PAGE>
2
released or intended by LICENSOR for general distribution and may contain known
and unknown errors.
1.3 LICENSOR shall license to LICENSEE, at no charge, the Licensed
Programs in source code form with some selected documentation sufficient for
LICENSEE to make use of the Licensed Programs.
1.4 LICENSOR shall not provide maintenance, upgrade, and enhancement
support or services for the Licensed Programs. LICENSOR is not in the trade or
business of developing software such as the Licensed Programs and LICENSOR shall
have no obligation to provide any support for the Licensed Programs regardless
of whether or not it is released by LICENSOR as a commercial product for general
distribution.
ARTICLE II
GRANT OF LICENSE
2.1 LICENSOR hereby grants to LICENSEE, and LICENSEE hereby accepts
a nonexclusive, royalty-free license to install and use the Licensed Programs
solely for LICENSEE's own internal use. LICENSOR hereby grants to LICENSEE the
right to sublicense only the Access 76 portion of the Licensed Programs in
object code form (not source code) to Operators, Resellers, franchisees or other
Persons whether or not associated with the A/TS Network. LICENSOR agrees that it
will not sublicense the source code to other Persons. Both parties agree that
each will not grant any license or sublicense to the Access 76 portion for the
Licensed Programs to any third party for use in a manner and marketing area
likely to be in competition with the operations of the other party and/or its
Affiliates.
2.2 LICENSEE may make a reasonable number of copies of the Licensed
Programs solely for backup purposes and for purposes of sublicensing in
accordance with Paragraph 2.1. LICENSEE shall place LICENSOR's copyright and/or
proprietary rights notices on any such backup copies of the Licensed Program(s)
which LICENSEE makes.
ARTICLE III
LICENSEE'S OBLIGATIONS
3.1 LICENSEE shall treat the Licensed Programs as the confidential
trade secret of LICENSOR, and LICENSEE shall not disclose or make available the
Licensed Programs in any form whatsoever to any third party, except for those
employees, agents or sublicensees (as permitted under Paragraph 2.1) of LICENSEE
that have agreed to use and keep confidential the Licensed Program(s) as
provided in this
<PAGE>
3
Agreement. LICENSEE shall not use or sublicense the Licensed Programs beyond
the scope of the license granted herein.
3.2 LICENSEE agrees that unless it has LICENSOR's prior written
permission, it will not associate the Licensed Programs or any results obtained
from the use thereof with LICENSOR or LICENSEE's operation.
3.3 LICENSEE acknowledges that in order to be executed, the Licensed
Program requires certain third party software, described more fully in Schedule
I. LICENSEE further acknowledges that LICENSOR does not have the right to grant
sub-licenses to such software. LICENSEE agrees that prior to use of the Licensed
Program in any manner, LICENSEE will obtain necessary Licenses from the vendors
of such third-party software.
ARTICLE IV
TERM
4.1 This Agreement is effective on the first date written in the
signature section or on the date LICENSEE actually receives the Licensed
Programs, whichever is earlier. This Agreement and the license shall expire
ninety-nine (99) years after the effective date.
4.2 LICENSOR may terminate this Agreement at any time by notice to
LICENSEE if LICENSEE breaches any material term or condition of this Agreement
and fails to cure any such breach within thirty (30) days of LICENSEE's receipt
of notice of breach. On any termination, LICENSEE shall, at LICENSOR's
direction, return or destroy all copies of the Licensed Programs and cease all
use of the Licensed Programs or any derivative work.
ARTICLE V
CONSIDERATION
No monetary condition is given for this license. Neither party shall
charge the other any fees or expenses relating to this Agreement. Each party
shall bear its own expenses resulting from this Agreement, if any.
ARTICLE VI
EXCLUSION OF WARRANTIES; LIMITATION OF LIABILITY
6.1 LICENSOR MAKES NO REPRESENTATION, GUARANTEE, OR WARRANTY
WHATSOEVER WITH RESPECT TO THE LICENSED PROGRAMS, WHETHER EXPRESS OR IMPLIED,
WHETHER ARISING BY
<PAGE>
4
CUSTOM, TRADE USAGE, COURSE OF PERFORMANCE OR OTHERWISE, AND WHETHER REGARDING
ITS ACCURACY, OR ITS SUITABILITY FOR LICENSEE'S PURPOSES OF OTHERWISE. LICENSOR
SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS
FOR A PARTICULAR PURPOSE. LICENSEE ACKNOWLEDGES THAT THE LICENSED PROGRAMS WERE
DEVELOPED BY LICENSOR FOR LICENSOR'S OWN USE, AND LICENSEE AGREES TO ACCEPT EACH
OF THE LICENSED PROGRAMS "AS IS."
6.2 IN NO EVENT SHALL LICENSOR BE LIABLE TO ANY PARTY FOR ANY
DIRECT, INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND
RESULTING FROM LOSS OF USE, DATA, OR PROFITS, OR ARISING OUT OF THIS AGREEMENT
OR LICENSEE'S USE OF ANY OF THE LICENSED PROGRAMS, IRRESPECTIVE OF WHETHER
LICENSOR MAY HAVE BEEN NOTIFIED THAT SUCH DAMAGES WERE FORESEEABLE OR LIKELY,
AND IRRESPECTIVE OF THE CAUSE OF ACTION OR THEORY UPON WHICH LIABILITY FOR SUCH
DAMAGES MIGHT BE ALLEGED, INCLUDING BUT NOT LIMITED TO INFRINGEMENT, NEGLIGENCE
(ACTIVE OR PASSIVE) OR OTHER TORT, BREACH OF CONTRACT, BREACH OF DUTY OR
WARRANTY (EXPRESS OR IMPLIED), STRICT LIABILITY, OR OTHERWISE WHETHER AT LAW, IN
EQUITY, OR OTHERWISE.
6.3 Each party agrees to unconditionally release, defend, indemnify
and hold the other party (indemnitee) harmless from and against any and all
claims, actions, liabilities, expenses, or damages (including but not limited to
attorney's fees and litigation expenses incurred by indemnitee to enforce this
Agreement or to prevent its breach, or both), hereinafter "claims," arising out
of the use of the Licensed Programs by the indemnifying party and/or its
licensee(s). LICENSEE AND LICENSOR STIPULATE THAT THIS AGREEMENT IS NOT AN
AGREEMENT AFFECTING THE PUBLIC, NOR IS IT A "CONSTRUCTION CONTRACT" (AS DEFINED
BY CALIFORNIA CIVIL CODE SECTION 2783), OR AN AGREEMENT CONTAINED IN, COLLATERAL
TO, OR AFFECTING A CONSTRUCTION CONTRACT.
6.4 The indemnity provided herein is intended by the parties to be
effective to the maximum extent permitted by the applicable law and should be so
construed and interpreted by any reviewing court or arbitrator.
ARTICLE VII
GENERAL
7.1 The obligations of the parties in Article 3 and Article 6 shall
survive any expiration or termination of this Agreement.
<PAGE>
5
7.2 This Agreement, together with the Asset Purchase Agreement,
states the entire agreement between the parties concerning its subject matter
and supersedes all related prior oral and written negotiations and
understandings. No representation, condition, understanding, statement of
intention or agreement of any kind, oral or written, shall bind either party
unless set forth or specifically incorporated in this Agreement.
7.3 No waiver, alteration, modification or cancellation of any of
the provisions of this Agreement shall be binding unless made in writing and
signed by the parties. The waiver by either party of any breach of this
Agreement shall not be a waiver of any subsequent breach, nor shall it be a
waiver of the underlying obligation.
7.4 The license to use the Licensed Programs is personal to LICENSEE
and LICENSEE may not transfer, sublicense or disclose the Licensed Programs to
any other party or assign this Agreement, except as provided expressly in this
Agreement, without the express written permission of LICENSOR. Notwithstanding
the foregoing, LICENSEE may assign its rights under this Agreement to any of its
lenders upon the sale (whether by sale of stock, merger, sale of assets or
otherwise) of all or substantially all of the assets of the business conducted
by LICENSEE. Any such assignment shall not relieve LICENSEE of its obligations
under Articles 3 and 6.
7.5 If any provision in this Agreement is, for any reason, held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision contained in this
Agreement.
7.6 All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given (i) if personally delivered,
when so delivered, (ii) if mailed, two Business Days after having been sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, (iii) if given by telex
or telecopier, once such notice or other communication is transmitted to the
telex or telecopier number specified below and the appropriate answer back or
telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (ii) above or (iv) if sent through a reputable overnight delivery service
in circumstances to which such service guarantees next day delivery, the day
following being so sent:
<PAGE>
6
If to UNOCAL:
Union Oil Company of California
P.O. Box 76
376 South Valencia Avenue
Brea, California 92621
Attn: Chief License Counsel
(for legal notices)
Telecopy: (714) 577-1297
If to LICENSEE:
National Auto/Truckstops, Inc.
c/o Unocal Products and Chemicals Division
1650 East Golf Road
Schaumburg, Illinois 60196-1088
Attn: William Osborne
Telecopier: (708) 330-5835
Copy to: The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Louis J. Mischianti
Telecopier: (212) 318-1360
Copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attn: Stuart I. Oran, Esq.
Telecopier: (212) 757-3990
Either party may give notice, request, demand, claim or other communication
hereunder using any other means (including ordinary mail or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless it actually is received by the individual
for whom it is intended. Either party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other party notice in the manner herein set forth.
7.7 THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, EXCLUDING ITS CONFLICT OF LAWS
RULES.
<PAGE>
7
ARTICLE VIII
SIGNATURES
NATIONAL AUTO/TRUCKSTOPS, INC. UNION OIL COMPANY OF CALIFORNIA
By: /s/ James Bauchiero By: /s/ A.J. Eliskalns
----------------------------- -----------------------------
Name: James Bauchiero Name: A.J. Eliskalns
Title: Vice President and Title: Vice President
Chief Financial Officer
EXHIBIT 10.14
TRADEMARK LICENSE AGREEMENT
---------------------------
(Unocal Agreement No. 09578)
THIS TRADEMARK LICENSE AGREEMENT (this "Agreement"), effective as of
the Closing Date as defined in the Asset Purchase Agreement dated as of November
23, 1992 (the "Asset Purchase Agreement"), made by and between UNION OIL COMPANY
OF CALIFORNIA, a California corporation doing business as UNOCAL (hereinafter
referred to as "UNOCAL"), and NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware
corporation (hereinafter referred to as "NATIONAL").
WHEREAS, NATIONAL and UNOCAL have entered into the Asset
Purchase Agreement; and
WHEREAS, each of UNOCAL and NATIONAL is obligated under the Asset
Purchase Agreement to enter into this Agreement; and
WHEREAS, UNOCAL is the owner of certain marks (including without
limitation "UNOCAL", "76" and "UNOCAL 76") when used as registered or
unregistered trademarks and/or trade names in various fields, including the
field of manufacturing and marketing various petroleum and related products and
services; and
WHEREAS, UNOCAL is also the owner of certain registered and/or
unregistered product trademarks and/or service marks used in connection with the
manufacture and sale of various petroleum and related products and services; and
WHEREAS, UNOCAL has established and maintains very high standards
for its products and services and in its business practices, with the result
that it has achieved excellent customer acceptance of its products and services;
and
WHEREAS, NATIONAL desires to acquire the right to use the aforesaid
marks, product trademarks and service marks in connection with the marketing of
petroleum and related products and the manufacture of fuel products; and
WHEREAS, it is very important to both parties that UNOCAL continue
to maintain its high standards in its related activities, and that NATIONAL
conform to such standards in its activities hereunder, in order to ensure that
both parties benefit from the substantial name recognition and customer loyalty
which stems from those high standards;
NOW, THEREFORE,, in consideration of the mutual covenants,
agreements and undertakings contained or referred to in this Agreement, the
parties hereby agree as follows:
<PAGE>
ARTICLE ONE - DEFINITIONS
1.1 DEFINITIONS - Each capitalized term used herein but not
otherwise defined herein shall have the meaning assigned to it in the Asset
Purchase Agreement. In addition, as used herein:
(a) "APPROVED PRODUCTS" shall mean those Products which meet
or exceed the specifications for that type of Product as established by UNOCAL
as of the date hereof (subject to any changes necessary to comply with
applicable law or which represent changes in specifications of a product
actually marketed by UNOCAL or its Affiliate in the relevant marketing area or
changes agreed to by the parties) and any additional products designated as
Approved Products by agreement of the parties.
(b) "APPROVED SERVICES" shall mean Services which meet or
exceed the standards for that type of Service established as of the date hereof.
(c) "AUTO/TRUCKSTOP" shall mean those fuel facilities within
the Territory which include the features set forth therefor in Schedule II, or
are excluded from certain requirements or restrictions by the provisions of
Schedule II.
(d) "BLS INDEX", as used with respect to a particular calendar
year, shall mean the average of the monthly indices for the consecutive twelve
[12] month period ending October 31 of the preceding calendar year from the
"Producers Price Index of Industrial Commodities" as published by the Bureau of
Labor Statistics, United States Department of Labor, using the year 1982 as the
base index equal to 100. If , at any time, the above index should cease to be
published, then another suitable index shall be substituted upon notice by
UNOCAL to NATIONAL.
(e) "BLS FACTOR" is a number equal to (a) the BLS Index for
the calendar year in which a payment is actually made, divided by (b) the BLS
Index for the twelve (12) month period ending October 31, 1992.
(f) "DESIGNATED FACILITY" shall mean an Auto/Truckstop
and/or a Fuel Stop.
(g) "EXISTING FACILITY" shall mean an Auto/Truckstop or Fuel
Stop facility of UNOCAL or its Reseller listed on Schedule A.
(h) "FUEL STOP" shall mean those fuel facilities within the
Territory which include the features set forth therefor in Schedule II, or are
excluded from certain requirements or restrictions by the provisions of Schedule
II.
2
<PAGE>
(i) "INTERSTATE HIGHWAY" shall mean a highway which is or
becomes part of the United States interstate highway system.
(j) "MARKS" shall mean those registered or unregistered marks
which are identified in Schedule I attached hereto.
(k) "MISCELLANEOUS MARKS" shall mean all marks and service
marks, registered and unregistered, utilized by UNOCAL in connection with its
auto/truckstop network prior to the Closing Date; provided, that Miscellaneous
Marks shall not include (i) the Marks, (ii) "Pure", "Firebird" or "Protech",
(iii) the Service Marks and (iv) any marks or service marks conveyed to National
pursuant to the Asset Purchase Agreement.
(l) "NATIONAL FACILITY or UNOCAL FACILITY or UNO-VEN FACILITY"
shall mean a retail fuel facility of NATIONAL, UNOCAL or The UNO-VEN Company,
respectively, or its Reseller at which one or more of the Marks and/or Service
Marks is used.
(m) "PAD V AREA" shall mean the states of Arizona, California,
Nevada, Oregon and Washington.
(n) "PRODUCTS" shall mean petroleum and related products
(including without limitation petroleum fuels and lubricants, automobile and
other vehicular parts, accessories, as well as clothing, recreational gear,
stationery, hardware supplies, toiletries, notions, and the like), but excluding
petrochemicals (such as solvents, polymers and the like, agricultural chemicals,
specialty chemicals, needle coke, and the like).
(o) "RESELLERS" shall mean third parties (such as
distributors, marketers, operators and retail dealers) licensed by UNOCAL or
sublicensed by NATIONAL to use the Marks or which are otherwise permitted to
sell Unocal Branded Products or provide Unocal Branded Services.
(p) "SERVICE MARKS" shall mean those registered or
unregistered service marks which are identified in Schedule I.
(q) "SERVICES" shall mean services provided to customers by a
party hereto or its Resellers in connection with the marketing of Unocal Branded
Products, including without limitation vehicle repair and maintenance services,
car washing, towing, food services, shower facilities, and the like.
(r) "STANDARD METROPOLITAN STATISTICAL AREA" shall mean an
area (i) which comprises a city with a population of at least 50,000, or (ii)
which contains an urbanized area of at least 50,000 within a total metropolitan
area population of at least 100,000. In addition to the county containing the
central city, a
3
<PAGE>
Standard Metropolitan Statistical Area may include additional counties that have
close economic and social ties to the core county.
(s) "TERRITORY" shall mean the area within one (1) mile of the
center line of an Interstate Highway located in the lower 48 contiguous states
of the United States of America.
(t) "UNOCAL BRANDED PRODUCT" shall mean any Product which
bears or is marketed using any of the Marks.
(u) "UNOCAL BRANDED SERVICES" shall mean any Service or which
is marketed using any of the Marks or any of the Service Marks.
(v) "UNO-VEN AREA" shall mean the area listed as such in
Schedule III.
(w) "UNO-VEN AUTO/TRUCKSTOP AREA", as used with respect to a
UNO-VEN Facility which uses one or more of the Marks, shall mean any location
within the UNO-VEN Area which:
(i) is on or along an Interstate Highway, and (A) is
less than two (2) miles from a UNO-VEN Area Existing Facility, or (B) is less
than twenty-five (25) miles from a UNO-VEN Area Existing Facility (if such
UNO-VEN Facility dispenses diesel fuel, but through no more than two (2) hoses),
or (C) is less than one hundred (100) miles from a UNO-VEN Area Existing
Facility (if such UNO-VEN Facility dispenses diesel fuel through more than two
(2) hoses); or
(ii)is on or along any street, highway or road that
intersects an Interstate Highway at the location of a UNO-VEN Area Existing
Facility (an "Intersecting Road"), and (A) is less than one (1) mile from a
UNO-VEN Area Existing Facility, or (B) is less than twenty-five (25) miles from
a UNO-VEN Area Existing Facility (if such UNO-VEN Facility dispenses diesel
fuel, but through no more than two (2) hoses), or (C) is less than fifty (50)
miles from a UNO-VEN Area Existing Facility (if such UNO-VEN Facility dispenses
diesel fuel through more than two (2) hoses);
provided, however, that notwithstanding clauses (ii)(A) through (ii)(C) above,
no UNO-VEN Facility shall be considered to be located within the UNO-VEN
Auto/Truckstop Area if such UNO-VEN Facility primarily serves customers arriving
from or traveling on or to an Interstate Highway adjacent to or parallel to the
Interstate Highway on which the UNO-VEN Area Existing Facility is located. For
purposes of this definition, (i) the above mileages shall be measured from the
nearest point of access for the UNO-VEN Area Existing Facility to the nearest
point of access for the UNO-VEN Facility in question along the shortest
connecting roadway between the two; and (ii) a given location shall be
considered to be "on or along" an Interstate
4
<PAGE>
Highway or Intersecting Road if it is located (A) directly on or alongside such
Interstate Highway or Intersecting Road, or (B) within a radius of two (2) miles
from the point of access of the Interstate Highway or Intersecting Road to such
location.
(x) "UNO-VEN Area Existing Facility" shall mean a facility
which is listed on Schedule IV.
ARTICLE TWO - LICENSE
2.1 LICENSE GRANT/EXTENSION TO RESELLERS - Subject to the terms
hereof, UNOCAL hereby grants to NATIONAL in the Territory (i) an exclusive
license to use the Marks, the Miscellaneous Marks and/or Service Marks in
connection with marketing Approved Products and Approved Services through
Designated Facilities (both Auto/Truckstops and Fuel Stops) (ii) a license to
affix the Marks and the Miscellaneous Marks to fuel products which are Approved
Products marketed and sold through Designated Facilities, and (iii) the right
and power to sublicense others to use the Marks, the Miscellaneous Marks and/or
Service Marks in connection with the marketing of Approved Products and Approved
Services through Designated Facilities, all subject to the following
limitations:
(a) WITHIN THE UNO-VEN AREA: The licenses granted above shall
apply only to UNO-VEN Area Existing Facilities. However, NATIONAL shall have the
right to extend the licenses granted above to replacement facilities in the
UNO-VEN Area provided that (i) the total number of Designate Facilities using
the Marks and operating within the UNO-VEN Area at any one time shall not exceed
fifty-two (52), (ii) no replacement Designated Facility shall be located so as
to place an existing UNO-VEN Facility within the UNO-VEN Auto/Truckstop Area,
and (iii) the products an services sold through such replacement Designated
Facility shall not differ materially from those of the existing Designated
Facility being replaced. NATIONAL shall give UNOCAL one hundred twenty (120)
days' prior written notice of its intention to build any replacement Designated
Facility, which notice shall be accompanied by sufficient information to
describe the parameters of the replacement facility and the operation thereof.
Otherwise, NATIONAL must first obtain the prior written approval of The UNO-VEN
Company before operating any other Designated Facility using the Marks within
the UNO-VEN Area. NATIONAL shall submit a branding request to UNOCAL which will
forward it to The UNO-VEN Company for its approval.
(b) WITHIN THE PAD V AREA (EXCLUDING CALIFORNIA: The licenses
granted above may be extended to new Auto/Truckstops without prior approval of
UNOCAL. The licenses granted above may be extended to new Fuel Stops, but only
with the prior written approval of UNOCAL. Notwithstanding the foregoing, prior
written approval of UNOCAL is not required if, after such extension of a
license, the total number of NATIONAL Facilities within the PAD V Area
5
<PAGE>
(excluding California) does not exceed five (5). The licenses granted above may
not be extended to any other facilities other than as indicated above, nor may
they be extended to any facility (i) if such facility is located in a Standard
Metropolitan Statistical Area, it is located closer than a one (1) mile radius
from a UNOCAL Facility then in existence or (ii) if such facility is not located
in a Standard Metropolitan Statistical Area, it is located closer than a five
(5) mile radius from a UNOCAL Facility then in existence.
(c) WITHIN CALIFORNIA: The licenses granted above may be
extended to new Designated Facilities within California only with the prior
written approval of UNOCAL. Notwithstanding the foregoing, prior written
approval of UNOCAL is not required if, after such extension of a license, the
total number of NATIONAL Facilities within California does not exceed the total
number of NATIONAL Facilities in California as of the Closing Date, provided
that such new Designated Facility is not located within one (1) mile of a UNOCAL
Facility then in existence, measured along the Interstate Highway or any street,
highway or road upon which such UNOCAL Facility is located.
Any and all contracts extending NATIONAL's license to use the Marks and/or
Service Marks to its Resellers, shall be in writing and in a form which has
first been approved by UNOCAL in writing, which approval shall not be
unreasonably withheld. UNOCAL shall have the right, at its expense, upon
reasonable notice, to inspect and copy all fully signed extensions or contracts.
No other right or license, express or implied, is granted under this Agreement
by either party hereto for the use of any trademark, service mark or trade name.
2.2 FUTURE MARKS. Notwithstanding the last sentence of Section 2.1
hereof, in the event UNOCAL in the future uses or licenses any marks or service
marks in the Territory not identified in Schedule I (other than Pure, Firebird
and Protech), the parties agree to negotiate in good faith a nonexclusive
license with respect to the use of such marks or service marks in connection
with Designated Facilities.
2.3 MANUFACTURE OF UNOCAL BRANDED PRODUCTS. UNOCAL shall provide to
NATIONAL the formulations of, and specifications for (including, without
limitation, specifications relating to product quality, distributing and
storing), all fuel products sold as Unocal Branded Products which were being
sold by UNOCAL or its Resellers in the Territory at any time during the six
month period immediately prior to the date of this Agreement and will continue
to provide any updated formulations and specifications which UNOCAL may
establish for such fuel products during the term of this Agreement. UNOCAL
hereby authorizes NATIONAL to make and/or have made and to affix the appropriate
Mark(s) to such fuel products which qualify as Approved Products pursuant to the
license granted in Section 2.1, above. UNOCAL agrees to make available to
NATIONAL and/or its Resellers all other Approved Products for resale pursuant to
one or more separate agreements.
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<PAGE>
2.4 REGISTRATION OF MARKS. Where permitted or required by law,
NATIONAL shall be registered as a permitted user of the Marks and Service Marks,
and any use of the same by NATIONAL prior to or after such registration shall
inure to the benefit of UNOCAL. NATIONAL and UNOCAL will cooperate with each
other in obtaining and maintaining registration of the Marks and the Service
Marks, as well as such other marks and service marks as UNOCAL may reasonably
request, in the Territory or elsewhere, including execution of any documents
necessary for such registration and/or for registration of NATIONAL as a
permitted user thereof.
2.5 TITLE. No ownership interest in the Marks or in the Service
Marks is conveyed to NATIONAL hereunder; all title in and to the same shall
remain with UNOCAL. NATIONAL agrees that it will not acquire (by use,
registration or otherwise) any trade name, trademark or service mark which is
confusingly similar to or likely to conflict with the Marks and/or the Service
Marks. UNOCAL agrees that NATIONAL shall have the right to use its own name to
indicate that NATIONAL is the manufacturer or packager of any Products or
Services manufactured or packaged by it for sale.
2.6 MANNER OF USE OF TRADEMARKS AND SERVICE MARKS. NATIONAL agrees
that it shall use the Marks and the Service Marks, as the case may be, (a)
solely upon and/or in connection with the operations of Designated Facilities
and/or the sale of Approved Products and/or Approved Services pursuant to the
license granted in Paragraph 2.1 hereof, and (b) solely in strict compliance
with instructions supplied from UNOCAL to NATIONAL from time to time consistent
with UNOCAL's own use of the same, concerning the manner of use of such Marks
and Service Marks (including but not limited to UNOCAL's manual concerning the
standards for signs, colors, appearance, etc. of the same, and UNOCAL's manual
concerning packaging and label requirements), and (c) only during the term of
this Agreement. Notwithstanding the foregoing, UNOCAL may (in the sole
discretion of its product specification committee) elect to waive minor
variations from UNOCAL's specifications for Approved Products on a lot by lot
basis. In the event that UNOCAL changes the specifications with respect to the
manner of use of any Mark or Service Mark during the term of this Agreement,
NATIONAL shall be permitted up to one [1] year after such change to complete
compliance with such change at all Designated Facilities.
ARTICLE THREE - BRAND MAINTENANCE
3.1 MARKETING RESPONSIBILITIES. Each party's responsibilities
concerning the marketing of Products and Services using the Marks and/or the
Service Marks, during the term of this Agreement, shall be as follows:
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(a) UNOCAL shall not have any responsibility for promoting and
maintaining customer acceptance of any Unocal Branded Products and Unocal
Branded Services sold by NATIONAL and/or its Resellers.
(b) CUSTOMER RELATIONS. NATIONAL shall ensure that all of the
Designated Facilities of NATIONAL and/or its Resellers shall, in accordance with
the standards established by UNOCAL from time to time, provide courteous and
efficient service, use fair and honest selling techniques, and provide equitable
treatment of all of their customers, in order to serve adequately and promptly
the customer's needs for Products and Services. This shall include, but not be
limited to, serving the public with care, prudence, good judgment, skill and
courtesy, and refraining from using any dishonest, or fraudulent selling
practices.
(c) RESPONSES TO CUSTOMER COMPLAINTS. The frequency and
handling of customer complaints will be an important measure of NATIONAL's
maintenance of customer acceptance. Accordingly, NATIONAL and its Resellers
shall develop and follow a procedure (reasonably acceptable to UNOCAL) for
documenting and resolving customer complaints, which procedure shall be at least
as favorable to the customer as UNOCAL's corresponding procedure as of the date
hereof. NATIONAL's customer complaint procedure shall include benchmarks for
minimum standards with respect to customer complaint levels. NATIONAL shall
maintain records of each customer complaint received (including the details of
the nature of the complaint and of the resolution of the complaint) for UNOCAL's
inspection (in a non-interfering manner during customary business hours) and
determination of whether or not NATIONAL and its Resellers are in compliance
with the provisions of this Section.
(d) UNIFORM WARRANTY OFFERING. The parties agree that each of
them and their Resellers will offer substantially uniform warranties and/or
guarantees with respect to the marketing of Unocal Branded Products within the
Territory. Any modifications of such warranties and/or guarantees shall be made
only by mutual agreement of NATIONAL and UNOCAL; PROVIDED, HOWEVER, that the
parties shall use their best efforts to offer comparable warranties and
guarantees within the Territory. Further, each of the parties and their
Resellers shall act cooperatively and promptly to resolve any warranty or
guarantee claims presented to them by a customer of any of them, without regard
(as far as such customer is concerned) of which of them supplied the Product in
question. The responding party or Reseller and the party or Reseller supplying
the Product in question will then negotiate an equitable compensation for the
responding party or Reseller's efforts.
(e) QUALITY CONTROL. In order for UNOCAL to be able to ensure
that the Products marketed by NATIONAL and/or its Resellers through Designated
Facilities or as Unocal Branded Products, conform to the specifications for
Approved Products of that type, NATIONAL will permit, and shall require its
Resellers to permit, an authorized representative of UNOCAL to enter NATIONAL
8
<PAGE>
its contractors' and/or its Resellers' premises (in a non-interfering manner
during customary business hours) where such Products are manufactured, stored,
shipped and/or marketed, so as to inspect the facilities, processes, containers
and materials used by NATIONAL, its contractors and/or Resellers in
manufacturing and/or marketing such Products, and to procure one or more samples
thereof for UNOCAL's testing for conformance to such specifications. The product
specifications shall be those established as of the date of this Agreement.
NATIONAL may request a change to any specification by reasonable prior written
notice, subject to the written approval of UNOCAL, which approval shall not be
unreasonably withheld. Similarly, NATIONAL shall permit an authorized
representative of UNOCAL to enter NATIONAL and/or its Resellers' premises (in a
non-interfering manner during customary business hours) so as to inspect the
Unocal Branded Services provided for conformance to the specifications for
Approved Services of that type.
(f) FIVE STAR PROGRAM. As a condition of the license terms
granted hereunder, NATIONAL shall at all times during the term of this Agreement
implement a Five Star quality program substantially as offered by UNOCAL as of
the date of this Agreement and as is described in Schedule V, attached hereto.
(g) INDUSTRY OR OTHER STANDARDS. Neither NATIONAL nor its
Resellers shall claim that any of Unocal Branded Products or Unocal Branded
Services which are marketed by it meet any industry or other performance
standards unless (i) UNOCAL has first given NATIONAL UNOCAL's written
concurrence therein, or (ii) UNOCAL's specification sheets or promotional
materials expressly indicate that such products or services meet such industry
or other performance standards.
(h) COMPLIANCE WITH THE LAW. NATIONAL shall use its best
efforts to ensure that all operations at the Designated Facilities of NATIONAL
and/or its Resellers which are reasonably related to the use of any or all of
the Marks and/or Service Marks are in compliance with all laws, ordinances and
regulations of the relevant governmental authorities, particularly the Clean Air
Act, the Occupational Safety and Health Act, and other regulations governing the
storage, dispensing, and sale of Products or the providing of Services.
3.2 DEBRANDING OF DESIGNATED FACILITIES. NATIONAL shall establish
and maintain a level of standards for the Designated Facilities of NATIONAL and
facilities of its Resellers which are (i) at least equal to the general level of
standards UNOCAL required for its own similar facilities as of the date hereof,
or (ii) which meet or exceed the standards of the average competitor in the
market relevant to such facility. In the event that any particular Designated
Facility of NATIONAL or its Resellers fails to meet such standards, and fails to
remedy such failure as promptly as practicable after NATIONAL's receipt of
written notice from UNOCAL, or in the event such a Designated Facility
repeatedly fails to meet such standards (even if it endeavors to remedy the
individual failures), UNOCAL may
9
<PAGE>
demand that NATIONAL initiate and diligently pursue proceedings to debrand such
facility, and NATIONAL agrees that it shall, as promptly as the law allows,
undertake whatever steps are required to lawfully remove, or cause to be
removed, all Marks and/or Service Marks from such facility and the Unocal
Branded Products and Unocal Branded Services marketed at or from such facility.
ARTICLE FOUR - FEES AND REPORTING
4.1 FEES. In consideration of and in recognition of the significant
benefits which will accrue to the operations of the Designated Facilities of
NATIONAL and its Resellers, and to NATIONAL and its Resellers' other marketing
of Unocal Branded Products and Unocal Branded Services pursuant to the license
granted in Section 2.1 hereof, NATIONAL agrees that it shall pay to UNOCAL a fee
of Six Hundred Thousand United States Dollars [$600,000 U.S.] per year. The
above amount as calculated for each calendar year shall be adjusted annually by
multiplying said amount by the BLS Factor. If this Agreement becomes effective
as of a date other than January 1, or terminates as of a date other than
December 31, then for the calendar year in which this Agreement becomes
effective or terminates, as the case may be, the fee shall be determined by
multiplying a fraction, the numerator of which shall be the number of days the
Agreement is in effect during the calendar year and the denominator of which
shall be the total number of days in the calendar year (either 365 or 366),
times the amount that otherwise would be payable for the full calendar year
pursuant to this Section 4.1.
4.2 REPORTS AND PAYMENTS. On or before the last day of each calendar
quarter (whether March 31, June 30, September 30, or December 31), NATIONAL
shall render to UNOCAL a payment equal to one-fourth (1/4) of the annual fee due
for the year in which such calendar quarter falls as set forth in Section 4.1
above; provided, however, that if payment pursuant to the foregoing provision
would result in an underpayment of the total fees due for a year, then the
December 31 payment shall be increased to include all amounts due and unpaid for
the year. Any amount due under this Section that is not paid as of the due date
shall bear interest at the Reference Rate set forth in the Asset Purchase
Agreement.
ARTICLE FIVE - INDEMNIFICATION
5.1 NATIONAL LIABILITY. Except to the extent provided in any other
agreement between the parties and subject to the provisions of this Article
Five, from and after the date hereof NATIONAL agrees to pay and to indemnify
fully, hold harmless and defend UNOCAL and its Affiliates, agents, officers,
directors, partners, employees, servants, consultants and assigns from and
against any and all claims based upon allegations of and/or damages (whether
based on negligent acts or omissions, statutory liability, strict liability or
otherwise), but excluding any claims
10
<PAGE>
based upon allegations of or damages arising out of any UNOCAL Liability, as
defined hereinbelow, arising out of:
(a) any Product or Service sold or otherwise transferred or
furnished to any member of the public by NATIONAL or its Resellers;
(b) any act or omission by NATIONAL or its Resellers in
connection with the lawful exercise of any phase of their respective businesses;
(c) any breach of this Agreement by NATIONAL; and
(d) any violation of any valid and applicable law, statute,
regulation or ruling issued by any governmental agency in the proper exercise of
its authority, or willful misconduct by NATIONAL or its Resellers.
Each of the liabilities described in Section 5.1(a)-(d) shall be defined as a
"NATIONAL Liability".
5.2 UNOCAL LIABILITY. Except to the extent provided in any other
agreement between the parties and subject to the provisions of this Article
Five, from and after the date hereof UNOCAL agrees to pay and to indemnify
fully, hold harmless and defend NATIONAL and its Affiliates, agents, officers,
directors, partners, employees, servants, consultants and assigns from and
against any and all claims based upon allegations of and/or damages (whether
based on negligent acts or omissions, statutory liability, strict liability or
otherwise), but excluding any claims based upon allegations of or damages
arising out of any NATIONAL Liability, as defined hereinabove, arising out of:
(a) any Product or Service sold or otherwise transferred or
furnished to any member of the public by UNOCAL or its Resellers, either
directly or through NATIONAL;
(b) any act or omission by UNOCAL or its Resellers in
connection with the lawful exercise of any phase of their respective businesses;
(c) any breach of this Agreement by UNOCAL; and
(d) any violation of any valid and applicable law, statute,
regulation or ruling issued by any governmental agency in the proper exercise of
its authority, or willful misconduct by UNOCAL or its Resellers.
Each of the liabilities described in Section 5.2(a)-(d) shall be defined as a
"UNOCAL Liability".
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5.3 CLAIMS. Any party making a claim under this Article Five shall
follow the method of asserting claims set forth in Section 7.3 of the Asset
Purchase Agreement.
ARTICLE SIX - CONFIDENTIALITY
6.1 CONFIDENTIAL INFORMATION. NATIONAL agrees that it will maintain
in confidence and prevent the duplication or disclosure to others of UNOCAL's
Confidential Information, except that NATIONAL, to the extent necessary for its
manufacture, use and/or sale of Unocal Branded Products, may disclose UNOCAL's
Confidential Information to its suppliers or NATIONAL's Resellers under written
obligations of confidentiality at least as stringent as those contained herein.
NATIONAL agrees that it shall not use UNOCAL's Confidential Information for any
purpose other than as specifically contemplated hereunder. For purposes of this
Agreement, the term "Confidential Information", shall mean confidential
information disclosed directly or indirectly by UNOCAL hereunder, including, but
not limited to, product information disclosed pursuant to Sections 2.4 and 3.1,
except:
(a) information which at the time of its disclosure is in the
public domain; or
(b) information which after disclosure hereunder becomes part
of the public domain by publication or otherwise through no fault of NATIONAL
(but only after it is published or otherwise becomes part of the public domain);
or
(c) information which NATIONAL can show was, at the time of
its receipt of the same hereunder, either developed by and/or for NATIONAL or
previously received by the recipient from a party who had a lawful right to
disclose the same and who did not require NATIONAL to hold the same in
confidence; or
(d) information which was received by NATIONAL after the time
of its disclosure hereunder from a third party who had a lawful right to
disclose the same to NATIONAL and who did not require NATIONAL to hold the same
in confidence.
For the purposes of this Section 6.1, specific technical information shall not
be deemed to be within any of the above four exceptions merely because it is
embraced by more general information within one of said exceptions; nor shall a
combination of features be deemed to be within any of said exceptions merely
because the individual features, separately considered, are within said
exceptions.
6.2 Nothing in this Agreement shall prohibit NATIONAL from
disclosing any Confidential Information as specifically required by law;
including, but
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<PAGE>
not limited to, the federal securities laws, or as required by the rules and
regulations of any securities exchange on which any securities or NATIONAL may
be listed, provided that such disclosure is made so as to secure any
confidentiality protection available under the applicable law.
ARTICLE SEVEN - TERM AND TERMINATION
7.1 TERM. This Agreement shall become effective as of the date first
written above and shall remain in full force and effect for a period of ten [10]
years from the Closing Date and thereafter for successive terms of two (2) years
each; PROVIDED, HOWEVER, that by written notice to the other party, either party
may terminate this Agreement as follows: (i) as of the end of the initial ten
(10)-year term, by such a notice delivered within eight (8) years of the Closing
Date, or (ii) as of the end of any subsequent two (2)-year term, by such a
notice delivered on, or prior to, the commencement date of that term.
Notwithstanding the above, this Agreement may also be terminated as follows:
(a) by written mutual consent of the parties at any time;
(b) by UNOCAL, upon ten [10] days' prior written notice, if
NATIONAL is in default of a material provision hereunder and fails to correct
such default within ninety [90] days of such written notice of default;
PROVIDED, HOWEVER, that if the action of any one or more of NATIONAL's Resellers
results in a default by NATIONAL, NATIONAL's commencement and diligent pursuit
of action against such Reseller(s) shall satisfy its obligation to correct such
default for the purposes of this Section 7.1;
(c) By NATIONAL, upon 180 days' prior written notice.
7.2 RENEWAL. If UNOCAL has delivered a termination notice pursuant
to Section 7.1 (i) or (ii) above, NATIONAL may at any time during the final year
of the initial ten (10)-year term or subsequent two (2)-year term, as the case
may be, request that the Agreement be renewed. UNOCAL agrees to negotiate in
good faith the terms on which such renewal would be granted.
7.3 CONTINUING OBLIGATIONS. Upon and after any termination of this
Agreement:
(a) Each party shall remain obligated to make any payment that
became due to the other hereunder prior to termination.
(b) Liabilities of any party arising from any act, default or
occurrence prior to termination shall remain with such party.
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(c) The parties' rights and obligations under Sections 2.4,
2.5, 4.3 and Articles 5 and 6 shall survive termination of this Agreement.
7.4 DISPOSAL OF INVENTORY FOLLOWING TERMINATION. In the event that
NATIONAL or its Resellers, upon the termination or expiration of this Agreement
for any reason, have in inventory any Approved Products bearing the Marks which
have been manufactured but not sold, NATIONAL or said Reseller may sell such
Approved Products for a period of six [6] months following such termination or
expiration without having to remove such Marks from such Approved Products.
Thereafter, NATIONAL must remove the Marks from all of its and its Resellers'
Products.
7.5 OTHER OBLIGATIONS ON TERMINATION. Upon termination of this
Agreement, NATIONAL shall:
(a) immediately take all steps to cease using the Marks and/or
the Service Marks (including but not limited to removing the same from
packaging, advertising, commercial registers and directories, telephone
directories, and similar listings) as promptly as possible, which obligation
shall include a positive duty to remove the Marks and Service Marks from
Designated Facilities of NATIONAL and its Resellers, and from any unsold Unocal
Branded Products or Unocal Branded Services (other than as provided in Section
7.4 hereof);
(b) not thereafter use the Marks or the Service Marks, or any
confusingly similar mark, trademark or service mark, in any manner or form
whatsoever in the conduct of NATIONAL's or its Resellers' business (other than
as authorized in Section 7.4 hereof), unless specific prior written permission
to do so has been given by UNOCAL; and
(c) within thirty (30) days, pay to UNOCAL all amounts
remaining due under Section 4.1 for the calendar year in which the Agreement
terminates.
7.6 CONSENT TO INJUNCTIVE RELIEF. If NATIONAL or its Resellers fail
for any reason to remove the Marks or the Service Marks as provided herein or
otherwise to observe the covenants set forth in this Agreement, NATIONAL agrees
and hereby specifically consents to, and shall require its Resellers to agree
and consent to, UNOCAL's obtaining a decree of a court having suitable
Jurisdiction ordering NATIONAL and/or its Resellers to immediately comply with
such covenants. Said consent is based on an acknowledgment by NATIONAL and its
Resellers that monetary payments alone would be an inadequate remedy for UNOCAL.
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ARTICLE EIGHT - RIGHT OF ASSIGNMENT
8.1. ASSIGNMENT. This Agreement is personal to NATIONAL, and
NATIONAL may not assign any of its rights or benefits or delegate any of its
duties or obligations under this Agreement, and any attempted assignment or
delegation without the express prior written consent of UNOCAL shall be null,
void and without effect. The preceding sentence shall not limit the rights
granted in Section 2.1(iii).
8.2 SUCCESSORS AND ASSIGNS. The rights, benefits, duties and
obligations of each party hereto shall inure to the benefit of, and be binding
upon, any successors, assigns or delegates consented to by UNOCAL.
8.3 OBLIGATIONS, SURVIVE ASSIGNMENT. Any assignment of this
Agreement by NATIONAL shall provide that NATIONAL shall not be relieved of its
obligations hereunder with respect to the confidentiality, duplication, use
and/or export of UNOCAL's Confidential information.
ARTICLE NINE - NOTICES
9.1 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given (i) if personally
delivered, when so delivered, (ii) if mailed, two Business Days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth below, (iii) if
given by telex or telecopier, once such notice or other communication is
transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter mailed in accordance
with the provisions of clause (ii) above or (iv) if sent through a reputable
overnight delivery service in circumstances to which such service guarantees
next day delivery, the day following being so sent:
If to UNOCAL:
FOR ALL PAYMENTS:
Union Oil Company of California
911 Wilshire Boulevard
Los Angeles, California 90017
Attn: A.J. Eliskalns
Telecopy: (213) 977-5835
15
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FOR ALL OTHER COMMUNICATIONS:
Union Oil Company of California
P.O. Box 76
376 South Valencia Avenue
Brea, California 92621
Attn: Chief License Counsel (for legal notices)
Telecopy: (714) 577-1297
If to NATIONAL:
National Auto/Truckstops, Inc.
c/o Unocal Petroleum Products and
Chemicals Division
1650 East Golf Road
Schaumburg, Illinois 60196-1088
Attn: William Osborne
Telecopier: (708) 330-5835
with a copy to:
The Clipper Group, L.P.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Louis J. Mischianti
Telecopier: (212) 318-1360
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attn: Stuart I. Oran, Esq.
Telecopier: (212) 757-3990
Either party may give notice, request, demands, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless it actually is
received by the individual for whom it is intended. Either party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
16
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ARTICLE TEN - MISCELLANEOUS
10.1 NO THIRD PARTY RIGHTS. This Agreement is intended to be solely
for the benefit of the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any person other than the parties
hereto, except as expressly provided to the contrary elsewhere in this
Agreement.
10.2 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the State of California without
reference to its conflicts-of-law principles.
10.3 ENTIRE AGREEMENT. This Agreement (including any Exhibits and
Schedules hereto) sets forth the entire understanding and agreement between the
parties as to the matters covered herein and supersedes and replaces any prior
understanding, agreement or statement of intent, in each case, written or oral.
10.4 WAIVERS AND AMENDMENTS. No waiver shall be deemed to have been
made by either party of any of its rights under this Agreement unless the same
shall be in a writing that is signed on its behalf by its authorized officer.
Any such waiver shall constitute a waiver only with respect to the specific
matter described in such writing and shall in no way impair the rights of the
party granting such waiver in any other respect or at any other time. This
Agreement shall not be amended or modified except by an instrument in writing
signed by the party against whom enforcement is sought.
10.5 UNO-VEN TRADEMARK LICENSE AGREEMENT. Unocal represents and
warrants to National that nothing in this Agreement conflicts with or causes a
breach or violation of the Trademark License Agreement dated December 1, 1989,
as amended, between The UNO-VEN Company and UNOCAL ("the UNO-VEN Trademark
License Agreement"). Without the prior consent of NATIONAL, UNOCAL shall not
amend, modify, waive or grant any consents with respect to any of the summarized
terms of the UNO-VEN Trademark License Agreement.
10.6 HEADINGS. The heading contained in this Agreement are for
convenience of reference only and do not qualify or affect in any way the
meaning or interpretation of this Agreement.
10.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
10.8 NOT A FRANCHISE AGREEMENT. This Agreement does not create, nor
is it intended by the parties to create, a "franchise" as contemplated by the
Petroleum Marketing Practices Act, 15 U.S.C. ss. 2801 et seq.
17
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
as of the date first written above.
UNION OIL COMPANY OF CALIFORNIA
By: /s/ A.J. Eliskalns
----------------------------------------------
Name: A.J. Eliskalns
--------------------------------------------
Title: Vice President
-------------------------------------------
Date:
--------------------------------------------
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ James Bauchiero
----------------------------------------------
Name: James Bauchiero
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
Date:
--------------------------------------------
18
EXHIBIT 10.15
[LETTERHEAD OF THE CLIPPER GROUP, L.P.]
April 12, 1993
National Auto/Truckstops Holdings Corporation
National Auto/Truckstops, Inc.
1650 East Golf Road
Schaumburg, IL 60196
Dear Sirs:
This letter confirms our agreement that The Clipper Group, L.P. and
Clipper Management Partners, L.P. (collectively, "Clipper") have been engaged by
National Auto/Truckstops Holdings Corporation ("Holdings") and National
Auto/Truckstops, Inc. ("National") to act as their exclusive financial advisors,
upon the terms and subject to the conditions set forth herein.
In connection with such engagement, if requested by National or
Holdings from time to time during the term hereof, Clipper shall, if it
determines in its discretion that it is willing and able to do so, provide
financial advisory services to National and Holdings, including, but not limited
to:
(i) analysis of the business, operations, financial condition and
future prospects of National;
(ii) advice to National and Holdings with respect to strategy and
tactics to be employed in future transactions;
(iii) strategic and financial planning;
(iv) advice relating to analysis and financing of future
investments;
(v) advice relating to future mergers, sales of assets or
recapitalization;
(vi) advice regarding public or private debt or equity financings,
including the selection of underwriters or placement agents;
(vii) analysis of acquisition candidates and the arranging of
financing necessary to effect such acquisitions; and
<PAGE>
2
(viii) analysis of divestitures or other such material transactions.
If Clipper shall determine to perform any such services, Holdings
and National shall compensate Clipper for such services at such rates as Clipper
shall establish from time to time, consistent with those rates customarily
charged at the time by nationally recognized investment banking firms for
similar services.
If Clipper shall determine that it is not willing or able to perform
any such services, Holdings and National may retain another independent
investment banking firm to provide the requested services. In all other
circumstances, Clipper shall be the exclusive financial advisor to Holdings and
National.
Upon consummation of National's acquisition of the assets of
Unocal's Auto/Truckstops network (the "Acquisition"), Holdings will pay to
Clipper a fee of $1,144,437.50 for Clipper's services in arranging and
negotiating debt and equity financing for the Acquisition. The above-mentioned
fee represents 0.5% of the capital raised in connection with the Acquisition
other than capital raised with respect to Holdings' Class A common stock.
In partial consideration for entering into this agreement, National
and Holdings will reimburse Clipper for all of its out-of-pocket expenses
(including, without limitation, the fees and expenses of its legal counsel)
incurred in connection with the Acquisition and related financing (including,
without limitation, the formation of investment partnerships). Holdings and
National will also indemnify Clipper pursuant to a letter agreement to be
entered into separately, a copy of which is attached as Exhibit A to this
letter.
This agreement will continue from the date hereof until such time as
of Clipper and its affiliates, including the Clipper managed partnerships, no
longer own, in the aggregate, 5% or more of the equity securities of National or
Holdings.
Please confirm that the foregoing is in accordance with your
understanding by signing and returning the enclosed duplicate of this letter.
Sincerely,
The Clipper Group, L.P.
Clipper Management Partners, L.P.
By: /s/ Bela R. Schwartz
----------------------------------------
Name: Bela R. Schwartz
----------------------------------------
Title: Treasurer
----------------------------------------
<PAGE>
3
Accepted and Agreed to:
National Auto/Truckstops Holdings Corporation
By: /s/ James Bauchiero
----------------------------------------
Name: James Bauchiero
----------------------------------------
Title: Vice President and Assistant Secretary
----------------------------------------
National Auto/Truckstops, Inc.
By: /s/ James Bauchiero
----------------------------------------
Name: James Bauchiero
----------------------------------------
Title: Vice President and Assistant Secretary
----------------------------------------
EXHIBIT 10.16
[LETTERHEAD OF THE CLIPPER GROUP, L.P.]
December 10, 1993
National Auto/Truckstops Holdings Corporation
National Auto/Truckstops, Inc.
3100 West End Avenue
Suite 200
P.O. Box 76
Nashville, TN 37202-0076
Dear Sirs:
Reference is made to the letter agreement between (i) The Clipper Group, L.P.
and Clipper Management Partners, L.P. (together, "Clipper"), and (ii) National
Auto/Truckstops Holdings ("Holdings") and National Auto/Truckstops, Inc.
("National"), dated April 12, 1993 (the "Agreement"), pursuant to which Clipper
has been engaged to act as exclusive financial advisor to Holdings and National.
In connection with the acquisition by Holdings of the truckstop network of
Truckstops of America (the "TA Acquisition"), and the granting of the option
described below, Holdings has requested an amendment to the Agreement for the
sole purpose of obtaining a limited waiver of Clipper's right to act as
exclusive financial advisor to Holdings with respect to the matters specified
below.
Accordingly, Clipper hereby waives its right to act as exclusive financial
advisor to Holdings for the sole and limited purpose of permitting the Board of
Directors of Holdings or the Repurchase Committee thereof to engage any other
financial advisor to advise on behalf of Holdings exclusively with respect to
the financing of the exercise and consummation by Holdings of the Repurchase
Option (as such term is defined in the Repurchase Agreement, dated as of
December 10, 1993, by and among Holdings and the other persons named therein.)
In addition, this will confirm that if the Repurchase Option is consummated, the
Agreement will terminate except for the provisions regarding fees, expenses and
indemnification.
Holdings, National and Clipper entered into a separate indemnification
agreement, which agreement was attached as Exhibit A to the Agreement (the
"Indemnification Agreement"). Holdings, National and Clipper now wish to amend
and restate the Indemnification Agreement in its entirety, a copy of which
amendment is attached hereto and supersedes in its entirety the Indemnification
Agreement.
<PAGE>
2
This amendment shall be governed by the laws of the State of New York (without
regard to its conflicts of law provisions) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
This amendment to the Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Except as expressly amended or waived hereby, all other terms and provisions of
the Agreement shall remain in full force and effect.
Please confirm your agreement with the foregoing by signing and returning the
enclosed counterpart of this letter.
Sincerely,
THE CLIPPER GROUP, L.P.
CLIPPER MANAGEMENT PARTNERS, L.P.
By: /s/ Louis J. Mischianti
-------------------------------------
Name: Louis J. Mischianti
-----------------------------------
Title:
----------------------------------
Accepted and Agreed to:
NATIONAL AUTO/TRUCKSTOPS HOLDINGS CORPORATION
By: /s/ James F. Blackstock
-------------------------------------
Name: James F. Blackstock
-----------------------------------
Title: Secretary
----------------------------------
NATIONAL AUTO/TRUCKSTOPS, INC.
By: /s/ James F. Blackstock
-------------------------------------
Name: James F. Blackstock
-----------------------------------
Title: Secretary
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<PAGE>
Exhibit A
December 10, 1993
The Clipper Group, L.P.
Clipper Capital Partners, L.P.
55 East 52nd Street
27th Floor
New York, New York 10055
Gentlemen:
In connection with your engagement to advise and assist us with the
acquisition of Unocal's Auto/Truckstop network, we hereby agree to indemnify and
hold harmless The Clipper Group, L.P. and Clipper Capital Partners, L.P.
(collectively, "Clipper") and its affiliates, the respective directors,
officers, partners, agents and employees of Clipper and its affiliates and each
other person, if any, controlling Clipper or any of its affiliates, to the full
extent lawful, from and against all losses, claims, damages, liabilities and
expenses incurred by them (including fees and disbursements of counsel) which
(A) are related to or arise out of (i) actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Company or (ii) actions taken or omitted to be taken by an indemnified
person with our consent or in conformity with our actions or omissions or (B)
are otherwise related to or arise out of Clipper's activities on our behalf
under Clipper's engagement, and we will reimburse Clipper and any other person
indemnified hereunder for all expenses (including fees and disbursements of
counsel) as they are incurred by Clipper or such other indemnified person in
connection with investigating, preparing or defending any such action or claim
whether or not in connection with pending or threatened litigation in which
Clipper or any other indemnified person is a party. We will not be responsible,
however, for any losses, claims, damages, liabilities or expenses pursuant to
clause (B) of the preceding sentence which are finally judicially determined to
have resulted exclusively from the willful misconduct or gross negligence of the
person seeking indemnification hereunder. We also agree that neither Clipper,
nor any of its affiliates, nor any director, officer, partner agent or employee
of Clipper or any of its affiliates, nor any person controlling Clipper or any
of its affiliates, shall have any liability to us for or in connection with such
engagement except for such liability for losses, claims, damages, liabilities or
expenses incurred by us which is finally judicially determined to have resulted
exclusively from Clipper's willful misconduct or gross negligence. We further
agree that we will not, without the prior written consent of Clipper, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not Clipper or any indemnified person is an actual
or potential party to such claim,
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2
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of Clipper and each other indemnified person
hereunder from all liability arising out of such claim, action, suit or
proceeding.
Promptly after receipt by an indemnified person of notice of any
complaint or the commencement of any action or proceeding with respect to which
indemnification is being sought hereunder, such person will notify us in writing
of such complaint or of the commencement of such action or proceeding, but
failure so to notify us will not relieve us from any liability which we may have
hereunder or otherwise, except to the extent that such failure materially
prejudices our rights. If we do elect or are requested by such indemnified
person, we will assume the defense of such action or proceeding, including the
employment of counsel reasonably satisfactory to Clipper and the payment of the
fees and disbursements of such counsel. In the event, however, such indemnified
person reasonably determines in its judgment that having common counsel would
present such counsel with a conflict of interest or if we fail to assume the
defense of the action or proceeding in a timely manner, then such indemnified
person may employ separate counsel to represent or defend it in any such action
or proceeding and we will pay the fees and disbursements of such counsel
provided, however, that we will not be required to pay the fees and
disbursements of more than one separate counsel for all indemnified persons in
any jurisdiction in any single action or proceeding. In any action or proceeding
the defense of which we assume, the indemnified person will have the right to
participate in such litigation and to retain its own counsel at such indemnified
person's own expense.
We agree that if any indemnification sought by an indemnified person
pursuant to this letter agreement is held by a court to be unavailable for any
reason other than as specified in the second sentence of the first paragraph of
this letter agreement, we and the indemnified person will contribute to the
losses, claims, damages, liabilities and expenses for which such indemnification
is held unavailable in such proportion as is appropriate to reflect the relative
benefits to us, on the one hand, and Clipper, on the other hand, in connection
with Clipper's engagement referred to above, subject to the limitation that the
aggregate contribution of all indemnified persons to all losses, claims,
damages, liabilities and expenses with respect to which contribution is
available hereunder will not exceed the amount of fees actually received by
Clipper from us pursuant to Clipper's engagement referred to above. It is hereby
agreed that the relative benefits to us, on the one hand, and the indemnified
person, on the other hand, with respect to Clipper's engagement shall be deemed
to be in the same proportion as (i) the total value paid or proposed to be paid
or received by us or our stockholders, as the case may be, pursuant to the
transaction, whether or not consummated, for which you are engaged to render
financial advisory services bears to (ii) the fee paid or proposed to be paid to
Clipper in connection with such engagement.
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3
Our indemnity, reimbursement and contribution obligations under this
letter agreement shall be in addition to any rights that Clipper or any
indemnified person may have at common law or otherwise.
We hereby consent to personal jurisdiction and service and venue in
any court in which any claim which is subject to this letter agreement is
brought against Clipper or any other indemnified person.
It is understood that, in connection with Clipper's above-mentioned
engagement, Clipper may also be engaged to act in one or more additional
capacities, and that the terms of the original engagement or any such additional
engagement may be embodied in one or more separate written agreements. The
provisions of this letter agreement shall apply to the original engagement, any
such additional engagement and any modification of the original engagement or
such additional engagement and shall remain in full force and effect following
the completion or termination of Clipper's engagement(s).
This Indemnification Agreement, and all of the provisions and
protections hereof, shall survive and remain in full force and effect following
the completion or termination of Clipper's engagement(s), and Clipper's rights,
and the obligations of National Auto/Truckstops Holdings Corporation and
National Auto/Truckstops, Inc. hereunder, shall survive and remain in full force
and effect following the termination of Clipper's engagement for any reason.
Very truly yours,
NATIONAL AUTO/TRUCKSTOPS
HOLDINGS CORPORATION
By:
------------------------------
NATIONAL AUTO/TRUCKSTOPS, INC.
By:
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4
Accepted:
THE CLIPPER GROUP, L.P.
By:
------------------------------
CLIPPER CAPITAL PARTNERS, L.P.
By:
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EXHIBIT 10.17
[LETTERHEAD OF THE CLIPPER GROUP, L.P.]
December 10, 1993
TA Holdings Corporation
TA Operating Corporation
200 Public Square
Cleveland, OH 94114
Dear Sirs:
This letter confirms our agreement that The Clipper Group, L.P. and
Clipper Capital Partners, L.P. (collectively, "Clipper") have been engaged by TA
Holdings Corporation ("Holdings") and TA Operating Corporation ("TA") to act as
their exclusive financial advisors, upon the terms and subject to the conditions
set forth herein.
In connection with such engagement, if requested by TA or Holdings
from time to time during the term hereof, Clipper shall, if it determines in its
discretion that it is willing and able to do so, provide financial advisory
services to TA and Holdings, including, but not limited to:
(i) analysis of the business, operations, financial condition and
future prospects of TA;
(ii) advice to TA and Holdings with respect to strategy and tactics
to be employed in future transactions;
(iii) strategic and financial planning;
(iv) advice relating to analysis and financing of future investments;
(v) advice relating to future mergers, sales of assets or
recapitalization;
(vi) advice regarding public or private debt or equity financings,
including the selection of underwriters or placement agents;
(vii) analysis of acquisition candidates and the arranging of
financing necessary to effect such acquisitions; and
(viii) analysis of divestitures or other such material transactions.
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If Clipper shall determine to perform any such services, Holdings
and TA shall compensate Clipper for such services at such rates as Clipper shall
establish from time to time, consistent with those rates customarily charged at
the time by nationally recognized investment banking firms for similar services.
If Clipper shall determine that it is not willing or able to perform
any such services, Holdings and TA may retain another independent investment
banking firm to provide the requested services. In all other circumstances,
Clipper shall be the exclusive financial advisor to Holdings and National.
Upon consummation of TA's acquisition of the assets of the
Truckstops of America network (the "Acquisition"), Holdings will pay to Clipper
a fee of $975,000 for Clipper's services in arranging and negotiating debt and
equity financing for the Acquisition.
In partial consideration for entering into this agreement, TA and
Holdings will reimburse Clipper for all of its out-of-pocket expenses
(including, without limitation, the fees and expenses of its legal counsel)
incurred in connection with its engagement hereunder, including, without
limitation, in connection with the Acquisition and related financing (including,
without limitation, the formation of investment partnerships). Holdings and TA
will also indemnify Clipper pursuant to a letter agreement to be entered into
separately, a copy of which is attached as Exhibit A to this letter, and which
shall survive any termination of Clipper's engagement hereunder.
This agreement will continue from the date hereof until such time as
of Clipper and its affiliates, including the Clipper managed partnerships, no
longer own, directly or indirectly through National Auto/Truckstops Holdings
Corporation, in the aggregate, 5% or more of the equity securities of TA or
Holdings.
Please confirm your agreement with the foregoing by signing and
returning the enclosed duplicate of this letter.
Sincerely,
The Clipper Group, L.P.
Clipper Capital Partners, L.P.
By: /s/ Louis J. Mischianti
-------------------------------------
Name: Louis J. Mischianti
-----------------------------------
Title:
----------------------------------
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Accepted and Agreed to:
TA Holdings Corporation
By: /s/ James W. George
-------------------------------
Name: James W. George
-------------------------------
Title: Controller
-------------------------------
TA Operating Corporation
By: /s/ James W. George
-------------------------------
Name: James W. George
-------------------------------
Title: Controller
-------------------------------
<PAGE>
Exhibit A
December 10, 1993
The Clipper Group, L.P.
Clipper Capital Partners, L.P.
55 East 52nd Street
27th Floor
New York, New York 10055
Gentlemen:
In connection with your engagement to advise and assist us with the
acquisition of the Truckstops of America network, we hereby agree to indemnify
and hold harmless The Clipper Group, L.P. and Clipper Capital Partners, L.P.
(collectively, "Clipper") and its affiliates, the respective directors,
officers, partners, agents and employees of Clipper and its affiliates and each
other person, if any, controlling Clipper or any of its affiliates, to the full
extent lawful, from and against all losses, claims, damages, liabilities and
expenses incurred by them (including fees and disbursements of counsel) which
(A) are related to or arise out of (i) actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Company or (ii) actions taken or omitted to be taken by an indemnified
person with our consent or in conformity with our actions or omissions or (B)
are otherwise related to or arise out of Clipper's activities on our behalf
under Clipper's engagement, and we will reimburse Clipper and any other person
indemnified hereunder for all expenses (including fees and disbursements of
counsel) as they are incurred by Clipper or such other indemnified person in
connection with investigating, preparing or defending any such action or claim
whether or not in connection with pending or threatened litigation in which
Clipper or any other indemnified person is a party. We will not be responsible,
however, for any losses, claims, damages, liabilities or expenses pursuant to
clause (B) of the preceding sentence which are finally judicially determined to
have resulted exclusively from the willful misconduct or gross negligence of the
person seeking indemnification hereunder. We also agree that neither Clipper,
nor any of its affiliates, nor any director, officer, partner agent or employee
of Clipper or any of its affiliates, nor any person controlling Clipper or any
of its affiliates, shall have any liability to us for or in connection with such
engagement except for such liability for losses, claims, damages, liabilities or
expenses incurred by us which is finally judicially determined to have resulted
exclusively from Clipper's willful misconduct or gross negligence. We further
agree that we will not, without the prior written consent of Clipper, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not Clipper or any indemnified person is an actual
or potential party to such claim,
<PAGE>
2
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of Clipper and each other indemnified person
hereunder form all liability arising out of such claim, action, suit or
proceeding.
Promptly after receipt by an indemnified person of notice of any
complaint or the commencement of any action or proceeding with respect to which
indemnification is being sought hereunder, such person will notify us in writing
of such complaint or of the commencement of such action or proceeding, but
failure so to notify us will not relieve us from any liability which we may have
hereunder or otherwise, except to the extent that such failure materially
prejudices our rights. If we do elect or are requested by such indemnified
person, we will assume the defense of such action or proceeding, including the
employment of counsel reasonably satisfactory to Clipper and the payment of the
fees and disbursements of such counsel. In the event, however, such indemnified
person reasonably determines in its judgment that having common counsel would
present such counsel with a conflict of interest or if we fail to assume the
defense of the action or proceeding in a timely manner, then such indemnified
person may employ separate counsel to represent or defend it in any such action
or proceeding and we will pay the fees and disbursements of such counsel
provided that we will not be required to pay the fees and disbursements of more
than one separate counsel for all indemnified persons in any jurisdiction in any
single action or proceeding. In any action or proceeding the defense of which we
assume, the indemnified person will have the right to participate in such
litigation and to retain its own counsel at such indemnified person's own
expense.
We agree that if any indemnification sought by an indemnified person
pursuant to this letter agreement is held by a court to be unavailable for any
reason other than as specified in the second sentence of the first paragraph of
this letter agreement, we and the indemnified person will contribute to the
losses, claims, damages, liabilities and expenses for which such indemnification
is held unavailable in such proportion as is appropriate to reflect the relative
benefits to us, on the one hand, and Clipper, on the other hand, in connection
with Clipper's engagement referred to above, subject to the limitation that the
aggregate contribution of all indemnified persons to all losses, claims,
damages, liabilities and expenses with respect to which contribution is
available hereunder will not exceed the amount of fees actually received by
Clipper from us pursuant to Clipper's engagement referred to above. It is hereby
agreed that the relative benefits to us, on the one hand, and the indemnified
person, on the other hand, with respect to Clipper's engagement shall be deemed
to be in the same proportion as (i) the total value paid or proposed to be paid
or received by us or our stockholders, as the case may be, pursuant to the
transaction, whether or not consummated, for which you are engaged to render
financial advisory services bears to (ii) the fee paid or proposed to be paid to
Clipper in connection with such engagement.
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3
Our indemnity, reimbursement and contribution obligations under this
letter agreement shall be in addition to any rights that Clipper or any
indemnified person may have at common law or otherwise.
We hereby consent to personal jurisdiction and service and venue in
any court in which any claim which is subject to this letter agreement is
brought against Clipper or any other indemnified person.
It is understood that, in connection with Clipper's above-mentioned
engagement, Clipper may also be engaged to act in one or more additional
capacities, and that the terms of the original engagement or any such additional
engagement may be embodied in one or more separate written agreements. The
provisions of this letter agreement shall apply to the original engagement, any
such additional engagement and any modification of the original engagement or
such additional engagement and shall remain in full force and effect following
the completion or termination of Clipper's engagement(s).
This Indemnification Agreement, and all of the provisions and
protections hereof, shall survive and remain in full force and effect following
the completion or termination of Clipper's engagement(s), and Clipper's rights,
and the obligations of TA Holdings Corporation and TA Operating Corporation
hereunder, shall survive and remain in full force and effect following the
termination of Clipper's engagement for any reason.
Very truly yours,
TA HOLDINGS CORPORATION
By:
------------------------------
TA OPERATING CORPORATION
By:
------------------------------
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Accepted:
THE CLIPPER GROUP, L.P.
By:
------------------------------
CLIPPER CAPITAL PARTNERS, L.P.
By:
------------------------------
EXHIBIT 10.18
AMENDED AND RESTATED REGISTRATION AGREEMENT
-------------------------------------------
THIS AMENDED AND RESTATED REGISTRATION AGREEMENT (this "Agreement")
is made as of December 10, 1993, by and among National Auto/Truckstops Holdings
Corporation, a Delaware corporation (the "Company"), National Partners, L.P., a
Delaware limited partnership ("National"), National Partners II, L.P., a
Delaware limited partnership ("National II") , National Partners III, L.P., a
Delaware limited partnership ("National III"), Clipper Capital Associates, L.P.,
f.k.a. Clipper Truckstops, L.P., a Delaware limited partnership ("Clipper"),
Clipper/Merchant I, L.P., a Delaware limited partnership ("Clipper/Merchant"),
Olympus Private Placement Fund, L.P., a Delaware limited partnership
("Olympus"), Barclays Bank PLC ("Barclays PLC"), Barclays U.S.A., Inc.
("Barclays U.S.A."), Mellon Bank, N.A. as Trustee of First Plaza Group Trust
("First Plaza"), UBS Capital Corporation, a Delaware corporation ("UBS
Capital"), The Phoenix Insurance Company, a Connecticut corporation ("Phoenix"),
and The Travelers Indemnity Company, a Connecticut corporation ("Travelers," and
together with Phoenix, the "Travelers Entities"). National, National II,
National III, Clipper, Clipper/Merchant, Olympus, Barclays U.S.A., UBS Capital
and the Travelers Entities are collectively referred to herein as the
"Stockholders." Olympus, Barclays PLC and First Plaza are collectively referred
to herein as the "Warrant Holders" with respect to the "Warrants" (as defined
below).
The Stockholders, other than Barclays U.S.A., National II and
National III (the "Senior Stockholders"), and the Company are parties to a
Senior Convertible Preferred Stock Purchase Agreement of even date herewith (the
"Purchase Agreement"), pursuant to which the Senior Stockholders are purchasing
the Company's Senior Convertible Participating Preferred Stock, Series I and the
Company's Senior Convertible Participating Preferred Stock, Series II (the
"Senior Preferred"). The Stockholders other than Barclays U.S.A., Olympus, UBS
Capital and the Travelers Entities (the "Original Stockholders"), are parties to
a Preferred Stock Purchase Agreement dated as of April 14, 1993 (the "Original
Purchase Agreement"), pursuant to which the Original Stockholders purchased the
Company's Convertible Preferred Stock, Series I and the Company's Convertible
Preferred Stock, Series II (the "Preferred Stock"). The Senior Preferred and the
Preferred Stock are convertible into the Company's Class B Common Stock, par
value $.01 per share (the "Class B Common"). The Company's Senior Convertible
Participating Preferred Stock, Series I is convertible into the Company's
Convertible Preferred Stock, Series I. The Company's Senior Convertible
Participating Preferred Stock, Series II is convertible into the Company's
Convertible Preferred Stock, Series II.
The Warrant Holders, the Company and the Company's wholly-owned
subsidiary, National Auto/Truckstops, Inc., a Delaware corporation, are parties
to Subordinated Note and Warrant Purchase Agreements dated as of April 13, 1993
(taken together as a single agreement solely for purposes of this Agreement, the
"Original Note
<PAGE>
2
Purchase Agreement"), pursuant to which the Warrant Holders purchased warrants
to purchase shares of Class B Common (the "Warrants").
Barclays PLC, Union Bank of Switzerland, New York Branch,
Clipper/Merban, L.P. and the Company are parties to Subordinated Note and Common
Stock Purchase Agreements of even date herewith (the "Note Purchase Agreements")
pursuant to which Barclays U.S.A. and UBS Capital are purchasing, INTER ALIA,
shares of Class B Common.
In order to induce the Senior Stockholders to enter into the
Purchase Agreement and Barclays PLC and Union Bank of Switzerland, New York
Branch to enter into the applicable Note Purchase Agreement, the Company has
agreed to provide the registration rights set forth in this Agreement.
The Company, the Original Stockholders and the Warrant Holders (the
"Original Parties") are parties to a Registration Agreement dated as of April
14, 1993 (the "Original Agreement"). The Original Parties desire to amend and
restate the Original Agreement in its entirety for the purpose, among others, of
amending the terms and provisions of the Original Agreement to incorporate the
registration rights of the Stockholders acquiring Senior Preferred pursuant to
the Purchase Agreement and the Stockholders acquiring Class B Common pursuant to
the Note Purchase Agreements.
Each of the Original Stockholders is a party to a Stockholders'
Agreement among the Company, the Original Stockholders and each of the other
stockholders of the Company dated as of April 14, 1993 (the "Global
Stockholders' Agreement"). Nothing contained in this Agreement is meant to amend
or modify the provisions or terms of the Global Stockholders' Agreement.
The execution and delivery of this Agreement is a condition to the
Closing under the Purchase Agreement and the Note Purchase Agreement. Unless
otherwise provided in this Agreement, capitalized terms used herein shall have
the meanings ascribed thereto in the Purchase Agreement or as set forth in
paragraph 8 hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. At any time after April 14,
1994 or such earlier time as the Company has completed a public offering of its
equity securities under the Securities Act, any single holder of at least 10% of
the then outstanding Registrable Securities or any two or more holders in
aggregate of at least 15% of the then outstanding Registrable Securities may
request registration under the
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3
Securities Act of all or part of their Registrable Securities on Form S-1 or any
similar long-form registration ("Long-Form Registrations"), and, except for the
National II/III Demand (as to which no minimum percentage shall apply and which
is defined below), any single holder of at least 10% of the Registrable
Securities or any two or more holders of in aggregate of at least 15% of the
then outstanding Registrable Securities may request registration under the
Securities Act of all or part of their Registrable Securities on Form S-2 or S-3
or any similar short-form registration ("Short-Form Registrations") if
available. Each request for a Demand Registration shall specify the approximate
number of Registrable Securities requested to be registered and the anticipated
per share price range for such offering. Within ten days after receipt of any
such request, the Company will give written notice of such requested
registration to all other holders of Registrable Securities and will include in
such registration all Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 15 days after the
receipt of the Company's notice. All registrations requested pursuant to this
paragraph 1(a) are referred to herein as "Demand Registrations."
(b) LONG-FORM REGISTRATIONS. Subject to the percentage requirements
of Section 1(a), National, Clipper and Clipper/Merchant (and, without
duplication, their respective designees), will each be entitled to request (i)
four Long-Form Registrations in which the Company will pay all Registration
Expenses ("Company-paid Long-Form Registrations") and (ii) unlimited Long-Form
Registrations in which the holders of Registrable Securities will pay their
share of the Registration Expenses as set forth in paragraph 5 hereof. A
registration will count as one of the permitted Company-paid Long-Form
Registrations only in the event that it has become effective and the holder of
Registrable Securities initially requesting such registration is able to
register and sell 100% of the Registrable Securities requested by such holder to
be included in such registration; provided that in any event the Company will
pay all Registration Expenses in connection with any registration initiated as a
Company-paid Long-Form Registration whether or not it has become effective. Any
Long-Form Registration shall, at the request of the holder of Registrable
Securities initially requesting such registration, be an underwritten
registration.
(c) SHORT-FORM REGISTRATIONS. In addition to the Long-Form
Registrations provided pursuant to paragraph 1(b), (i) National, Clipper and
Clipper/Merchant will each be entitled to request an unlimited number of
Short-Form Registrations in which the Company will pay all Registration
Expenses, and (ii) at any time after the first anniversary of a public offering
of the Company's equity securities under the Securities Act and provided that
the Company is permitted to use any short form for registration of its equity
securities under the Securities Act, National II and National III will be
entitled to request one Short-Form Registration in which the Company will pay
all Registration Expenses (the "National II/III Demand"). Notwithstanding
anything to the contrary in Section 1(b) above, Demand Registrations will be
Short-Form Registrations whenever the Company is permitted to use any applicable
short form. After the Company has become subject to the reporting requirements
of the Securities Exchange Act, the Company will use its best efforts to
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4
make Short-Form Registrations available for the sale of Registrable Securities.
A registration will count as the one National II/III Demand only in the event
that it has become effective and National II and/or National III, as the case
may be, are able to register and sell 100% of the Registrable Securities
requested to be included in such registration.
(d) PRIORITY ON DEMAND REGISTRATIONS. The Company will not
include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the holders of at least a
majority of the Registrable Securities included in such registration. If a
Demand Registration is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering exceeds the number of Registrable Securities and other
securities, if any, which can be sold in an orderly manner in such offering
within a price range acceptable to the holders of a majority of the Registrable
Securities initially requesting registration, the Company will include in such
registration (i) first, any Class B Common into which the Senior Preferred is
convertible (disregarding, for the purposes hereof, any restrictions which
render such shares "Non-Convertible Shares" as defined in Section 2(g) below)
which the holders thereof have requested to be included therein, pro rata among
the holders thereof on the basis of the number of shares requested to be
included in such registration by each such holder, (ii) second, the Registrable
Securities requested to be included therein by the holders requesting such
registration and the other Registrable Securities requested to be included in
such registration, pro rata among the holders of such securities on the basis of
the number of shares requested to be included in such registration by each such
holder, and (iii) third, other securities requested to be included in such
registration, in each case, to the extent in the opinion of the underwriters
such shares can be sold in an orderly manner within the price range of such
offering. Any Persons other than holders of Registrable Securities who
participate in Demand Registrations which are not at the Company's expense must
pay their share of the Registration Expenses as provided in paragraph 5 hereof.
(e) RESTRICTIONS ON LONG-FORM REGISTRATIONS. The Company will
not be obligated to effect any Long-Form Registration within six months after
the effective date of a previous Long-Form Registration. The Company may
postpone for up to six months the filing or the effectiveness of a registration
statement for a Demand Registration or suspend the effectiveness of a
registration statement of a Demand Registration if the Company and the holders
of at least a majority of the Registrable Securities agree that such Demand
Registration would reasonably be expected to have an adverse effect on any
proposal or plan by the Company or any of its Subsidiaries to engage in any
acquisition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or similar transaction; provided that in
such event, the holders of Registrable Securities initially requesting such
Demand Registration will be entitled to withdraw such request and, if such
request is withdrawn, such Demand
<PAGE>
5
Registration will not count as one of the permitted Demand Registrations
hereunder and the Company will pay all Registration Expenses in connection with
such registration.
(f) SELECTION OF UNDERWRITERS. Except as otherwise provided in
the Financial Advisory Agreement between the Company and Clipper dated as of
April 14, 1993 (the "Advisory Agreement") the holders of a majority of the
Registrable Securities requested to be included in any Demand Registration will
have the right to select the investment banker(s) and manager(s) to administer
the offering.
(g) OTHER REGISTRATION RIGHTS. Except as provided in this
Agreement, the Company will not grant to any Persons the right to request the
Company to register any equity securities of the Company, or any securities
convertible or exchangeable into or exercisable for such securities, without the
prior written consent of the holders of at least a majority of the Registrable
Securities then outstanding; provided that the Company may grant rights to
employees of the Company and its Subsidiaries to participate in Piggyback
Registrations so long as such rights are subordinate to the rights of the
holders of Registrable Securities with respect to such Piggyback Registrations.
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to
register any of its securities under the Securities Act (other than pursuant to
a Demand Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and will include in such registration
all Registrable Securities with respect to which the Company has received
written requests for inclusion therein within 15 days after the receipt of the
Company's notice. At any time that the Company proposes to register any of its
Securities as contemplated by this Section 2(a), and a registration form which
will allow a Piggyback Registration is available for use by the Company in such
registration, the Company shall use such form for such registration.
(b) PIGGYBACK EXPENSES. The Registration Expenses of the
holders of Registrable Securities will be paid by the Company in all Piggyback
Registrations.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company will include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, any Class B Common into which the Senior Preferred is convertible
(disregarding, for the purposes hereof, any restrictions which render such
shares "NonConvertible Shares" as defined in Section 2(g) below) which the
holders thereof have
<PAGE>
6
requested to be included therein, pro rata among the holders thereof on the
basis of the number of shares requested to be included in such registration by
each such holder, (iii) third, any other Registrable Securities requested to be
included in such registration, pro rata among the holders of such securities on
the basis of the number of shares requested to be included in such registration
by each such holder, and (iv) fourth, other securities requested to be included
in such registration, in each case, to the extent in the opinion of the
underwriters such shares can be sold in an orderly manner within the price range
of such offering.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company will
include in such registration (i) first, any Class B Common into which the Senior
Preferred is convertible (disregarding, for the purposes hereof, any
restrictions which render such shares "Non-Convertible Shares" as defined in
Section 2(g) below) which the holders thereof have requested to be included
therein, pro rata among the holders thereof on the basis of the number of shares
requested to be included in such registration by each such holder, (ii) second,
the securities requested to be included therein by the holders requesting such
registration and the Registrable Securities requested to be included in such
registration, pro rata among the holders of such securities on the basis of the
number of shares requested to be included in such registration by each such
holder, and (iii) third, other securities requested to be included in such
registration, in each case, to the extent in the opinion of the underwriters
such shares can be sold in an orderly manner within the price range of such
offering.
(e) SELECTION OF UNDERWRITERS. Notwithstanding any other
provision contained in this Agreement pertaining to the selection of banker(s)
and manager(s) of underwritten offerings, after the selection of such manager(s)
and banker(s), if any Piggyback Registration is an underwritten offering, the
selection of investment banker(s) and manager(s) for the offering must be
approved by the holders of a majority of the Registrable Securities requested to
be included in such Piggyback Registration. Such approval will not be
unreasonably withheld.
(f) OTHER REGISTRATIONS. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company will not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least six months has elapsed from the effective date of such
previous registration.
<PAGE>
7
(g) NON-CONVERTIBLE SHARES. If at any time any holder of the
Class B Common constituting Registrable Securities elects to sell any or their
Class B Common in an underwritten public offering pursuant to paragraph 1 or 2
hereof, then any holder of shares of Series II Preferred Stock constituting
Registrable Securities that are not then convertible into Class B Common by
reason of Sections 4.3.2(f) or 4.3.4(f) of the Company's Amended and Restated
Certificate of Incorporation ("Non-Convertible Shares") may deliver to the
Company an irrevocable written request (a "Repurchase Request"), within 15 days
after receipt of notice from the Company of such registration, that the Company
purchase any or all of such holder's Non-Convertible Shares for an amount per
share equal to the offering price per share (net of underwriting discounts) of
the Class B Common sold in such offering (the "Net Offering Price Per Share")
and the Company shall, to the extent permitted by applicable law, purchase such
Non-Convertible Shares for such amount immediately after the closing of any such
underwritten public offering of Class B Common; PROVIDED THAT, to the extent
that any such repurchase of Non-Convertible Shares as provided for hereunder
would cause any holder of any class of the Company's equity securities to own
immediately following such repurchase more than fifty percent in value of the
outstanding stock of the Company (within the meaning of Section 267(b)(8) of the
Internal Revenue Code of 1986) (a "Majority Holder"), such repurchase of
Non-Convertible Shares shall be limited to prevent it from creating a Majority
Holder; PROVIDED FURTHER THAT, to the extent that such repurchase shall cause a
Change of Control as such term is defined in the Global Stockholders' Agreement,
such repurchase shall be limited so as not to cause a Change of Control as so
defined. The Company shall finance any repurchase of Non-Convertible Shares by
selling a number of newly issued or treasury shares of Class B Common in the
underwritten public offering giving rise to such repurchase having a fair market
value equal to the fair market value of the Non-Convertible Shares subject to
Repurchase Requests, and such Class B shares shall be treated hereunder as
Registrable Securities of the holder or holders making the Repurchase
Request(s). Notwithstanding the foregoing, the Company shall have no obligation
to purchase any Non-Convertible Shares from any holder to the extent such holder
would have been prohibited or limited by paragraphs 1(d), 2(c) or 2(d) from
selling Class B Common in the underwritten public offering had the
Non-Convertible Shares been freely convertible into Class B Common and taking
into account any other Registrable Securities of such holder being sold in such
underwritten public offering and the other electing holders. Any holder selling
Non-Convertible Shares shall deliver certificates for such shares (free and
clear of all liens) to be purchased by the Company hereunder at the closing of
such purchase against payment by the Company by wire transfer or certified check
of the Net Offering Price Per Share delivered. Each holder of Series II
Preferred Stock delivering a Repurchase Request hereunder shall reimburse the
Company for such holder's proportionate share of any Registration Expenses
allocable to the Company as a result of the sale by the Company of Class B
Common pursuant to this Section 2(g) to the extent such Registration Expenses
are not otherwise required to be paid by the Company pursuant to this Agreement.
<PAGE>
8
3. HOLDBACK AGREEMENTS.
(a) Each holder of Registrable Securities agrees not to effect
any public sale or distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 180-day
period beginning on the effective date of any underwritten Demand Registration
or any underwritten Piggyback Registration in which Registrable Securities are
included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registrations
on Form S-8 or any successor form), unless the underwriters managing the
registered public offering otherwise agree, and (ii) to cause each holder of at
least 5% (on a fully-diluted basis) of its Common Stock, or any securities
convertible into or exchangeable or exercisable for Common Stock, purchased from
the Company at any time after the date of this Agreement (other than in a
registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.
4. REGISTRATION PROCEDURES. Subject to any other applicable
provision of this Agreement, whenever the holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof (including the registration of Senior Preferred,
Preferred Stock and Class B Common, as the case may be, held by a holder of
Registrable Securities requesting registration as to which the Company has
received reasonable assurances that only Registrable Securities will be
distributed to the public), and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best efforts to cause such registration statement to become
effective (provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to the counsel
selected by the holders of a majority of the Registrable Securities covered by
such registration statement copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel);
<PAGE>
9
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than six months and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction, (iii) consent to general service of
process in any such jurisdiction or (iv) make any amendment to its charter or
by-laws, if such amendment would have a material adverse effect upon the rights
of any class of securities of the Company);
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any material fact necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, and, subject to the Company's right to suspend the effectiveness of
such registration statement pursuant to Section 1(e) hereof, at the request of
any such seller, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-12 of the Securities
<PAGE>
10
and Exchange Commission or, failing that, to secure NASDAQ authorization for
such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such with
respect to such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares), in each case to the extent
permitted under the Company's Certificate of Incorporation, the Company's
By-laws and the Global Stockholders' Agreement;
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder,
in its sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
<PAGE>
11
(m) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities;
and
(n) obtain a cold comfort letter from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by cold comfort letters as the holders of a
majority of the Registrable Securities being sold reasonably request.
If any such registration or comparable statement refers to any
holder by name or otherwise as the holder of any securities of the Company and
in its sole and exclusive judgment, such holder is or might be deemed to be a
controlling person of the Company, such holder shall have the right to require
(i) the insertion therein of language, in form and substance satisfactory to
such holder and presented to the Company in writing, to the effect that the
holding by such holder of such securities is not to be construed as a
recommendation by such holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such holder
will assist in meeting any future financial requirements of the Company, or (ii)
in the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any similar Federal statute then in force, the
deletion of the reference to such holder; provided that with respect to this
clause (ii) such holder shall furnish to the Company an opinion of counsel to
such effect, which opinion and counsel shall be reasonably satisfactory to the
Company. In connection with any registration undertaken pursuant to this
Agreement, the Company will deliver to each holder of Registrable Securities
included in such registration an opinion of counsel which is customary in form
and substance and reasonably acceptable to holders of equity securities involved
in similar registrations generally.
5. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), will be borne as provided in this Agreement, except
that the Company and any of its Subsidiaries will, in any event, pay their
internal expenses (including, without limitation, all salaries and expenses of
their officers and employees performing legal or accounting duties), the expense
of any annual audit or quarterly review, the expense of any liability insurance
and the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company or any of
its Subsidiaries are then listed or on the NASD automated quotation system.
<PAGE>
12
(b) In connection with each Demand Registration and each
Piggyback Registration, the Company shall reimburse, or shall cause one or more
of its Subsidiaries to reimburse, the holders of Registrable Securities covered
by such registration for the reasonable fees and disbursements of one counsel
chosen by the holders of a majority of the Registrable Securities initially
requesting such registration.
(c) To the extent Registration Expenses are not required to be
paid by the Company, each holder of securities included in any registration
hereunder will pay those Registration Expenses allocable (based upon the number
of shares included in such registration) to the registration of such holder's
securities so included, and any Registration Expenses not so allocable will be
borne by all sellers of securities included in such registration in proportion
to the aggregate selling price of the securities to be so registered.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted
by law, each holder of Registrable Securities, its officers, directors,
trustees, beneficiaries, partners and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein or by such holder's failure to deliver a
copy of the registration statement or prospectus or to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such holder with a sufficient number of copies
of the same. In connection with an underwritten offering, the Company will
indemnify such underwriters, their officers and directors and each person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders
of Registrable Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder will furnish
to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will indemnify the Company,
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement
<PAGE>
13
or omission is contained in any information or affidavit so furnished in writing
by such holder expressly for inclusion in such registration statement; provided
that the obligation to indemnify will be individual to each holder and will be
limited to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification, failure to provide such notification shall
not affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure, and (ii) unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
with respect to such claim, permit such indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). An indemnified party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest exists
between such indemnified party and any other such indemnified parties with
respect to such claim.
(d) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and will survive the transfer of securities. The
Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements; provided
that no holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties to the
Company or the underwriters other than representations and warranties regarding
such holder and such holder's intended method of distribution.
<PAGE>
14
8. DEFINITIONS.
"REGISTRABLE SECURITIES" means (i) any Senior Preferred issued
pursuant to the Purchase Agreement, (ii) any Preferred stock issued pursuant to
the Original Purchase Agreement, (iii) any Class B Common issued pursuant to the
Note Purchase Agreements, (iv) any Class B Common issued upon the conversion of
either the Senior Preferred Stock issued pursuant to the Purchase Agreement or
the Preferred Stock issued pursuant to the Original Purchase Agreement, (v) any
Preferred Stock issued upon the conversion of the Senior Preferred issued
pursuant to the Purchase Agreement; (vi) any Senior Preferred, Preferred Stock,
Class B Common or other equity security of the Company issued or issuable with
respect to the securities referred to in clauses (i), (ii), (iii), (iv) and (v)
by way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization, (vii)
shares of Class B Common issued upon exercise of the Warrants issued by the
Company to the Warrant Holders and (viii) any other equity securities of the
Company held by Persons holding securities described in clauses (i) to (vii),
inclusive, above. As to any particular Registrable Securities, such securities
will cease to be Registrable Securities when they have ceased to be restricted
securities, unless such securities are held at such time by a holder of other
Registrable Securities; provided that any securities which cease to be
restricted securities solely because they have become eligible for transfer
pursuant to Rule 144 (or any similar rule then in force) will not cease to be
Registrable Securities until they have actually been sold to the public in
compliance with Rule 144 (or any similar rule then in force). For purposes of
this Agreement, "restricted securities" means the Registrable Securities until
such time as such Registrable Securities have (a) been effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them, (b) become eligible for sale pursuant to Rule 144 (or
any similar provision then in force) under the Securities Act or (c) been
otherwise transferred and new certificates for them not bearing the restrictive
Securities Act legend of the character set forth in paragraph 7C of the Purchase
Agreement have been delivered by the Company in accordance with the provisions
of paragraph 4(ii) of the Purchase Agreement. Whenever any particular securities
cease to be restricted securities, the holder thereof shall be entitled to
receive from the Company, without expense, new securities of like tenor not
bearing a restrictive Securities Act legend of the character set forth in
paragraph 7C of the Purchase Agreement. For purposes of this Agreement, a Person
will be deemed to be a holder of Registrable Securities whenever such Person has
the right to acquire directly or indirectly such Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
<PAGE>
15
"SERIES II PREFERRED STOCK" means, collectively, the Company's
Senior Convertible Participating Preferred Stock, Series II, par value $.01 per
share, and the Company's Convertible Preferred Stock, Series II, par value $.01
per share.
9. MISCELLANEOUS.
(a) SELECTION OF INVESTMENT BANKERS. Except as otherwise
provided herein or in the Advisory Agreement in connection with Demand
Registrations, the selection of investment banker(s) and manager(s) for any
public offering or private sale by the Company of its securities must be
approved by the holders of a majority of the Registrable Securities
participating in such offering, which approval will not be unreasonably
withheld.
(b) NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement.
(c) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company
will not take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
(d) REMEDIES. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(e) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the Company and holders of at least 75% of the
Registrable Securities then outstanding; provided that no modification, waiver
or amendment of Sections 2 (a) through 2 (d) shall be effective against any
holder of Registrable Securities unless such modification, waiver or amendment
is approved in writing by such holder of Registrable Securities.
(f) SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the
<PAGE>
16
benefit of the respective successors and assigns of the parties hereto whether
so expressed or not. In addition, whether or not any express assignment has been
made, the provisions of this Agreement which are for the benefit of purchasers
or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(g) INCORPORATION OF PURCHASE AGREEMENT PROVISIONS. The
paragraphs entitled "Severability," "Counterparts," "Descriptive Headings,"
"Notices" and "Governing Law" of the Purchase Agreement are hereby incorporated
in this Agreement by reference and made a part hereof, except that the
provisions of such paragraphs shall refer to this Agreement rather than the
Purchase Agreement and shall continue to apply hereto regardless of whether the
Purchase Agreement is no longer in effect.
(h) NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against any party.
(i) ORIGINAL AGREEMENT SUPERSEDED. This Agreement amends and
supersedes the Original Agreement in its entirety, and all references to the
Original Agreement in respect of any periods from and after the date hereof
shall be deemed to be references to this Agreement.
(j) TERMINATION. This Agreement shall automatically terminate
and be of no further force or effect upon the occurrence and completion of the
Repurchase Option as contemplated in the Repurchase Agreement dated as of
December 10, 1993 by and among the Company and the persons set forth on Schedule
A thereto.
* * * * * *
<PAGE>
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
NATIONAL AUTO/TRUCKSTOPS
HOLDINGS CORPORATION
By: /s/ [AUTHORIZED SIGNATORY]
------------------------------------------
Its: Assistant Secretary
CLIPPER CAPITAL ASSOCIATES, L.P.
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ [AUTHORIZED SIGNATORY]
--------------------------------------
Title: Assistant Secretary
NATIONAL PARTNERS, L.P.
By: Clipper Capital Associates, L.P.
Its: General Partner
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ [AUTHORIZED SIGNATORY]
--------------------------------------
Title: Assistant Secretary
<PAGE>
18
NATIONAL PARTNERS II, L.P.
By: Clipper Capital Associates, L.P.
Its: General Partner
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ [AUTHORIZED SIGNATORY]
--------------------------------------
Title: Assistant Secretary
NATIONAL PARTNERS III, L.P.
By: Clipper Capital Associates, L.P.
Its: General Partner
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ [AUTHORIZED SIGNATORY]
--------------------------------------
Title: Assistant Secretary
CLIPPER/MERCHANT I, L.P.
By: Clipper Capital Associates, L.P.
Its: General Partner
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ [AUTHORIZED SIGNATORY]
--------------------------------------
Title: Assistant Secretary
<PAGE>
19
OLYMPUS PRIVATE PLACEMENT
FUND, L.P.
By: OGP Partners, L.P.
Its: General Partner
By: /s/ [AUTHORIZED SIGNATORY]
------------------------------------------
Its: General Partner
UBS CAPITAL CORPORATION
By: /s/ [AUTHORIZED SIGNATORY]
------------------------------------------
Its:President
By: /s/ [AUTHORIZED SIGNATORY]
------------------------------------------
Its:Vice President
BARCLAYS U.S.A., INC.
By: /s/ [AUTHORIZED SIGNATORY]
------------------------------------------
Its:Treasurer
BARCLAYS BANK PLC
By: /s/ [AUTHORIZED SIGNATORY]
------------------------------------------
Its:
------------------------------------------
<PAGE>
20
FIRST PLAZA GROUP TRUST
By: Mellon, Bank, N.A., Trustee, as directed
by General Motors Investment
Management Corporation
[SEAL] By: /s/ Judith A. Manion
------------------------------------------
Its: Paralegal
------------------------------------------
[ILLEGIBLE STAMP]
THE PHOENIX INSURANCE COMPANY
By: /s/ Robert M. Mills
------------------------------------------
Its: Assistant Investment Officer
------------------------------------------
THE TRAVELERS INDEMNITY COMPANY
By: /s/ Robert M. Mills
------------------------------------------
Its: Assistant Investment Officer
------------------------------------------
EXHIBIT 10.19
NATIONAL AUTO/TRUCKSTOPS HOLDINGS CORPORATION
1993 Stock Incentive Plan
<PAGE>
NATIONAL AUTO/TRUCKSTOPS HOLDINGS CORPORATION
1993 STOCK INCENTIVE PLAN
ARTICLE 1.
GENERAL
1.1 PURPOSE. The purpose of this National Auto/Truckstops Holdings
Corporation 1993 Stock Incentive Plan (the "Plan") is to provide for certain
officers, directors and key employees of National Auto/Truckstops Holdings
Corporation (the "Company") and certain of its Affiliates an equity-based
incentive to maintain and enhance the performance and profitability of the
Company.
1.2 ADMINISTRATION.
(a) The Plan shall be administered by the Compensation
Committee or such other committee (the "Committee") appointed by the Board of
Directors of the Company (the "Board"), which committee shall consist of two or
more directors, provided, that if the Company is or becomes subject to Rule
16b-3 of the Securities Exchange Act of 1934 (the "Act") or any successor rule
thereto, each director appointed to the Committee shall be a "disinterested
person" within the meaning of the Act. The members of the Committee shall be
appointed by, and may be changed at any time and from time to time in the
discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise all
of the powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Plan agreements executed pursuant to the Plan, (iii)
to prescribe, amend and rescind rules relating to the Plan, (iv) to make any
determination necessary or advisable in administering the Plan, and (v) to
correct any defect, supply any omission and reconcile any inconsistency in the
Plan.
(c) The determination of the Committee on all matters relating
to the Plan or any Plan agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any award
hereunder.
(e) Notwithstanding anything to the contrary contained herein,
unless and until the Board shall appoint the members of the Committee, the Plan
shall be administered by the Board; and the Board may, in its sole discretion,
at any time and from time to time, resolve to administer the
<PAGE>
2
Plan. In either of the foregoing events, the term "Committee" as used herein
shall be deemed to mean the Board. Notwithstanding the foregoing, a member of
the Committee may not act with respect to any award of options to such member.
1.3 PERSONS ELIGIBLE FOR AWARDS. Awards under the Plan may be made
to such officers, directors and executive, managerial, professional or other
employees ("key personnel") of the Company or its Affiliates, as the Committee
shall from time to time in its sole discretion select; officers and directors
who are not employees of either the Company or an Affiliate also shall be
eligible to receive awards under the Plan.
1.4 TYPES OF AWARDS UNDER PLAN.
(a) Awards may be made under the Plan in the form of (i) stock
options ("options"), (ii) stock appreciation rights related to an option
("related stock appreciation rights"), and (iii) stock appreciation rights not
related to any option ("unrelated stock appreciation rights"), all as more fully
set forth in Article II.
(b) Options granted under the Plan may be either (i)
"nonqualified" stock options subject to the provisions of section 83 of the
Internal Revenue Code of 1986, as amended (the "Code") or (ii) options intended
to qualify for incentive stock option treatment described in Code section 422.
(c) All options when granted are intended to be nonqualified
stock options, unless the applicable Plan agreement explicitly states that an
option is intended to be an incentive stock option. If an option is intended to
be an incentive stock option, and if for any reason such option (or any portion
thereof) shall not qualify as an incentive stock option, then, to the extent of
such nonqualification, such option (or portion) shall be regarded as a
nonqualified stock option appropriately granted under the Plan provided that
such option (or portion) otherwise meets the Plan's requirements relating to
nonqualified stock options.
1.5 SHARES AVAILABLE FOR AWARDS.
(a) Subject to Section 3.5 (relating to adjustments upon
changes in capitalization), as of any date the total number of shares of Common
Stock with respect to which options and unrelated stock appreciation rights may
be granted under the Plan shall be equal to the excess (if any) of (i) 572,000
of shares of Common Stock, over (ii) the sum of (A) the number of shares of
Common Stock subject to outstanding options and outstanding unrelated stock
<PAGE>
3
appreciation rights granted under the Plan, (B) the number of shares previously
issued pursuant to the exercise of options granted under the Plan, and (C) the
number of shares in respect of which related and unrelated stock appreciation
rights granted under the Plan shall have previously been exercised. In
accordance with (and without limitation upon) the preceding sentence, shares of
Common Stock covered by options or unrelated stock appreciation rights granted
under the Plan which expire, terminate, or are canceled for any reason
whatsoever without the grantee (or the grantee's beneficiary) having enjoyed any
of the benefits of stock ownership (other than voting rights or dividends that
are forfeited) shall again become available for awards under the Plan. The
maximum number of shares of Common Stock with respect to which awards may be
granted under the Plan to officers, directors and employees of National Auto/
Truckstops Inc. and its subsidiaries, and to officers, directors and employees
of TA Holdings Corporation and its subsidiaries, is 332,000 and 240,000,
respectively.
(b) Shares of stock that shall be subject to issuance pursuant
to the Plan shall be authorized and applicable unissued or treasury shares of
Common Stock.
(c) Without limiting the generality of the foregoing, the
Committee may cancel any award granted under the Plan and issue a new award in
substitution therefor upon such terms as the Committee may in its sole
discretion determine (provided that the substituted award shall satisfy all
applicable Plan requirements as of the date such new award is made) without the
grantee's consent, where (unless the applicable Plan agreement (as defined in
Section 1.7(a)) otherwise provides) the substituted award confers upon the
grantee, until exercised, substantially the same economic benefit inherent in
the replaced award, and with the grantee's consent if otherwise.
1.6 DEFINITIONS OF CERTAIN TERMS.
(a) The term "Affiliate" as used herein means any person or
entity which, at the time of reference, directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, the Company.
(b) The term "Common Stock" as used herein means the shares of
Class B common stock, par value $.01 per share, of the Company as constituted on
the effective date of the Plan, and any other shares into which such Class B
common stock shall thereafter be changed by reason of a recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like.
<PAGE>
4
(c) Except as otherwise determined by the Committee in its
sole discretion, the "fair market value" as of any date and in respect of any
share of Common Stock shall be the mean between the high and low sales prices of
a share of Common Stock as reported on the New York Stock Exchange if shares of
Common Stock are then trading upon such exchange, or if not, then such average
on such other stock exchange on which shares of the Common Stock are principally
trading, on such date, if any, or if none, then as otherwise determined by the
Committee in its sole discretion. In no event shall the fair market value of any
share be less than its par value.
1.7 AGREEMENTS EVIDENCING AWARDS.
(a) Options and stock appreciation rights granted under the
Plan shall be evidenced by written agreements. Any such written agreements shall
(i) contain such provisions not inconsistent with the terms of the Plan as the
Committee may in its sole discretion deem necessary or desirable and (ii) be
referred to herein as "Plan agreements."
(b) Each Plan agreement with respect to the granting of an
option shall set forth the number of shares of Common Stock subject to the
option granted thereby.
(c) Each Plan agreement with respect to the granting of a
related stock appreciation right shall set forth the number of shares of Common
Stock subject to the option related to the stock appreciation right granted
thereby. Each Plan agreement with respect to the granting of an unrelated stock
appreciation right shall set forth the number of stock appreciation rights
granted thereby.
(d) Each Plan agreement with respect to the granting of an
option shall set forth the amount (the "option exercise price") payable by the
grantee to the Company in connection with the exercise of the option evidenced
thereby. Except as otherwise determined by the Committee with respect to
nonqualified stock options, the option exercise price per share shall not be
less than the fair market value of a share of Common Stock on the date the
option is granted. In the case of options intended to be incentive stock
options, the option exercise price per share shall not be less than the fair
market value of a share of Common Stock on the date the option is granted.
(e) Each Plan agreement with respect to a stock appreciation
right shall set forth the amount (the "appreciation base") over which
appreciation will be measured upon exercise of the stock appreciation right
evidenced thereby. Except as otherwise determined by the
<PAGE>
5
Committee, the appreciation base per share of Common Stock subject to a stock
appreciation right shall not be less than (i) in the case of an unrelated stock
appreciation right, the fair market value of a share of Common Stock on the date
the stock appreciation right is granted, or (ii) in the case of a related stock
appreciation right, the option exercise price per share of Common Stock subject
to the related option.
ARTICLE 2.
STOCK OPTIONS AND
STOCK APPRECIATION RIGHTS
2.1 GRANT OF STOCK OPTIONS. The Committee may grant options to
purchase shares of Common Stock in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole discretion
determine, subject to the terms of the Plan.
2.2 GRANT OF STOCK APPRECIATION RIGHTS.
(a) RELATED STOCK APPRECIATION RIGHTS. The Committee may grant
a related stock appreciation right in connection with all or any part of an
option granted under the Plan, either at the time the related option is granted
or any time thereafter prior to the exercise, termination or cancellation of
such option, and subject to such terms and conditions as the Committee shall
from time to time determine, subject to the terms of the Plan. The grantee of a
related stock appreciation right shall, subject to the terms of the Plan and the
applicable Plan agreement, have the right to surrender to the Company for
cancellation all or a portion of the related option granted under the Plan, but
only to the extent that such option is then exercisable, and to be paid therefor
an amount equal to the excess (if any) of (i) the aggregate fair market value of
the shares of Common Stock subject to the option or portion thereof (determined
as of the date of exercise of such stock appreciation right), over (ii) the
aggregate appreciation base (determined pursuant to Section 1.7(e)) of the
shares of Common Stock subject to the stock appreciation right or portion
thereof surrendered.
(b) UNRELATED STOCK APPRECIATION RIGHTS. The Committee may
grant an unrelated stock appreciation right in such amount and subject to such
terms and conditions as the Committee shall from time to time in its sole
discretion determine, subject to the terms of the Plan. The grantee of an
unrelated stock appreciation right shall, subject to the terms of the Plan and
the applicable Plan agreement, have the right to surrender to the Company for
cancellation all or a portion of such stock appreciation right, but only to the
extent that such stock appreciation
<PAGE>
6
right is then exercisable, and to be paid therefor an amount equal to the excess
(if any) of (i) the aggregate fair market value of the shares of Common Stock
subject to the stock appreciation right or portion thereof surrendered
(determined as of the date of exercise of such stock appreciation right), over
(ii) the aggregate appreciation base (determined pursuant to Section 1.7(e)) of
the shares of Common Stock subject to the stock appreciation right or portion
thereof.
(c) PAYMENT. Payment due to the grantee upon exercise of a
stock appreciation right shall be made in cash and/or in Common Stock (valued at
the fair market value thereof as of the date of exercise), as determined by the
Committee in its sole discretion. If the Committee shall determine to make all
of such payments in Common Stock, no fractional shares shall be issued and no
payments shall be made in lieu of fractional shares.
2.3 EXERCISE OF RELATED STOCK APPRECIATION RIGHT REDUCES SHARES
SUBJECT TO OPTION. Upon any exercise of a related stock appreciation right or
any portion thereof, the number of shares of Common Stock subject to the related
option shall be reduced by the number of shares of Common Stock in respect of
which such stock appreciation right shall have been exercised.
2.4 EXERCISABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS.
Subject to the other provisions of this Plan:
(a) EXERCISABILITY DETERMINED BY PLAN AGREEMENT. Each Plan
agreement shall set forth the period during which and the conditions subject to
which the option or stock appreciation right evidenced thereby shall be
exercisable, as determined by the Committee in its discretion.
(b) DEFAULT PROVISIONS. Unless the applicable Plan
agreement otherwise specifies:
(i) no option or stock appreciation right shall be
exercisable prior to the first anniversary of the date of grant,
(ii) each option or stock appreciation right granted under
the Plan shall become cumulatively exercisable with respect to an
additional 25% of the shares of Common Stock subject thereto, rounded down
to the next lower full share, on each of the first, second and third
anniversary of the date of grant,
<PAGE>
7
(iii) each option or stock appreciation right shall become
100% exercisable on the fourth anniversary of the date of grant, and
(iv) each option or stock appreciation right shall remain
100% exercisable through the day prior to the tenth anniversary of the
date of grant, after which such option or stock appreciation right shall
terminate and cease to be exercisable.
(c) EXERCISE OF RELATED STOCK APPRECIATION RIGHT. Unless the
applicable Plan agreement otherwise provides, a related stock appreciation right
shall be exercisable at any time during the period that the related option may
be exercised.
(d) PARTIAL EXERCISE PERMITTED. Unless the applicable Plan
agreement otherwise provides, an option or stock appreciation right granted
under the Plan may be exercised from time to time as to all or part of the
shares as to which such option or stock appreciation right shall then be
exercisable.
(e) NOTICE OF EXERCISE; EXERCISE DATE.
(i) An option or stock appreciation right shall be
exercisable by the filing of a written notice of exercise with the
Company, on such form and in such manner as the Committee shall in its
sole discretion prescribe, and by payment in accordance with Section 2.6.
(ii) Unless the applicable Plan agreement otherwise
provides or the Committee in its sole discretion otherwise determines, the
date of exercise of an option or unrelated stock appreciation right shall
be the date the Company receives such written notice of exercise.
(iii) For purposes of the Plan, the "option exercise date"
shall be deemed to be the sixth business day immediately following the
date written notice of exercise is received by the Company.
2.5 LIMITATION ON EXERCISE.
Notwithstanding any other provision of the Plan, no Plan
agreement shall permit an award to be exercisable prior to January 1, 1996, or
more than ten (10) years after the date of grant.
<PAGE>
8
2.6 PAYMENT OF OPTION PRICE.
(a) TENDER DUE UPON NOTICE OF EXERCISE. Unless the applicable
Plan agreement otherwise provides or the Committee in its sole discretion
otherwise determines, (i) any written notice of exercise of an option shall be
accompanied by payment of the full purchase price for the shares being
purchased, and (ii) the grantee shall have no right to receive shares of Common
Stock with respect to an option exercise prior to the option exercise date.
(b) MANNER OF PAYMENT. Payment of the option exercise price
shall be made in any combination of the following:
(i) by certified or official bank check
payable to the Company (or the equivalent thereof
acceptable to the Committee);
(ii) with the consent of the Committee in its sole
discretion, by personal check (subject to collection), which may in the
Committee's discretion be deemed conditional;
(iii) if and to the extent provided in the applicable Plan
agreement, by delivery of previously acquired shares of Common Stock owned
by the grantee for at least six months (or such other period as the
Committee may prescribe) having a fair market value (determined as of the
option exercise date) equal to the portion of the option exercise price
being paid thereby, provided that the Committee may require the grantee to
furnish an opinion of counsel acceptable to the Committee to the effect
that such delivery would not result in the grantee incurring any liability
under section 16(b) of the Act and does not require any Consent (as
defined in Section 4.2); and
(iv) with the consent of the Committee in its sole
discretion, by the promissory note and agreement of the grantee providing
for payment with interest on the unpaid balance accruing at a rate not
less than needed to avoid the imputation of income under Code section 7872
and upon such terms and conditions (including the security, if any,
therefor) as the Committee may determine. Any promissory note issued in
accordance with this Section 2.6(b)(iv) shall be secured by the stock
issued in connection with delivery of such note and shall provide for full
recourse against the grantee, unless the Committee otherwise determines.
<PAGE>
9
(c) CASHLESS EXERCISE. Payment in accordance with clause (i)
of Section 2.6(b) may be deemed to be satisfied, if and to the extent provided
in the applicable Plan agreement, by delivery to the Company of an assignment of
a sufficient amount of the proceeds from the sale of Common Stock acquired upon
exercise to pay for all of the Common Stock acquired upon exercise and an
authorization to the broker or selling agent to pay that amount to the Company,
which sale shall be made at the grantee's direction at the time of exercise,
provided that the Committee may require the grantee to furnish an opinion of
counsel acceptable to the Committee to the effect that such delivery would not
result in the grantee incurring any liability under section 16(b) of the Act and
does not require any Consent (as defined in Section 4.2).
(d) ISSUANCE OF SHARES. As soon as practicable after receipt
of full payment, the Company shall, subject to the provisions of Section 4.2,
deliver to the grantee one or more certificates for the shares of Common Stock
so purchased, which certificates may bear such legends as the Company may deem
appropriate concerning restrictions on the disposition of the shares in
accordance with applicable securities laws, rules and regulations or otherwise.
2.7 TERMINATION OF EMPLOYMENT.
Subject to the other provisions of the Plan and unless the
applicable Plan agreement otherwise provides:
(a) GENERAL RULE. All options and stock appreciation rights
granted to a grantee shall terminate upon his termination of employment for any
reason (including death) except to the extent post-employment exercise of the
vested portion of an option or stock appreciation right is permitted in
accordance with this Section 2.7. The "vested portion" of any option or stock
appreciation right shall mean the portion thereof which is vested (whether or
not then exercisable) immediately prior to the grantee's termination of
employment for any reason.
(b) IMPROPER ACTIVITY; QUIT. All options and stock
appreciation rights granted to a grantee shall terminate and expire on the day
the grantee's employment is terminated for cause or the grantee quits
employment, whether or not he is a party to a written employment contract. For
purposes of this Section 2.7, a grantee's employment shall be deemed to be
terminated for "cause" if he is discharged (i) on account of fraud, embezzlement
or other unlawful or tortious conduct, whether or not involving or against the
Company or any Affiliate, (ii) for violation of a policy of the Company or any
Affiliate, (iii) for
<PAGE>
10
serious and willful acts of misconduct detrimental to the business or reputation
of the Company or any Affiliate (whether or not such acts constitute "cause"
pursuant to any written employment contract with the Optionee) or (iv) for
"cause" or any like term as defined in any written employment contract with the
grantee.
(c) REGULAR TERMINATION; LEAVES OF ABSENCE. If the grantee's
employment terminates for reasons other than as provided in subsection (b) or
(d) of this Section 2.7, the portion of options and stock appreciation rights
granted to such grantee which were vested and exercisable immediately prior to
such termination of employment may be exercised until the earlier of (a) 30 days
after his termination of employment or (b) the date on which such options and
stock appreciation rights terminate or expire in accordance with the provisions
of the Plan (other that this Section 2.7) and the Plan agreement; provided, that
the Committee may in its sole discretion determine such other period for
exercise (i) with respect to any portion of options and stock appreciation
rights which were vested but not exercisable immediately prior to such
termination of employment and (ii) in the case of an individual whose employment
terminates solely because his employer ceases to be an Affiliate or he transfers
his employment with the Company's consent to a purchaser of a business disposed
of by the Company. The Committee may in its discretion determine (i) whether any
leave of absence (including short-term or long-term disability or medical leave)
shall constitute a termination of employment for purposes of the Plan, and (ii)
the impact, if any, of any such leave on outstanding awards under the Plan.
(d) DEATH. If a grantee's employment terminates by reason of
death, or if a grantee's employment terminates in the manner described in
Section 2.7(c) and he dies within the period for exercise provided for therein,
the options and stock appreciation rights vested and exercisable by him
immediately prior to his death shall be exercisable by the person to whom such
options and stock appreciation rights pass under the grantee's will (or, if
applicable, pursuant to the laws of descent and distribution) until the earlier
of (a) one year after the grantee's death or (b) the date on which such options
and stock appreciation rights terminate or expire in accordance with the
provisions of the Plan (other than this Section 2.7) and the Plan agreement;
provided, that the Committee may in its sole discretion determine such other
period for exercise with respect to any portion of options and stock
appreciation rights which were vested but not exercisable by the grantee
immediately prior to his death.
<PAGE>
11
(e) TERMINATIONS OF EMPLOYMENT ON OR BEFORE DECEMBER 31, 1995.
Notwithstanding anything contained herein to the contrary, if a grantee's
employment terminates for any reason (including death) on or before December 31,
1995, then January 1, 1996, shall be deemed to be the date of the grantee's
termination of employment for purposes of any post-employment exercisability of
any portion of the Option which was vested but not exercisable by the grantee
immediately prior to the actual date of the grantee's termination of employment.
2.8 CALL AND PUT OPTIONS. Unless the applicable
Plan agreement otherwise provides:
(a) CALL OPTION. If a grantee shall no longer be employed by
the Company or any of its Affiliates for any reason whatsoever, including,
without limitation, by reason of death, permanent disability, adjudicated
incompetency or termination with or without cause (each, a "termination" and the
effective date of such termination is hereinafter referred to as the
"Termination Effective Date"), irrespective of whether such grantee receives in
connection with the termination any severance or other payment from the Company
or any Affiliate, the Company, by written notice (the "Call Notice") to such
grantee or his estate, legal representative or committee, as the case may be
(the "Departing Purchaser"), given on the later of (i) a date which is on or
after January 1, 1996, and on or before February 15, 1996, if the Termination
Effective Date is on or before December 31, 1995, or (ii) if the Termination
Effective Date is after December 31, 1995, within sixty (60) days after the
later of (x) the Termination Effective Date, and (y) where applicable, the
expiration of the Post-Employment Exercise Period (as defined below), shall have
the right, but not the obligation, to purchase, and if the Company exercises
such right, the Departing Purchaser shall have the obligation to sell, such
number of shares of Common Stock specified in the Call Notice, which number may
be any or all of the shares of Common Stock held by the Departing Purchaser, at
an aggregate purchase price equal to the Call Purchase Price (as defined in
Appendix A attached hereto). The closing of the purchase of the Departing
Purchaser's shares shall occur in accordance with Section 2.8(d). The
Post-Employment Exercise Period shall mean the period following a grantee's
termination of employment during which he (or in the case of his death, the
person to whom such options pass in accordance with Section 2.7(d)) may exercise
the vested portion of an option granted hereunder in accordance with the
provisions of Section 2.7(c) or (d).
(b) PUT OPTION. In the event that, following the effective
date of a grantee's termination and the expiration of the grantee's
Post-Employment Exercise
<PAGE>
12
Period, if any, the Company does not timely exercise its right under Section
2.8(a) to repurchase the shares of Common Stock held by the Departing Purchaser,
then for a period of thirty (30) days following the date on which the Company
ceased to be entitled to purchase such shares of Common Stock pursuant to
Section 2.8(a) (or waived in writing its right to do so provided that no waiver
may be effective prior to January 1, 1996), such Departing Purchaser shall have
the right and option (the "Put Option") to require the Company to purchase any
or all of the shares of Common Stock held by such Departing Purchaser by
delivering written notice of exercise (the "Put Exercise Notice") to the Company
setting forth the number of such shares of Common Stock subject to the Put
Option. If the Departing Purchaser shall exercise the Put Option, then the
Company shall purchase and the Departing Purchaser (and each Permitted
Transferee of the Optionee as defined in Section 3.3) shall sell, such number of
shares of Common Stock set forth in the Put Exercise Notice held by such
Departing Purchaser (and all shares of Common Stock acquired by the Optionee
under the Plan and transferred to each such Permitted Transferee) at an
aggregate purchase price equal to the Put Purchase Price (as defined in Appendix
B attached hereto). The closing of the purchase of the Departing Purchaser's
shares shall occur in accordance with Section 2.8(d).
(c) RESTRICTIONS ON PUT. In the event that following the
delivery of a Put Exercise Notice, the Company is unable to repurchase the
shares of Common Stock set forth in the Put Exercise Notice (as a result of
legal or bona fide business contractual restrictions), then such Put Exercise
Notice shall nevertheless remain in full force and effect (in which event the
Company shall repurchase the shares of Common Stock set forth in the Put
Exercise Notice within sixty (60) days following the date on which the Company
first becomes able to repurchase such shares), unless within sixty (60) days of
receiving notice from the Company of such inability (and in any event prior to
repurchase of such shares by the Company), the Departing Purchaser notifies the
Company that he elects to withdraw and terminate the Put Exercise Notice.
(d) CLOSING. The closing of any purchase under this Section
2.8 shall, subject to Section 2.8(c), be held at the principal offices of the
Company at 11:00 a.m. local time on the 30th day after the date of the Call
Notice or Put Exercise Notice, as the case may be, or at such other time and
place as the Company and the Departing Purchaser agree upon. At such closing,
the Departing Purchaser (and each Permitted Transferee, if any) shall deliver or
cause the delivery of certificates representing the shares of Common Stock to be
sold, duly endorsed for transfer and
<PAGE>
13
accompanied by all requisite stock transfer taxes, and such shares shall be free
and clear of any liens, claims, options, charges, encumbrances or rights of
others arising through the action or inaction of the Departing Purchaser, and
the Departing Purchaser (and each such Permitted Transferee) shall so represent
and warrant, and further represent and warrant that he or it is the beneficial
owner of such shares. The Company shall deliver at the closing payment in full,
by certified or bank check for such shares. In no event may the Company or a
Departing Purchaser (or a Permitted Transferee) exercise a call or put option
prior to January 1, 1996.
2.9 SPECIAL ISO REQUIREMENTS.
In order for a grantee to receive special tax treatment with
respect to stock acquired under an option intended to be an incentive stock
option, the grantee of such option must be, at all times during the period
beginning on the date of grant and ending on the day three months before the
date of exercise of such option, an employee of the Company or any of the
Company's parent or subsidiary corporations (within the meaning of Code section
424), or of a corporation or a parent or subsidiary corporation of such
corporation issuing or assuming a stock option in a transaction to which Code
section 424(a) applies. No option intended to be an incentive stock option shall
be granted under the Plan unless the Plan is approved, directly or indirectly,
by (i) the express consent of stockholders holding at least a majority of the
Company's voting stock voting in person or by proxy at a duly held stockholders'
meeting, or (ii) the unanimous written consent of the stockholders of the
Company, within 12 months before or after the date the Plan is adopted. If an
option granted under the Plan is intended to be an incentive stock option, and
if the grantee, at the time of grant, owns stock possessing 10 percent or more
of the total combined voting power of all classes of stock of the grantee's
employer corporation or of its parent or subsidiary corporation, then (a) the
option exercise price per share shall in no event be less than 110 percent of
the fair market value of the Common Stock on the date of such grant and (b) such
option shall not be exercisable after the expiration of five years after the
date such option is granted.
<PAGE>
14
ARTICLE 3.
MISCELLANEOUS
3.1 AMENDMENT OF THE PLAN; MODIFICATION OF AWARDS.
(a) PLAN AMENDMENTS. The Board may, without stockholder
approval, at any time and from time to time suspend, discontinue or amend the
Plan in any respect whatsoever, except that no such amendment shall impair any
rights under any award theretofore made under the Plan without the consent of
the grantee of such award. Furthermore, from and after the time the Plan is
initially approved by the stockholders, except as and to the extent otherwise
permitted by Section 3.5 or 3.11, no such amendment shall, without stockholder
approval:
(i) materially increase the benefits
accruing to grantees under the Plan;
(ii)materially increase, beyond the amounts set forth in
Section 1.5, the total number of shares of Common Stock in respect of
which options and unrelated stock appreciation rights may be issued under
the Plan;
(iii) materially modify the designation
in Section 1.3 of the class of persons eligible to
receive awards under the Plan;
(iv) permit a stock option or stock appreciation right to
be exercisable more than 10 years after the date of grant; or
(v) extend the term of the Plan beyond
the period set forth in Section 3.13.
(b) AWARD MODIFICATIONS. With the consent of the grantee
(except with respect to the Committee's ability to substitute awards without the
consent of the grantee in accordance with Section 1.5(c)), and subject to the
terms and conditions of the Plan (including Section 3.1(a)), the Committee may
amend outstanding Plan agreements with such grantee, including, without
limitation, any amendment which would (i) accelerate the time or times at which
an award may vest or become exercisable and/or (ii) extend the scheduled
termination or expiration date of the award.
<PAGE>
15
3.2 RESTRICTIONS.
(a) CONSENT REQUIREMENTS. If the Committee shall at any time
determine that any Consent (as hereinafter defined) is necessary or desirable as
a condition of, or in connection with, the granting of any award under the Plan,
the acquisition, issuance or purchase of shares or other rights hereunder or the
taking of any other action hereunder (each such action being hereinafter
referred to as a "Plan Action"), then such Plan Action shall not be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Committee. Without limiting the
generality of the foregoing, if (i) the Committee may make any payment in cash,
Common Stock or both, and (ii) the Committee determines that Consent is
necessary or desirable as a condition of, or in connection with, payment in any
one or more of such forms, then the Committee shall be entitled to determine not
to make any payment whatsoever until such Consent has been obtained.
(b) CONSENT DEFINED. The term "Consent" as used herein with
respect to any Plan Action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or other
self-regulatory organization or under any federal, state or local law, rule or
regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state or local law,
rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made and (iv) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or
other regulatory bodies or any parties to any loan agreements or other
contractual obligations of the Company or any Affiliate.
3.3 NONTRANSFERABILITY. No award granted to any grantee under the
Plan or under any Plan agreement shall be assignable or transferable by the
grantee other than by will or by the laws of descent and distribution. During
the lifetime of the grantee, all rights with respect to any option or stock
appreciation right granted to the grantee under the Plan or under any Plan
agreement shall be exercisable only by him. Shares of Common Stock acquired upon
exercise of any portion of an option granted to a grantee under the Plan shall
not be transferable to any
<PAGE>
16
person, other than (i) to the grantee's parent, spouse, ex-spouse or child (or
any trust for the benefit of any such person) or (ii) pursuant to the laws of
descent and distribution, in each case, to a "Permitted Transferee." Such shares
shall remain subject to the Company's call option as set forth in Section 2.8(a)
upon the effective date of the grantee's termination, but, unless the applicable
Plan agreement otherwise provides, no transferee shall be entitled to any put
option as set forth in Section 2.8(b) or otherwise. Each transferee shall agree
in writing to be bound by all of the provisions of this Plan and any applicable
Plan agreement, and no such transferee shall be permitted to make any transfer
other than in accordance with the terms of the Plan or such Plan agreement.
3.4 WITHHOLDING TAXES.
(a) Whenever under the Plan shares of Common Stock are to be
delivered upon exercise of an option or stock appreciation right, the Company
may require as a condition of delivery that the grantee remit an amount
sufficient to satisfy all federal, state and other governmental withholding tax
requirements related thereto. Whenever cash is to be paid under the Plan
(whether upon exercise of a stock appreciation right or otherwise), the Company
may, as a condition of its payment, deduct therefrom, or from any salary or
other payments due to the grantee, an amount sufficient to satisfy all federal,
state and other governmental withholding tax requirements related thereto or to
the delivery of any shares of Common Stock under the Plan.
(b) Without limiting the generality of the foregoing, (i) a
grantee may elect to satisfy all or part of the foregoing withholding
requirements by delivery of unrestricted shares of Common Stock owned by the
grantee for at least six months (or such other period as the Committee may
determine) having a fair market value (determined as of the date of such
delivery by the grantee) equal to all or part of the amount to be so withheld,
provided that the Committee may require, as a condition of accepting any such
delivery, that the grantee furnish an opinion of counsel acceptable to the
Committee to the effect that such delivery would not result in the grantee
incurring any liability under section 16b of the Act; and (ii) the Committee may
permit any such delivery to be made by withholding shares of Common Stock from
the shares otherwise issuable pursuant to the award(s) giving rise to the tax
withholding obligation (in which event the date of delivery shall be deemed the
date the award(s) was exercised).
3.5 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If and to the extent
specified by the Committee, the number
<PAGE>
17
of shares of Common Stock which may be issued pursuant to awards under the Plan,
the number of shares of Common Stock subject to awards under the Plan, the
option exercise price and appreciation base of options and stock appreciation
rights theretofore granted under the Plan, and the amount payable by a grantee
in respect of an award (if any), may be appropriately adjusted (as the Committee
may determine) for any change in the number of issued shares of Class A common
stock or Class B common stock resulting from the subdivision or combination of
shares of Class A common stock or Class B common stock or other capital
adjustments, or the payment of a stock dividend after the effective date of this
Plan, or other change in such shares of common stock effected without receipt of
consideration by the Company; provided, that any awards covering fractional
shares of common stock resulting from any such adjustment shall be eliminated,
and provided further, that each incentive stock option granted under the Plan
shall not be adjusted in a manner that causes such option to fail to continue to
qualify as an "incentive stock option" within the meaning of Code section 422.
Adjustments under this Section 3.5 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
3.6 RIGHT OF DISCHARGE RESERVED. Nothing in the Plan or in any Plan
agreement shall confer upon any person the right to continue in the employment
or service of the Company or an Affiliate or affect any right which the Company
or an Affiliate may have to terminate the employment or service of such person.
3.7 NO RIGHTS AS A STOCKHOLDER. No grantee or other person shall
have any of the rights of a stockholder of the Company with respect to shares
subject to an option or shares deliverable upon exercise of a stock appreciation
right until the issuance of a stock certificate to him for such shares. Except
as otherwise provided in Section 3.5, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued. In the case of a grantee of an award
which has not yet vested and/or become exercisable, the grantee shall have the
rights of a stockholder of the Company if and only to the extent provided in the
applicable Plan agreement.
3.8 NATURE OF PAYMENTS.
(a) Any and all awards or payments hereunder shall be granted,
issued or paid, as the case may be, in consideration of services performed for
the Company or for its Affiliates by the grantee.
<PAGE>
18
(b) No such awards, issuances and payments shall, unless
otherwise determined by the Committee, be taken into account in computing the
amount of the grantee's salary or compensation for the purposes of determining
any pension, retirement, death or other benefits under (i) any pension,
retirement, life insurance or other benefit plan of the Company or any Affiliate
or (ii) any agreement between the Company or any Affiliate and the grantee.
(c) By accepting an award under the Plan, the grantee shall
thereby waive any claim to continued exercise or vesting of an award or to
damages or severance entitlement related to non-continuation of the award beyond
the period provided herein or in the applicable Plan agreement, notwithstanding
any contrary provision in any written employment contract with the grantee,
whether any such contract is executed before or after the grant date of the
award.
3.9 NON-UNIFORM DETERMINATIONS. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, awards under the Plan (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Plan agreements, as to (a) the persons to receive awards under the
Plan, (b) the terms and provisions of awards under the Plan, (c) the exercise by
the Committee of its discretion in respect of the exercise of stock appreciation
rights pursuant to the terms of the Plan, and (d) the treatment of leaves of
absence for purposes of Section 2.7(b).
3.10 OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan shall
be deemed in any way to limit or restrict the Company, any Affiliate or the
Committee from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or here after in effect.
3.11 REORGANIZATION.
(a) In the event that the Company is merged or consolidated
with another corporation and, whether or not the Company shall be the surviving
corporation, there shall be any change in the shares of Class A common stock or
Class B common stock by reason of such merger or consolidation, or in the event
that all or substantially all of the assets of the Company are acquired by
another person, or in the event of a "change of control" (as defined in Section
3.11(c) below) after the date of the adoption of this Plan, or in
<PAGE>
19
the event of a reorganization or liquidation of the Company (each such event
being hereinafter referred to as a "Reorganization Event") or in the event that
the Board shall propose that the Company enter into a Reorganization Event, then
the Committee may in its discretion take any or all of the following actions:
(i) by written notice to each grantee, provide that his
options and/or stock appreciation rights will be terminated unless
exercised within 30 days (or such longer period as the Committee shall
determine in its sole discretion) after the date of such notice (without
acceleration of the vesting and/or exercisability of such awards); and/or
(ii)advance the dates upon which any or all outstanding
options and/or stock appreciation rights shall be vested and/or
exercisable.
(b) Whenever deemed appropriate by the Committee, any action
referred to in Section 3.11(a) may be made conditional upon the consummation of
the applicable Reorganization Event.
(c) For purposes of Section 3.11(a), the term "change of
control" means either (i) a person or "group" (within the meaning of section
13(d)(3) of the Act) acquiring or having beneficial ownership of securities
(including options, warrants, rights and convertible and exchangeable
securities) having a majority of the ordinary voting power of the capital stock
of the Company (assuming exercise or conversion solely of the securities held by
such person or group) or (ii) the election of a majority of the directors of the
Company who are not currently directors of the Company and are not designated or
approved by a majority of the Company's current directors or their designated or
approved successors. Notwithstanding the foregoing, the term "change of control"
shall not include an offering of any class of shares of common stock of the
Company or any of its Affiliates registered under the Securities Act of 1933, as
amended (or any successor act).
(d) In the event that the "Repurchase Option" (as defined in
the agreement dated as of December 10, 1993, by and among the Company and each
of the persons named on Schedule A attached thereto (the "Repurchase
Agreement")) is timely exercised in accordance with its terms, then each
outstanding option, and stock appreciation right, granted under the Plan to an
officer, director or employee of TA Operating Corporation, doing business as
Truckstops of America, which is expected to change its name to Truckstops of
America, Inc., shall terminate and, pursuant to the terms of the Repurchase
<PAGE>
20
Agreement, be replaced by a number of options to purchase, and stock
appreciation rights relating to, shares of stock of TA Holdings Corporation,
respectively, having terms and conditions intended to preserve the economic
benefit inherent in the replaced award, as provided for in the Repurchase
Agreement. Notwithstanding any other provision of the Plan to the contrary,
there shall be no acceleration of the vesting and/or exercisability of such
awards solely by reason of the exercise of the Repurchase Option and the
exercise of the Repurchase Option shall not be deemed to be a change of control
or any other Reorganization Event.
3.12 SECTION HEADINGS. The section headings contained herein are
for the purposes of convenience only and are not intended to define or limit the
contents of said sections.
3.13 EFFECTIVE DATE AND TERM OF PLAN.
(a) The Plan shall be deemed adopted and become effective upon
the approval thereof by the Board or on such other date as the Board shall
determine; provided that, notwithstanding any other provision of the Plan, if
the Company is or becomes subject to Rule 16b-3 of the Act or any successor rule
thereto, no award made under the Plan shall then be exercisable unless the Plan
is approved, directly or indirectly, by (i) the express consent of stockholders
holding at least a majority of the Company's voting stock voting in person or by
proxy at a duly held stockholders' meeting, or (ii) the unanimous written
consent of the stockholders of the Company, in accordance with Rule 16b-3 of the
Act or any successor rule thereto.
(b) The Plan shall terminate 10 years after the earlier of the
date on which it becomes effective or the date on which it is approved by
shareholders, and no awards shall thereafter be made under the Plan.
Notwithstanding the foregoing, all awards made under the Plan prior to such
termination date shall remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the Plan.
3.14 GOVERNING LAW. This Plan shall be governed by the laws of the
State of New York applicable to agree- ments made and to be performed entirely
within such State.
<PAGE>
21
APPENDIX A
"Call Purchase Price" means the purchase price equal to a number
obtained by the following formula"
(X-Y) x A/B
where
X equals five and one-half (5.5) multiplied by
EBITDA (as defined below);
Y equals the aggregate amount of consolidated
Indebtedness (as defined below);
A equals the number of shares of Common Stock for which options
have been granted to the respective Optionee ("Shares")
subject to the Call Notice; and
B equals the number of issued and outstanding shares of capital
stock of the Company plus all shares issuable pursuant to
warrants exercisable at a price equal to $.01 per warrant,
each as of the date of the Call Notice;
PROVIDED, HOWEVER, in the event that the Termination Effective Date occurs on or
before December 31, 1995, the "Call Purchase Price" shall be equal to $10.00
multiplied by the number of Shares subject to the Call Notice.
EBITDA shall mean EBITDA, as such term is defined in the Credit
Agreement dated as of December 10, 1993, between TA Operating Corporation and
the lender parties thereto, without giving effect to any amendments to such
agreement (the "Credit Agreement"), of the Company, as appropriately adjusted
for the effects of site closings, lease conversion costs, and any material items
beyond management control, for the most recent four (4) consecutive full fiscal
quarters subsequent to the date of adoption of this Plan and prior to the date
of the delivery of the Call Notice, and (ii) Indebtedness shall mean
consolidated Indebtedness as such term is defined in the Credit Agreement, of
the Company as reflected on the Company's balance sheet of the last day of such
most recent four (4) consecutive full fiscal quarters prior to the date of the
delivery of the Call Notice.
<PAGE>
22
APPENDIX B
"Put Purchase Price" means the purchase price equal to a number
obtained by the following formula:
(X-Y) x A/B
where
X equals five and three-tenths (5.3) multiplied
by EBITDA (as defined in Appendix A attached
hereto);
Y equals the aggregate amount of consolidated
Indebtedness (as defined in Appendix A
attached hereto);
A equals the number of Shares (as defined in Appendix A attached
hereto) subject to the Put Exercise Notice (and the Shares
required to be sold to the Company by any Permitted
Transferee); and
B equals the number of issued and outstanding shares of capital
stock of the Company plus all shares issuable pursuant to
warrants exercisable at a price equal to $.01 per warrant,
each as of the date of the Put Exercise Notice;
PROVIDED, HOWEVER, in the event that the Termination Effective Date occurs on or
before December 31, 1995, the "Put Purchase Price" shall be equal to $10.00
multiplied by the number of Shares subject to the Put Exercise Notice.
EXHIBIT 10.20
NATIONAL AUTO/TRUCKSTOPS HOLDINGS CORPORATION
1993 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
NATIONAL AWARDS
NONQUALIFIED STOCK OPTION AGREEMENT, dated as of December 10, 1993,
between National Auto/Truckstops Holdings Corporation, a Delaware corporation
(the "Company"), and (the "Optionee"), an officer, employee or
-----------------
director of the Company or one of its Affiliates.
The Company's Board of Directors (the "Board"), acting on behalf of
the Compensation Committee of the Board to administer the National
Auto/Truckstops Holdings Corporation 1993 Stock Incentive Plan (the "Plan"), has
determined that the purposes of the Plan will be furthered by awarding to the
Optionee options under the Plan. Capitalized terms defined in the Plan and not
otherwise defined herein shall have the meaning given such terms in the Plan.
In consideration of the foregoing and of the mutual undertakings set
forth in this Nonqualified Stock Option Agreement ("Agreement"), the Company and
the Optionee agree as follows:
SECTION 1. GRANT OF OPTION.
1.1. The Company hereby grants to the Optionee an option to purchase
the number of shares of Class B common stock, par value $.01 per share, of the
Company ("Common Stock") in the amounts and at the purchase prices set forth on
Exhibit A hereto.
1.2. The Option granted hereby is intended to be a nonqualified
stock option subject to the provisions of section 83 of the Internal Revenue
Code of 1986, as amended (the "Code"), and is not intended to qualify for
special tax treatment as a statutory stock option subject to the provisions of
section 422 of the Code.
SECTION 2. VESTING AND EXERCISABILITY.
2.1. The Option shall not be vested prior to December 31, 1993. No
portion of the Option shall be exercisable prior to January 1, 1996, or
subsequent to December 9, 2003. The Option shall vest and become exercisable
with respect to the shares of Common Stock subject thereto if the Applicable
EBITDA Targets are
<PAGE>
2
satisfied in accordance with the schedule attached hereto as Exhibit B;
provided, however, that the Option shall become exercisable for all purposes
(including post-employment exercisability, in accordance with Section 4 of this
Agreement) as and to the extent the Option becomes vested in accordance with the
schedule attached hereto as Exhibit B or on January 1, 1996, if later. The
Applicable EBITDA Targets shall be either the National EBITDA Targets as set
forth on said Exhibit B if the Repurchase Option (as defined in Plan Section
3.11(d)) is timely exercised in accordance with its terms, or the Holdings
EBITDA Targets as set forth on said Exhibit B if the Repurchase Option is not so
exercised.
2.2. The Option may at any time and from time to time be exercised
in whole or in part for the shares of Common Stock subject thereto, within the
limitations on exercisability set forth above.
2.3. Unless terminated earlier, the unexercised portion of the
Option shall automatically and without notice terminate and become null and void
on December 9, 2003.
SECTION 3. METHOD OF EXERCISE. The Option or any part thereof may be
exercised in accordance with Section 2 of this Agreement by giving written
notice of exercise to the Company, on a form to be provided by the Committee for
that purpose, and by specifying the number of whole shares of Common Stock with
respect to which the Option is being exercised, together with full payment of
the purchase price for the number of shares purchased. Payment of the purchase
price shall be made by certified or official bank check payable to the Company
(or the equivalent thereof acceptable to the Committee), or by cashless exercise
in accordance with Plan Section 2.6(c) provided that only shares of Common Stock
held by the Optionee for at least six months prior to the date of exercise may
be used for such purpose. As soon as practicable after it receives payment of
the purchase price, subject to the provisions of Plan Section 3.2, the Company
shall deliver to the Optionee a certificate or certificates for the shares of
Common Stock so purchased, which shares shall bear a restrictive legend in
accordance with Section 6 of this Agreement (or as otherwise determined by the
Committee). The shares of Common Stock so delivered automatically shall become
subject to the terms and conditions of the Stockholders' Agreement, dated as of
April 14, 1993, by and among the Company and the Stockholders (as defined
therein), as it may be amended, and the Supplemental Stockholders' Agreement,
dated as of December 10, 1993, by and among the Company and certain of the
Company's stockholders, as it may be amended, copies of which are on file in the
office of the Company and will be furnished to the Optionee.
<PAGE>
3
SECTION 4. TERMINATION OF EMPLOYMENT OR SERVICE.
4.1. IN GENERAL. The non-vested portion of any Option shall
terminate and expire upon the Optionee's termination of employment or service;
the vested portion shall expire when it may no longer be exercised pursuant to
the provisions of the Plan and this Agreement (including this Section 4). The
"vested portion" of any Option shall mean the portion thereof which is vested
(whether or not then exercisable) immediately prior to the Optionee's
termination of employment for any reason. Notwithstanding anything contained
herein to the contrary, if the Optionee's employment terminates for any such
reason (including death) on or before December 31, 1995, then January 1, 1996,
shall be deemed to be the date of the Optionee's termination of employment for
purposes of any post-employment exercisability of any portion of the Option
which was vested but not exercisable by the Optionee immediately prior to the
actual date of the Optionee's termination of employment.
4.2. IMPROPER ACTIVITY; QUIT.
(a) IMPROPER ACTIVITY. If the Optionee's employment is
terminated for cause, whether or not he is a party to a written employment
contract, the vested and exercisable portion of the Option granted hereunder may
be exercised until the earlier of (a) 30 days after his employment terminates or
(b) the date on which the Option otherwise terminates or expires in accordance
with the applicable provisions of the Plan and this Agreement. Notwithstanding
anything contained herein to the contrary, if the Optionee's employment
terminates for cause on or before December 31, 1995, then January 1, 1996, shall
be deemed to be the date of the Optionee's termination of employment for
purposes of any post-employment exercisability of any portion of the Option
which was vested but not exercisable by the Optionee immediately prior to the
actual date of the Optionee's termination of employment. For purposes of this
Section 4, an Optionee's employment shall be deemed to be terminated for "cause"
if he is discharged for "cause" or any like term as defined in a written
employment contract with the Optionee, if any.
(b) QUIT. If the Optionee quits employment, whether or not he
is a party to a written employment contract, the Option granted hereby shall
terminate and expire as of the close of business on the day the Optionee's
employment terminates; provided, however, that if the Optionee quits employment
before January 1, 1996, then any portion of the Option which was vested but not
exercisable by the Optionee immediately prior to the actual date of the
<PAGE>
4
Optionee's termination of employment may be exercised by the Optionee from
January 1, 1996 through January 15, 1996.
4.3. REGULAR TERMINATION; PERMANENT DISABILITY. If the Optionee's
employment terminates for reasons other than as provided in Section 4.2 or 4.4
of this Agreement, including for "permanent disability" (as defined below), the
vested and exercisable portion of the Option granted hereunder may be exercised
until the earlier of (a) 60 days after his employment terminates or (b) the date
on which the Option otherwise terminates or expires in accordance with the
applicable provisions of the Plan and this Agreement. Notwithstanding anything
contained herein to the contrary, if the Optionee's employment terminates for
any such reason on or before December 31, 1995, then January 1, 1996, shall be
deemed to be the date of the Optionee's termination of employment for purposes
of any post-employment exercisability of any portion of the Option which was
vested but not exercisable by the Optionee immediately prior to the actual date
of Optionee's termination of employment. For purposes of this Agreement, the
term "permanent disability" shall mean any medically determinable physical or
mental impairment, as reasonably determined by the Committee, which prevents the
Optionee from performing any employment duties and which is likely to be
permanent or of indefinite duration.
4.4. DEATH. In the event that the Optionee's employment terminates
by reason of death, or if the Optionee's employment shall terminate as described
in Section 4.3 of this Agreement and he dies within the 60-day period described
therein and while some portion of the Option is vested and/or exercisable, the
portion, if any, of the Option which was vested and exercisable immediately
prior to the Optionee's death shall be exercisable by the person to whom the
Option has passed under the Optionee's will (or, if applicable, pursuant to the
laws of descent and distribution) until the earlier of (a) one year after the
Optionee's death or (b) the date on which the Option otherwise terminates or
expires in accordance with the applicable provisions of the Plan and this
Agreement (disregarding Section 4.3 of this Agreement). Notwith standing
anything contained herein to the contrary, if the Optionee's employment
terminates by reason of death on or before December 31, 1995, then January 1,
1996, shall be deemed to be the date of the Optionee's death for purposes of any
post-employment exercisability of any portion of the Option which was vested but
not exercisable by the Optionee immediately prior to the actual date of the
Optionee's death.
4.5. PAYMENT. For purposes of any post-employment exercisability
of the Option in accordance with
<PAGE>
5
this Section 4, payment of the purchase price in accordance with Section 3 of
this Agreement shall be satisfied if made in accordance with Plan Section
2.6(b)(i) or (c).
SECTION 5. CALL AND PUT OPTIONS. The shares of Common Stock issued
upon exercise of all or any portion of an Option shall be subject to a call
right by the Company and a put right by the Optionee (but not by any transferee
of the Optionee, except that a Permitted Transferee shall participate in a put
option as described in Plan Section 2.8) following his termination of employment
in accordance with the provisions of Plan Section 2.8. Notwithstanding the
preceding sentence and the provisions of Plan Section 2.8, no Option shall be
subject to a call right by the Company or a put right by the Optionee if, and to
the extent, that any such right would cause the Company or the Optionee (or any
Permitted Transferee) to incur any liability under Rule 16b-3 of the Act.
SECTION 6. NON-TRANSFERABILITY.
6.1. No right granted to the Optionee under the Plan or this
Agreement shall be assignable or transferable (whether by operation of law or
otherwise and whether voluntarily or involuntarily), other than by will or by
the laws of descent and distribution. During the lifetime of the Optionee, all
rights granted to the Optionee under the Plan or under this Agreement shall be
exercisable only by the Optionee, and shall not be exercisable prior to January
1, 1996. Shares of Common Stock acquired upon exercise of any portion of an
option granted to an Optionee under the Plan shall not be transferable to any
person prior to January 1, 1996; such shares shall not be transferable to any
person on and after January 1, 1996, other than (i) to the Optionee's parent,
spouse, ex-spouse or child (or any trust for the benefit of any such person) or
(ii) pursuant to the laws of descent and distribution. Such shares shall remain
subject to the Company's call option as set forth in Section 2.8(a) upon the
Optionee's termination, but shall not be entitled to any put option as set forth
in Section 2.8(b) (or otherwise) except as permitted by Permitted Transferees in
accordance with Section 5 of this Agreement. Each transferee shall agree in
writing to be bound by all of the provisions of the Plan and this Agreement, and
no such transferee shall be permitted to make any transfer other than in
accordance with the terms of the Plan or this Agreement. Any sale, assignment,
mortgage, pledge, encumbrance or other transfer in violation of this Section 6
shall be null and void and of no force and effect.
<PAGE>
6
6.2. The certificate or certificates of shares of Common Stock
issued pursuant to the terms of this Agreement shall bear a legend in
substantially the following form:
"The shares represented by this certificate are subject to the terms
and conditions (including forfeiture and restrictions against
transfer) contained in a Nonqualified Stock Option Agreement entered
into between the registered holder hereof and National
Auto/Truckstops Holdings Corporation. Copies of such Nonqualified
Stock Option Agreement are on file in the Office of the Secretary of
National Auto/Truckstops Holdings Corporation.
The shares represented by this certificate are further subject to a
Stockholders' Agreement, dated as of April 14, 1993, as it may be
amended, and the Supplemental Stockholders' Agreement, dated as of
December 10, 1993, as it may be amended, copies of which are on file
at the Office of the Secretary of National Auto/Truckstops Holdings
Corporation and will be furnished to any prospective purchasers on
request. By acceptance of this certificate, each holder hereof
agrees to be bound by the provisions of such agreements."
SECTION 7. RIGHT OF DISCHARGE RESERVED.
Nothing in the Plan or this Agreement shall confer upon the Optionee
the right to continue in the employment or service of the Company or any of its
Affiliates or affect any right that the Company or such Affiliate may have to
terminate the employment or service of the Optionee.
SECTION 8. NO STOCKHOLDER RIGHTS.
Neither the Optionee nor any person succeeding to the Optionee's
rights hereunder shall have any rights as a stockholder with respect to any
shares subject to the Option until the date of the issuance of a stock
certificate or certificates to him for such shares. Except for adjustments made
pursuant to Plan Section 3.5 (as described in Section 9 of this Agreement), no
adjustment shall be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities or other property)
for which the record date is prior to the date such stock certificate is issued.
<PAGE>
7
SECTION 9. PLAN PROVISIONS TO PREVAIL.
This Agreement shall be subject to all of the terms and provisions
of the Plan, which are incorporated hereby and made a part hereof, including,
without limitation, the provisions of Plan Section 3.2 (generally relating to
consents required by securities and other laws), Plan Section 3.4 (generally
relating to withholding tax obligations), Plan Section 3.5 (generally relating
to adjustments to the number of shares of Common Stock subject to the Option and
the option exercise price, upon certain changes in capitalization, provided that
the Committee shall be required to make an appropriate adjustment in the
circumstances described in Plan Section 3.5) and Plan Section 3.11 (generally
relating to the effects of certain reorganizations and other extraordinary
transactions, provided that in such an event payment of the purchase price in
accordance with Section 3 of this Agreement shall be satisfied if made in
accordance with Plan Section 2.6(b)(i) or (c)). In the event there is any
inconsistency between any of the provisions of the Agreement and the Plan, the
provisions of the Plan shall govern.
SECTION 10. OPTIONEE'S ACKNOWLEDGEMENTS.
By entering into this Agreement the Optionee agrees and acknowledges
that (a) he has received and read a copy of the Plan, including Plan Section
3.8(c) (generally relating to waivers of continued exercise or vesting of
awards, damages and severance entitlements related to non-continuation of
awards), and accepts this Option upon all of the terms thereof, (b) he agrees to
be bound by the provisions of the Stockholders' Agreement described in Section 3
of this Agreement and to execute such documents with respect thereto as the
Committee may require, and (c) that none of the Company, the Board, the
Committee, the Affiliates (including their respective parents and subsidiaries)
and their respective shareholders, officers, directors, employees, agents and
counsel shall be liable for any action or determination with respect to the Plan
or any award thereunder or this Agreement.
SECTION 11. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors and assigns of the Company and, to the extent
set forth in Plan Section 3.3 and Section 6 of this Agreement, the heirs and
personal representatives of the Optionee.
<PAGE>
8
SECTION 12. GOVERNING LAW.
THIS AGREEMENT IS DEEMED ADOPTED, MADE AND DELIVERED IN NEW YORK AND
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
SECTION 13. NOTICES.
All notices and other communications hereunder to be given to the
Company shall be given in writing, shall be personally delivered against receipt
or sent by registered or certified mail, return receipt requested, and if
mailed, shall be addressed to the Company, at National Auto/Truckstops Holdings
Corporation, 3100 West End Avenue, Suite 200, Nashville, Tennessee 37202-0076
Attn.: James F. Blackstock, or at such other address as the Company may
hereafter designate to the Optionee by notice as provided herein. All notices to
be given to the Optionee hereunder shall be addressed to the Optionee at the
address set forth below or at such other address as the Optionee may hereafter
designate to the Company by notice as provided herein. Either party may, by
notice, change the address to which notice to such party is to be given. Notices
hereunder shall be deemed to have been duly given when received by personal
delivery or by registered or certified mail to the party entitled to receive the
same.
SECTION 14. CANCELLATION AND SUBSTITUTION OF OPTION.
The Committee may cancel the Option granted hereunder the Plan and
issue a new award in substitution therefor upon such terms as the Committee may
in its sole discretion determine (provided that the substituted award shall
satisfy all applicable Plan requirements as of the date such new award is made)
without the Optionee's, consent, where the substituted award confers upon the
Optionee, until exercised, substantially the same net economic benefit inherent
in the replaced Option, and with the Optionee's consent if otherwise.
<PAGE>
9
SECTION 15. SECTION HEADINGS.
The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
National Auto/Truckstops
Holdings Corporation
By
---------------------------
Name:
Title:
ATTEST:
-------------------
------------------------------
(Optionee)
------------------------------
(Address)
<PAGE>
10
EXHIBIT A
Optionee shall receive options to purchase shares of Common Stock as
determined by the Company's Board acting on behalf of the Committee. Such
options are granted as of December 10, 1993 at a purchase price of $10.00 per
share (the "Series I Option"), at a purchase price of $17.49 per share (the
"Series II Option") or at a purchase price of $28.56 per share (the "Series III
Option"), as follows:
OPTION TYPE PURCHASE PRICE NUMBER OF SHARES
Series I Option $10.00 25,175
Series II Option $17.49 26,573
Series III Option $28.56 28,252
By:
---------------------------
Name:
Title:
Dated: this day of , 1994
--- -------------
<PAGE>
11
EXHIBIT B TO NATIONAL AWARDS AGREEMENT
VESTING
<TABLE>
<CAPTION>
If Repurchase
Option is If Repurchase
Exercised: Option is Not Maximum Annual % of Maximum Cumulative
National Exercised: Shares Becoming % of Shares
Year EBITDA Holdings EBITDA Vested if Becoming Vested if
ENDED Targets (in Targets (in Applicable EBITDA Applicable EBITDA
$ MILLIONS) $ MILLIONS) TARGETS ARE MET TARGETS ARE MET
------------- --------------- ------------------ ----------------
<S> <C> <C> <C> <C>
12/31/93 30.0 30.0 25% 25%
12/31/94 75.0 99.0 25% 50%
12/31/95 121.2 170.7 25% 75%
12/31/96 168.7 245.2 25% 100%
12/31/97 217.4 322.4 -- 100%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Highest % of
Applicable EBITDA % of Shares Becoming Vested if % of
TARGET MET* APPLICABLE EBITDA TARGETS ARE MET
----------- ---------------------------------
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
100% or more 25% 50% 75% 100% 100%
99% 20% 40% 60% 80% 0
98% 16% 32% 48% 64% 0
97% 12% 24% 36% 48% 0
96% 8% 16% 24% 32% 0
95% 4% 8% 12% 20% 0
less than 95% 0 0 0 0 0
</TABLE>
- --------
* The extent to which the Option will become vested will be proportionately
adjusted on a straight line basis if actual EBITDA falls between the
percentages listed.
<PAGE>
12
To illustrate:
(i) Assume that 110% of the applicable EBITDA target is met on 12/31/93.
25% of the Option becomes vested.
(ii) Assume further that 98% of the applicable EBITDA target is met on
12/31/94. 32% of the Option is vested, I.E., an additional 7% is
vested.
(iii) Assume further that 97% of the applicable EBITDA target is met on
12/31/95. 36% of the Option is vested, I.E., an additional 4% vests.
[Note, however, that if, for example, 96% of the applicable EBITDA
target is met on 12/31/95, then no additional vesting occurs because
the extent to which the Option is vested on 12/31/95 (32% vested)
exceeds the cumulative percentage of shares vested if 97% of the
applicable EBITDA target is met on 12/31/95 (24%).]
(iv) Assume further that 99% of the applicable EBITDA target is met on
12/31/96. 80% of the Option is vested, I.E., an additional 44%
vests.
(v) Assume further that 100% of the applicable EBITDA target is met on
12/31/97. 100% of the Option is vested.
EXERCISABILITY
- --------------
The Option shall become exercisable for all purposes (including
post-employment exercisability, in accordance with Section 4 of the Agreement)
on the date the Option becomes vested in accordance with Section 2 of the
Agreement and the schedule above or on January 1, 1996, if later.
EXHIBIT 10.21
NATIONAL AUTO/TRUCKSTOPS HOLDINGS CORPORATION
1993 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
TRUCKSTOPS AWARDS
NONQUALIFIED STOCK OPTION AGREEMENT, dated as of December 10, 1993,
between National Auto/Truckstops Holdings Corporation, a Delaware corporation
(the "Company"), and _______________ (the "Optionee"), an officer, employee or
director of the Company or one of its Affiliates.
The Company's Board of Directors (the "Board"), acting on behalf of
the Compensation Committee of the Board to administer the National
Auto/Truckstops Holdings Corporation 1993 Stock Incentive Plan (the "Plan"), has
determined that the purposes of the Plan will be furthered by awarding to the
Optionee options under the Plan. Capitalized terms defined in the Plan and not
otherwise defined herein shall have the meaning given such terms in the Plan.
In consideration of the foregoing and of the mutual undertakings set
forth in this Nonqualified Stock Option Agreement ("Agreement"), the Company and
the Optionee
agree as follows:
SECTION 1. GRANT OF OPTION.
1.1. The Company hereby grants to the Optionee an option to purchase
the number of shares of Class B common stock, par value $.01 per share, of the
Company ("Common Stock") in the amounts and at the purchase prices set forth on
Exhibit A hereto.
1.2. The Option granted hereby is intended to be a nonqualified
stock option subject to the provisions of section 83 of the Internal Revenue
Code of 1986, as amended (the "Code"), and is not intended to qualify for
special tax treatment as a statutory stock option subject to the provisions of
section 422 of the Code.
SECTION 2. VESTING AND EXERCISABILITY.
2.1. The option to purchase one share of Common Stock pursuant to
the Series I Option (as defined in Exhibit A) shall vest on December 10, 1993;
the remainder of the Option shall not be vested prior to December 31, 1994. No
portion of the Option shall be exercisable prior to
<PAGE>
2
January 1, 1996, or subsequent to December 9, 2003. The remainder of the Option
shall vest and become exercisable with respect to the shares of Common Stock
subject thereto if the Applicable EBITDA Targets are satisfied in accordance
with the schedule attached hereto as Exhibit B; provided, however, that the
Option shall become exercisable for all purposes (including post-employment
exercisability, in accordance with Section 4 of this Agreement) as and to the
extent the Option becomes vested in accordance with the schedule attached hereto
as Exhibit B or on January 1, 1996, if later. The Applicable EBITDA Targets
shall be either the TA EBITDA Targets as set forth on said Exhibit B if the
Repurchase Option (as defined in Plan Section 3.11(d)) is timely exercised in
accordance with its terms, or the Holdings EBITDA Targets as set forth on said
Exhibit B if the Repurchase Option is not so exercised.
2.2. The Option may at any time and from time to time be exercised
in whole or in part for the shares of Common Stock subject thereto, within the
limitations on exercisability set forth above.
2.3. Unless terminated earlier, the unexercised portion of the
Option shall automatically and without notice terminate and become null and void
on December 9, 2003.
SECTION 3. METHOD OF EXERCISE. The Option or any part thereof may be
exercised in accordance with Section 2 of this Agreement by giving written
notice of exercise to the Company, on a form to be provided by the Committee for
that purpose, and by specifying the number of whole shares of Common Stock with
respect to which the Option is being exercised, together with full payment of
the purchase price for the number of shares purchased. Payment of the purchase
price shall be made by certified or official bank check payable to the Company
(or the equivalent thereof acceptable to the Committee), or by cashless exercise
in accordance with Plan Section 2.6(c) provided that only shares of Common Stock
held by the Optionee for at least six months prior to the date of exercise may
be used for such purpose. As soon as practicable after it receives payment of
the purchase price, subject to the provisions of Plan Section 3.2, the Company
shall deliver to the Optionee a certificate or certificates for the shares of
Common Stock so purchased, which shares shall bear a restrictive legend in
accordance with Section 6 of this Agreement (or as otherwise determined by the
Committee). The shares of Common Stock so delivered automatically shall become
subject to the terms and conditions of the Stockholders' Agreement, dated as of
April 14, 1993, by and among the Company and the Stockholders (as defined
therein), as it may be amended, and the Supplemental Stockholders' Agreement,
dated as of December 10, 1993, by
<PAGE>
3
and among the Company and certain of the Company's stockholders, as it may be
amended, copies of which are on file in the office of the Company and will be
furnished to the Optionee.
SECTION 4. TERMINATION OF EMPLOYMENT OR SERVICE.
4.1. IN GENERAL. The non-vested portion of any Option shall
terminate and expire upon the Optionee's termination of employment or service;
the vested portion shall expire when it may no longer be exercised pursuant to
the provisions of the Plan and this Agreement (including this Section 4). The
"vested portion" of any Option shall mean the portion thereof which is vested
(whether or not then exercisable) immediately prior to the Optionee's
termination of employment for any reason. Notwithstanding anything contained
herein to the contrary, if the Optionee's employment terminates for any such
reason (including death) on or before December 31, 1995, then January 1, 1996,
shall be deemed to be the date of the Optionee's termination of employment for
purposes of any post-employment exercisability of any portion of the Option
which was vested but not exercisable by the Optionee immediately prior to the
actual date of the Optionee's termination of employment.
4.2. IMPROPER ACTIVITY; QUIT.
(a) IMPROPER ACTIVITY. If the Optionee's employment is
terminated for cause, whether or not he is a party to a written employment
contract, the vested and exercisable portion of the Option granted hereunder may
be exercised until the earlier of (a) 30 days after his employment terminates or
(b) the date on which the Option otherwise terminates or expires in accordance
with the applicable provisions of the Plan and this Agreement. Notwithstanding
anything contained herein to the contrary, if the Optionee's employment
terminates for cause on or before December 31, 1995, then January 1, 1996, shall
be deemed to be the date of the Optionee's termination of employment for
purposes of any post-employment exercisability of any portion of the Option
which was vested but not exercisable by the Optionee immediately prior to the
actual date of the Optionee's termination of employment. For purposes of this
Section 4, an Optionee's employment shall be deemed to be terminated for "cause"
if he is discharged for "cause" or any like term as defined in a written
employment contract with the Optionee, if any.
(b) QUIT. If the Optionee quits employment,
whether or not he is a party to a written employment
contract, the Option granted hereby shall terminate and
expire as of the close of business on the day the Optionee's
<PAGE>
4
employment terminates; provided, however, that if the Optionee quits employment
before January 1, 1996, then any portion of the Option which was vested but not
exercisable by the Optionee immediately prior to the actual date of the
Optionee's termination of employment may be exercised by the Optionee from
January 1, 1996 through January 15, 1996.
4.3. REGULAR TERMINATION; PERMANENT DISABILITY. If the Optionee's
employment terminates for reasons other than as provided in Section 4.2 or 4.4
of this Agreement, including for "permanent disability" (as defined below), the
vested and exercisable portion of the Option granted hereunder may be exercised
until the earlier of (a) 60 days after his employment terminates or (b) the date
on which the Option otherwise terminates or expires in accordance with the
applicable provisions of the Plan and this Agreement. Notwithstanding anything
contained herein to the contrary, if the Optionee's employment terminates for
any such reason on or before December 31, 1995, then January 1, 1996, shall be
deemed to be the date of the Optionee's termination of employment for purposes
of any post-employment exercisability of any portion of the Option which was
vested but not exercisable by the Optionee immediately prior to the actual date
of Optionee's termination of employment. For purposes of this Agreement, the
term "permanent disability" shall mean any medically determinable physical or
mental impairment, as reasonably determined by the Committee, which prevents the
Optionee from performing any employment duties and which is likely to be
permanent or of indefinite duration.
4.4. DEATH. In the event that the Optionee's employment terminates
by reason of death, or if the Optionee's employment shall terminate as described
in Section 4.3 of this Agreement and he dies within the 60-day period described
therein and while some portion of the Option is vested and/or exercisable, the
portion, if any, of the Option which was vested and exercisable immediately
prior to the Optionee's death shall be exercisable by the person to whom the
Option has passed under the Optionee's will (or, if applicable, pursuant to the
laws of descent and distribution) until the earlier of (a) one year after the
Optionee's death or (b) the date on which the Option otherwise terminates or
expires in accordance with the applicable provisions of the Plan and this
Agreement (disregarding Section 4.3 of this Agreement). Notwithstanding anything
contained herein to the contrary, if the Optionee's employment terminates by
reason of death on or before December 31, 1995, then January 1, 1996, shall be
deemed to be the date of the Optionee's death for purposes of any
post-employment exercisability of any portion of the Option which was vested but
not exercisable by the Optionee
<PAGE>
5
immediately prior to the actual date of the Optionee's death.
4.5. PAYMENT. For purposes of any post-employment exercisability of
the Option in accordance with this Section 4, payment of the purchase price in
accordance with Section 3 of this Agreement shall be satisfied if made in
accordance with Plan Section 2.6(b)(i) or (c).
SECTION 5. CALL AND PUT OPTIONS. The shares of Common Stock issued
upon exercise of all or any portion of an Option shall be subject to a call
right by the Company and a put right by the Optionee (but not by any transferee
of the Optionee, except that a Permitted Transferee shall participate in a put
option as described in Plan Section 2.8) following his termination of employment
in accordance with the provisions of Plan Section 2.8. Notwithstanding the
preceding sentence and the provisions of Plan Section 2.8, no Option shall be
subject to a call right by the Company or a put right by the Optionee if, and to
the extent, that any such right would cause the Company or the Optionee (or any
Permitted Transferee) to incur any liability under Rule 16b-3 of the Act.
SECTION 6. NON-TRANSFERABILITY.
6.1. No right granted to the Optionee under the Plan or this
Agreement shall be assignable or transferable (whether by operation of law or
otherwise and whether voluntarily or involuntarily), other than by will or by
the laws of descent and distribution. During the lifetime of the Optionee, all
rights granted to the Optionee under the Plan or under this Agreement shall be
exercisable only by the Optionee, and shall not be exercisable prior to January
1, 1996. Shares of Common Stock acquired upon exercise of any portion of an
option granted to an Optionee under the Plan shall not be transferable to any
person prior to January 1, 1996; such shares shall not be transferable to any
person on and after January 1, 1996, other than (i) to the Optionee's parent,
spouse, ex-spouse or child (or any trust for the benefit of any such person) or
(ii) pursuant to the laws of descent and distribution. Such shares shall remain
subject to the Company's call option as set forth in Section 2.8(a) upon the
Optionee's termination, but shall not be entitled to any put option as set forth
in Section 2.8(b) (or otherwise) except as permitted by Permitted Transferees in
accordance with Section 5 of this Agreement. Each transferee shall agree in
writing to be bound by all of the provisions of the Plan and this Agreement, and
no such transferee shall be permitted to make any transfer other than in
accordance with the terms of the Plan or this
<PAGE>
6
Agreement. Any sale, assignment, mortgage, pledge, encumbrance or other transfer
in violation of this Section 6 shall be null and void and of no force and
effect.
6.2. The certificate or certificates of shares of Common Stock
issued pursuant to the terms of this Agreement shall bear a legend in
substantially the following form:
"The shares represented by this certificate are subject to the terms
and conditions (including forfeiture and restrictions against
transfer) contained in a Nonqualified Stock Option Agreement entered
into between the registered holder hereof and National
Auto/Truckstops Holdings Corporation. Copies of such Nonqualified
Stock Option Agreement are on file in the Office of the Secretary of
National Auto/Truckstops Holdings Corporation.
The shares represented by this certificate are further subject to a
Stockholders' Agreement, dated as of April 14, 1993, as it may be
amended, and the Supplemental Stockholders' Agreement, dated as of
December 10, 1993, as it may be amended, copies of which are on file
at the Office of the Secretary of National Auto/Truckstops Holdings
Corporation and will be furnished to any prospective purchasers on
request. By acceptance of this certificate, each holder hereof
agrees to be bound by the provisions of such agreements."
SECTION 7. RIGHT OF DISCHARGE RESERVED.
Nothing in the Plan or this Agreement shall confer upon the Optionee
the right to continue in the employment or service of the Company or any of its
Affiliates or affect any right that the Company or such Affiliate may have to
terminate the employment or service of the Optionee.
SECTION 8. NO STOCKHOLDER RIGHTS.
Neither the Optionee nor any person succeeding to the Optionee's
rights hereunder shall have any rights as a stockholder with respect to any
shares subject to the Option until the date of the issuance of a stock
certificate or certificates to him for such shares. Except for adjustments made
pursuant to Plan Section 3.5 (as described in Section 9 of this Agreement), no
adjustment shall be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities or other property)
for which the record date is prior to the date such stock certificate is issued.
<PAGE>
7
SECTION 9. PLAN PROVISIONS TO PREVAIL.
This Agreement shall be subject to all of the terms and provisions
of the Plan, which are incorporated hereby and made a part hereof, including,
without limitation, the provisions of Plan Section 3.2 (generally relating to
consents required by securities and other laws), Plan Section 3.4 (generally
relating to withholding tax obligations), Plan Section 3.5 (generally relating
to adjustments to the number of shares of Common Stock subject to the Option and
the option exercise price, upon certain changes in capitalization, provided that
the Committee shall be required to make an appropriate adjustment in the
circumstances described in Plan Section 3.5) and Plan Section 3.11 (generally
relating to the effects of certain reorganizations and other extraordinary
transactions, provided that in such an event payment of the purchase price in
accordance with Section 3 of this Agreement shall be satisfied if made in
accordance with Plan Section 2.6(b)(i) or (c)). In the event there is any
inconsistency between any of the provisions of the Agreement and the Plan, the
provisions of the Plan shall govern.
SECTION 10. OPTIONEE'S ACKNOWLEDGEMENTS.
By entering into this Agreement the Optionee agrees and acknowledges
that (a) he has received and read a copy of the Plan, including Plan Section
3.8(c) (generally relating to waivers of continued exercise or vesting of
awards, damages and severance entitlements related to non-continuation of
awards), and accepts this Option upon all of the terms thereof, (b) he agrees to
be bound by the provisions of the Stockholders' Agreement described in Section 3
of this Agreement and to execute such documents with respect thereto as the
Committee may require, and (c) that none of the Company, the Board, the
Committee, the Affiliates (including their respective parents and subsidiaries)
and their respective shareholders, officers, directors, employees, agents and
counsel shall be liable for any action or determination with respect to the Plan
or any award thereunder or this Agreement.
SECTION 11. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors and assigns of the Company and, to the extent
set forth in Plan Section 3.3 and Section 6 of this Agreement, the heirs and
personal representatives of the Optionee.
<PAGE>
8
SECTION 12. GOVERNING LAW.
THIS AGREEMENT IS DEEMED ADOPTED, MADE AND DELIVERED IN NEW YORK AND
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
SECTION 13. NOTICES.
All notices and other communications hereunder to be given to the
Company shall be given in writing, shall be personally delivered against receipt
or sent by registered or certified mail, return receipt requested, and if
mailed, shall be addressed to the Company, at National Auto/Truckstops Holdings
Corporation, 3100 West End Avenue, Suite 200, Nashville, Tennessee 37202-0076
Attn.: James F. Blackstock, or at such other address as the Company may
hereafter designate to the Optionee by notice as provided herein. All notices to
be given to the Optionee hereunder shall be addressed to the Optionee at the
address set forth below or at such other address as the Optionee may hereafter
designate to the Company by notice as provided herein. Either party may, by
notice, change the address to which notice to such party is to be given. Notices
hereunder shall be deemed to have been duly given when received by personal
delivery or by registered or certified mail to the party entitled to receive the
same.
SECTION 14. CANCELLATION AND SUBSTITUTION OF OPTION.
The Committee may cancel the Option granted hereunder the Plan and
issue a new award in substitution therefor upon such terms as the Committee may
in its sole discretion determine (provided that the substituted award shall
satisfy all applicable Plan requirements as of the date such new award is made)
without the Optionee's, consent, where the substituted award confers upon the
Optionee, until exercised, substantially the same net economic benefit inherent
in the replaced Option, and with the Optionee's consent if otherwise.
<PAGE>
9
SECTION 15. SECTION HEADINGS.
The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
National Auto/Truckstops
Holdings Corporation
By
---------------------------
Name:
Title:
ATTEST:
-------------------
------------------------------
(Optionee)
------------------------------
(Address)
<PAGE>
10
EXHIBIT A
Optionee shall receive options to purchase shares of Common Stock as
determined by the Company's Board acting on behalf of the Committee. Such
options are granted as of December 10, 1993 at a purchase price of $10.00 per
share (the "Series I Option"), at a purchase price of $17.49 per share (the
"Series II Option") or at a purchase price of $28.56 per share (the "Series III
Option"), as follows:
OPTION TYPE PURCHASE PRICE NUMBER OF SHARES
Series I Option $10.00
---------------
Series II Option $17.49
---------------
Series III Option $28.56
---------------
By:
---------------------------
Name:
Title:
Dated: this day of , 1994
-- -------
<PAGE>
11
EXHIBIT B TO TRUCKSTOPS AWARDS AGREEMENT
VESTING
<TABLE>
<CAPTION>
If Repurchase If Repurchase
Option is Option is Not Maximum Annual % of Maximum Cumulative
Exercised: Exercised: Shares Becoming % of Shares
TA EBITDA Holdings EBITDA Vested if Becoming Vested if
Year Targets (in Targets (in Applicable EBITDA Applicable EBITDA
ENDED $ MILLIONS) $ MILLIONS) TARGETS ARE MET TARGETS ARE MET
----- ------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
12/31/94 24.0 99.0 25% 25%
12/31/95 49.5 170.7 25% 50%
12/31/96 76.5 245.2 25% 75%
12/31/97 105.0 322.4 25% 100%
12/31/98 135.5 402.9 -- 100%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Highest % of
Applicable EBITDA % of Shares Becoming Vested if % of
TARGET MET* APPLICABLE EBITDA TARGETS ARE MET
----------- ---------------------------------
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
100% or more 25% 50% 75% 100% 100%
99% 20% 40% 60% 80% 0
98% 16% 32% 48% 64% 0
97% 12% 24% 36% 48% 0
96% 8% 16% 24% 32% 0
95% 4% 8% 12% 20% 0
less than 95% 0 0 0 0 0
</TABLE>
- --------
* The extent to which the Option will become vested will be proportionately
adjusted on a straight line basis if actual EBITDA falls between the
percentages listed.
<PAGE>
12
To illustrate:
(i) Assume that 110% of the applicable EBITDA target is met on
12/31/94. 25% of the Option becomes vested.
(ii) Assume further that 98% of the applicable EBITDA target is met on
12/31/95. 32% of the Option is vested, I.E., an additional 7% is
vested.
(iii) Assume further that 97% of the applicable EBITDA target is met on
12/31/96. 36% of the Option is vested, I.E., an additional 4%
vests. [Note, however, that if, for example, 96% of the applicable
EBITDA target is met on 12/31/96, then no additional vesting
occurs because the extent to which the Option is vested on
12/31/95 (32% vested) exceeds the cumulative percentage of shares
vested if 97% of the applicable EBITDA target is met on 12/31/96
(24%).]
(iv) Assume further that 99% of the applicable EBITDA target is met on
12/31/97. 80% of the Option is vested, I.E., an additional 44%
vests.
(v) Assume further that 100% of the applicable EBITDA target is met on
12/31/98. 100% of the Option is vested.
EXERCISABILITY
The Option shall become exercisable for all purposes (including
post-employment exercisability, in accordance with Section 4 of the Agreement)
on the date the Option becomes vested in accordance with Section 2 of the
Agreement and the schedule above or on January 1, 1996, if later.
EXHIBIT 10.22
TERMINATION, CONSULTING AND RELEASE AGREEMENT
(C. WILLIAM OSBORNE)
TERMINATION, CONSULTING AND RELEASE AGREEMENT dated as of
January 17, 1997 (the "Agreement") among National Auto/Truckstops Holdings
Corporation, a Delaware corporation ("Holdings"), National Auto/Truckstops,
Inc., a Delaware corporation (the "Company"), and C. William Osborne (the
"Executive").
WHEREAS, the Executive was previously employed by the Company
on an at will basis;
WHEREAS, the Executive desires to resign his employment with the
Company and any and all of his positions with Holdings and its direct and
indirect subsidiaries and affiliates effective as of the date hereof, subject to
the terms and conditions set forth below;
WHEREAS, Holdings and the Company are prepared to make certain
payments described herein to the Executive in consideration for the undertakings
of the Executive described herein;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the adequacy of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1. RESIGNATION; CERTAIN ADDITIONAL PAYMENTS; FULL SATISFACTION.
(a) The Executive hereby resigns, effective as of the date
hereof, from the Executive's positions as President and Chief Executive Officer
of the Company and Holdings and from all other positions and directorships which
the Executive holds with the Company and Holdings and their respective direct
and indirect subsidiaries and affiliates.
<PAGE>
2
(b) The Executive shall be entitled to receive from the
Company continued payment of his base salary as is currently in effect through
January 31, 1997.
(c) The Executive shall be entitled to receive from the
Company a bonus in respect of services performed during the fiscal year ending
December 31, 1996 in an amount equal to ten percent (10%) of his annual base
salary as is currently in effect. Such bonus shall be paid by the Company to the
Executive on or before February 28, 1997.
(d) The Company shall reimburse the Executive for up to six
months of reasonable and customary out placement services beginning not later
than August 1, 1997; PROVIDED that the Company's reimbursement obligations shall
cease upon the termination of the Executive's services hereunder for "Cause" (as
hereinafter defined).
(e) The Executive acknowledges and agrees that, except as
expressly set forth in this Section 1 and Sections 2, 3 and 4 of this Agreement,
the Executive shall not be entitled to any other compensation or benefits from
Holdings or the Company (or their respective direct or indirect subsidiaries and
affiliates) including, without limitation, any other severance or termination
benefits; PROVIDED that it is agreed that nothing in this Agreement shall
constitute a waiver of the Executive's rights to vested benefits, if any, under
any Company retirement or group health plan in respect of his services to the
Company prior to the date hereof. The Executive hereby acknowledges that, as of
the date hereof, the Executive has been paid all monies due to the Executive
from Holdings and the Company (and their respective direct or indirect
subsidiaries and affiliates) on account of wages, wage
<PAGE>
3
supplements, commissions, bonuses, vacation, benefits and all other entitlements
in respect of the Executive's services prior to the date hereof.
2. CONSULTING ARRANGEMENT.
(a) The Company hereby retains the Executive, and the
Executive hereby agrees to serve, as a consultant to Holdings and the Company
during the one year period commencing on February 1, 1997 and ending on January
31, 1998 (the "Consulting Term").
(b) During the Consulting Term, the Executive shall render
such advice and services relating the business and strategic business plan of
Holdings and the Company as may be reasonably required by Holdings and the
Company, it being understood that such services shall be incidental to, and
shall not materially interfere with, the other business activities of the
Executive. In addition, the Executive agrees to cooperate with Holdings and the
Company during the Consulting Term and thereafter by making himself reasonably
available to testify on behalf of Holdings or the Company (or their respective
direct or indirect subsidiaries and affiliates) in any action, suit or
proceeding, whether civil, criminal, administrative, or investigative, relating
to events that occurred during the Executive's employment with the Company or
Holdings (or during the Consulting Term), and to assist Holdings, the Company
and their respective direct or indirect subsidiaries and affiliates in any such
action, suit or proceeding by providing information and meeting and consulting
with the Boards of Directors of Holdings and the Company or their
representatives or counsel or representatives or counsel to Holdings or the
Company or any of their respective direct or indirect subsidiaries and
affiliates, as reasonably requested by the Board of Directors of Holdings or the
Company or such representatives or counsel.
<PAGE>
4
The Company shall reimburse the Executive for reasonable and documented
out-of-pocket expenses incurred in connection with the performance of consulting
services hereunder.
(c) As an advance with respect to compensation for the
performance of consulting services during the Consulting Term, the Executive
shall receive a lump sum payment of $176,300.00 from the Company (the
"Advance"), payable on or about February 1, 1997 (such date, the "Initial
Payment Date"). The Executive shall be entitled to the payment of the Advance
regardless of the extent to which his services are requested hereunder.
(d) From and after the date hereof the Executive shall cease
to be an employee of Holdings and the Company and their respective affiliates
and shall not be entitled to participate in any employee benefit plan or other
benefits or conditions of employment available to the employees of Holdings, the
Company or their affiliates; PROVIDED that (i) (A) until the earliest to occur
of (x) January 31, 1998, (y) the full time employment (including self
employment) of the Executive by a new employer or (z) the Executive's
termination for Cause hereunder (the "Continuation Period"), to the extent
permitted by the Company's group health and medical plans, the Executive shall
be entitled to receive continued coverage under the Company's group health and
medical plans as if the Executive were an active employee of the Company, and
(B) from and after the expiration of the Continuation Period, the Executive
shall be entitled to COBRA continuation coverage under the Company's group
health and medical plans to the extent provided by law and (ii) if the
arrangements described in clause (i) above are not permitted by the Company's
group health and medical plans, (A) from and after February 1, 1997, the
Executive
<PAGE>
5
shall be entitled to COBRA continuation coverage to the extent permitted by law,
and (B) until the expiration of the Continuation Period, the Company shall be
responsible for the excess of (I) the premium cost to the Executive of such
COBRA continuation coverage over (II) the premium cost from to time to active
employees of the Company with respect to similar coverage under the Company's
group health and medical plans.
(e) The Executive shall have no authority to act as an agent
of Holdings, the Company or their respective direct or indirect subsidiaries and
affiliates, except on authority specifically so delegated, and he shall not
represent himself to the contrary to any person or entity and the Executive
shall not direct the work of any employee of Holdings, the Company or their
respective direct or indirect subsidiaries and affiliates or make any management
decisions or undertake to commit Holdings, the Company or their respective
direct or indirect subsidiaries and affiliates to any action in relation to
third parties.
3. DEFERRED SEVERANCE PAYMENTS.
(a) On January 31, 1998 (the "Final Payment Date"), the
Executive shall be entitled to a deferred severance payment in the form of a
lump sum payment equal to $88,150.00; if, and only if, the Executive's services
as a consultant were not previously terminated for Cause.
(b) If the Executive's services as a consultant shall have
been terminated for Cause on or prior to the Final Payment Date, the Executive
shall not be entitled to receive any deferred severance payment.
(c) For purposes of this Agreement, "Cause" shall mean (i) the
Executive's continued failure substantially to perform his duties hereunder
(other than as a result of total or partial incapacity due to physical illness
or death), (ii) the
<PAGE>
6
Executive's dishonesty in the performance of his duties hereunder, (iii) the
Executive's breach of any of the provisions of this Agreement, (iv) an act or
acts on the Executive's part constituting a felony under the laws of the Unites
States or any state thereof or the Executive's commission of any crime involving
moral turpitude or (v) an act or acts on the Executive's part which is
materially injurious to the business or reputation of Holdings or the Company or
their respective direct or indirect subsidiaries and affiliates. Any voluntary
resignation by the Executive as a consultant to Holdings or the Company shall be
treated as a termination for Cause for purposes of this Agreement.
4. EQUITY ARRANGEMENTS.
(a) As of the date hereof, all Series II and Series III
options currently held by the Executive under Holdings' 1993 Stock Incentive
Plan (the "Option Plan") shall be forfeited and canceled without consideration.
All Series I options currently by the Executive under the Option Plan shall be
canceled as of the date hereof in consideration for the Executive's right to
receive (i) an option payment from Holdings (the "Initial Option Payment") on
the Initial Payment Date (or, if Holdings is unable to make the Initial Option
Payment on the Initial Payment Date as a result of legal or contractual
restrictions, such payment shall be made within five business days of the date
Holdings first becomes able to make the Initial Option Payment) and (ii) a
deferred option payment from Holdings (the "Deferred Option Payment") on the
Final Payment Date (or, if Holdings is unable to make the Deferred Option
Payment on the Final Payment Date as a result of legal or contractual
restrictions, such payment shall be made within five business days of the date
Holdings first becomes able to make the Deferred Option Payment).
<PAGE>
7
The amount of the Initial Option Payment shall equal (a) the product
of $13.00 and the number of shares of Class B common stock, par value $.01 per
share ("Class B Shares"), underlying the vested Series I options currently held
by the Executive minus (b) the aggregate exercise price of the vested Series I
options currently held by the Executive.
The amount of the Deferred Option Payment shall be calculated
as follows:
(i) If the Executive's services to Holdings and the
Company is not terminated for Cause on or prior to the Final Payment Date, the
Deferred Option Payment shall equal the product of $2.69 and the number of Class
B Shares underlying the vested Series I options previously held by the Executive
(which amount shall be deemed to include interest at the Applicable Federal Rate
from the Initial Payment Date until the date of payment of the Deferred Option
Payment).
(ii) If the Executive's services as a consultant to
Holdings and the Company is terminated for Cause on or prior to the Final
Payment Date, the Executive shall not be entitled to receive the Deferred Option
Payment.
(b) Holdings hereby agrees to purchase, and the Executive
hereby agrees to sell, (i) in consideration for the payment by Holdings of the
purchase price (the "Initial Purchase Price") on the Initial Payment Date (or,
if Holdings is unable to pay the Initial Purchase Price on the Initial Payment
Date as a result of legal or contractual restrictions, such payment shall be
made within five business days of the date Holdings first becomes able to pay
the Initial Purchase Price) and (ii) in consideration for the payment by
Holdings of the deferred purchase price (the "Deferred Purchase Price") on the
Final Payment Date (or, if Holdings is unable to
<PAGE>
8
pay the Deferred Purchase Price on the Final Payment Date as a result of legal
or contractual restrictions, such payment shall be made within five business
days of the date Holdings first becomes able to pay the Deferred Purchase
Price), all Class B Shares currently held by the Executive (including any Class
B Shares held for the benefit of the Executive in an individual retirement
account ("IRA") and any Class B Shares previously transferred by the Executive
to a "Permitted Transferee" in accordance with Section 2(c) of the National
Auto/Truckstops Holdings Corporation Stockholders' Agreement dated as of April
14, 1993 (the "Stockholders' Agreement")).
(c) The closing of the purchase of Class B Shares on the
Initial Payment Date under Section 4(b) shall be held at the principal offices
of the Company at 11:00 a.m. local time on the Initial Payment Date, or at such
other time and place as the Company and the Executive agree upon. At such
closing, the Executive shall deliver or cause the delivery of certificates
representing the Class B Shares to be sold, duly endorsed for transfer and
accompanied by all requisite stock transfer taxes, and such Class B Shares shall
be free and clear of any liens, claims, options, charges, encumbrances or rights
of others arising through the action or inaction of the Executive, and the
Executive shall so represent and warrant, and further represent and warrant that
he is the beneficial owner of such Class B Shares. Holdings shall deliver at the
closing payment in full, by certified or bank check for such Class B Shares.
(d) The amount of the Initial Purchase Price shall equal the
product of $10.00 and the number of Class B Shares currently held of record by
the Executive.
<PAGE>
9
The amount of the Deferred Purchase Price shall be calculated as
follows:
(i) If the Executive's services as a consultant to
Holdings and the Company is not terminated for Cause on or prior to the Final
Payment Date, the Deferred Purchase Price shall equal the product of $5.69 and
the number of Class B Shares currently held by the Executive (which amount shall
be deemed to include interest at the Applicable Federal Rate from the Initial
Payment Date until the date of payment of the Deferred Purchase Price).
(ii) If the Executive's services as a consultant to
Holdings and the Company is terminated for Cause on or prior to the Final
Payment Date, then, as liquidated damages, the Executive shall not be entitled
to receive the Deferred Purchase Price.
(e) Except as expressly provided in this Section 4, the
Executive shall have no further rights with respect to any options or Class B
Shares currently held by him including, without limitation, any rights under the
Option Plan or the Management Subscription Agreement dated as of April 14, 1993.
5. SATISFACTION OF NOTE. On the Initial Payment Date and as a
condition to receipt by the Executive of the payments contemplated by Sections
2, 3 and 4 hereof, the Executive shall repay to Holdings all outstanding
principal and interest due under the Note of the Executive payable to the order
of Holdings dated as of April 14, 1993, in the principal amount of $125,000.00
(the "Note"). Any amounts received by the Executive on the Initial Payment Date
in respect of the Initial Option Payment or the Initial Purchase Price may be
used by the Executive to offset any amount due in respect of outstanding
principal and interest under the Note.
<PAGE>
10
6. RELEASE BY EXECUTIVE.
(a) As a material inducement for Holdings and the Company to
enter into this Agreement and to pay the Executive the amounts contemplated
hereunder, the Executive, on behalf of himself, his agents, assignees,
attorneys, heirs and executors agrees to and does hereby fully and completely
forever release Holdings and the Company and their respective subsidiaries,
affiliates, predecessors and successors and all of their respective past and/or
present officers, directors, partners, members, managing members, managers,
employees, agents, representatives, administrators, attorneys, insurers and
fiduciaries in their individual and/or representative capacities (hereinafter
collectively referred to as "Employer Releasees"), from any and all causes of
action, suits, agreements, promises, damages, disputes, controversies,
contentions, differences, judgments, claims, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialities, covenants, contracts,
variances, trespasses, extents, executions and demands of any kind whatsoever
which the Executive or his heirs, executors, administrators, successors and
assigns ever had, now have or may have against the Employer Releasees or any of
them, in law, admiralty or equity whether known or unknown to the Executive,
for, upon, or by reason of, any matter, course or thing whatsoever from the
beginning of the world to the date of this Agreement, including, without
limitation, in connection with or in relationship to the Executive's employment
with Holdings or the Company or their respective affiliates, the termination any
such employment, and all matters referred to any applicable employment,
compensatory or equity arrangement with Holdings, the Company or their
respective affiliates; PROVIDED that such released claims shall not include any
claims for indemnification that the Executive may have under the
<PAGE>
11
certificate of incorporation or by-laws of Holdings or the Company relating to
acts by the Executive in his capacity as an officer or director of Holdings or
the Company, as appropriate (such released claims are collectively referred to
herein as the "Released Executive Claims").
(b) The Released Executive Claims include, without limitation,
(i) any and all claims under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Civil Rights Act of 1971, the
Civil Rights Act of 1991, the Fair Labor Standards Act, the Employee Retirement
Income Security Act of 1974, the Americans with Disabilities Act, the Family and
Medical Leave Act of 1993, and any and all other federal, state or local laws,
statutes, rules and regulations pertaining to employment or otherwise, and (ii)
any claims for wrongful discharge, breach of contract, fraud, misrepresentation
or any compensation claims, or any other claims under any statute, rule or
regulation or under the common law, including compensatory damages, punitive
damages, attorney's fees, costs, expenses and all claims for any other type of
damage or relieve.
7. RELEASE BY HOLDINGS AND THE COMPANY.
(a) As a material inducement for the Executive to enter into
this Agreement, each of Holdings and the Company agree to and do hereby fully
and completely forever release the Executive, from any and all causes of action,
suits, agreements, promises, damages, disputes, controversies, contentions,
differences, judgments, claims, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialities, covenants, contracts, variances,
trespasses, extents, executions and demands of any kind whatsoever which
Holdings or the Company ever had, now have or may have against the Executive, in
law, admiralty or equity whether known or
<PAGE>
12
unknown to Holdings or the Company, for, upon, or by reason of, any matter,
course or thing whatsoever from the beginning of the world to the date of this
Agreement, including, without limitation, in connection with or in relationship
to Executive's employment with Holdings or the Company or their respective
affiliates, the termination any such employment, and all matters referred to any
applicable employment, compensatory or equity arrangement with Holdings, the
Company or their respective affiliates; PROVIDED that such released claims shall
not include any claims arising out of or in connection with any fraudulent or
deceptive act on the part of the Executive or the Executive's failure to
disclose to the Company any information that could be materially injurious to
Holdings or the Company (such released claims are collectively referred to
herein as the "Released Employer Claims").
8. CERTAIN ADDITIONAL AGREEMENTS.
(a) Each of the Executive on the one hand, and Holdings and
the Company, on the other hand, represents, covenants and agrees to the other
that neither they, nor their agents, assignees, attorneys, heirs or executors
(as applicable) have commenced, continued or joined in, and will not hereafter
commence, continue, or join in, any lawsuit, arbitration or other action
asserting any Released Executive Claim or Released Employer Claim, respectively,
against the other (including the Executive and the Employer Releasees) or in any
other manner attempt to assert any Released Executive Claim or Released Employer
Claims, respectively, against the other (including the Executive and the
Employer Releasees).
(b) Each of the parties hereto understands and agrees that the
Company's payment of amounts hereunder and Executive's signing of this Agreement
<PAGE>
13
do not in any way indicate that Executive or the Company or Holdings has any
viable claims against the other or that any party hereto admits any liability to
the other whatsoever.
9. EXECUTIVE COVENANTS.
(a) CONFIDENTIALITY. The Executive agrees that he shall not at
any time (whether during or after the Consulting Term) disclose or use for his
own benefit or purposes or the benefit or purposes of any other person or entity
(other than Holdings, the Company and their respective direct or indirect
subsidiaries and affiliates) any trade secrets, information, data or other
confidential information relating to current or former customers, development
programs, costs, marketing, trading, investment, sales activities, promotion,
credit and financial data, manufacturing processes, financing methods, plans, or
other business and affairs of Holdings, the Company or their respective direct
or indirect subsidiaries and affiliates generally; PROVIDED that the foregoing
shall not apply to information which is generally known to the public other than
as a result of the Executive's breach of this covenant. The Executive agrees
that he will promptly return to Holdings all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof or therefrom, in any
way relating to the business of Holdings, the Company or their respective direct
or indirect subsidiaries and affiliates. The Executive further agrees that he
will not retain or use for his own account at any time any trade names,
trademark or other proprietary business designation used or owned in connection
with the business of Holdings, the Company or their respective direct or
indirect subsidiaries and affiliates.
<PAGE>
14
(b) NON-SOLICITATION. The Executive agrees that he will not at
any time (whether during or after the Consulting Term) directly or indirectly
solicit, or induce, any employee or client of Holdings or the Company or their
respective direct or indirect subsidiaries or affiliates to terminate his or her
employment or client relationship with Holdings, the Company or their respective
direct or indirect subsidiaries or affiliates. In addition, the Executive agrees
that he will not directly or indirectly employ or offer employment to any person
who was employed by Holdings, the Company or their respective direct or indirect
subsidiaries or affiliates unless such person shall have ceased to be employed
by Holdings, the Company or their respective direct or indirect subsidiaries or
affiliates for a period of at least 12 months; PROVIDED that the restriction set
forth in this sentence shall not apply with respect to any such person who shall
have ceased to be employed by Holdings, the Company or their respect direct or
indirect subsidiaries or affiliates as a result of a termination by their
employer without cause.
(c) NON-DISPARAGEMENT. The Executive agrees that he shall not
at any time (whether during or after the Consulting Term) make negative
statements or representations, or otherwise communicate negatively, directly or
indirectly, in writing or orally, or otherwise, or take any action which may,
directly or indirectly, disparage or be damaging to the Company, Holdings or
their respective direct or indirect subsidiaries or affiliates or any of their
respective current or former customers, successors, officers, directors,
employees, business or reputation.
(d) REMEDIES. The Executive acknowledges and agrees that the
remedies available to Holdings and the Company at law for a breach or threatened
breach of any of the provisions of this Section 9 would be inadequate and, in
<PAGE>
15
recognition of this fact, the Executive agrees that, in the event of a breach or
threatened breach, in addition to any remedies at law, Holdings and the Company
shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
10. TAXES. All payments made hereunder other than the Advance, the
Initial Purchase Price and the Deferred Purchase Price will be subject to
required withholding of federal, state and local income and employment taxes. It
is intended that the Advance payable hereunder will constitute revenues to the
Executive and that the Initial Purchase Price and the Deferred Purchase Price
paid in respect of the Class B Shares shall not constitute compensation to the
Executive. To the extent consistent with applicable law, Holdings and the
Company will not withhold any amounts therefrom as federal income tax
withholding from wages or as employee contributions under the Federal Insurance
Contributions Act or any other state or federal laws and in such case, the
Executive shall be solely responsible for and shall indemnify Holdings and the
Company (and their respective officers and directors) for the withholding and/or
payment of any federal, state or local income or payroll taxes with respect to
the Advance, the Initial Purchase Price and the Deferred Purchase Price.
11. CLASS B SHARES HELD IN AN IRA. Notwithstanding anything to the
contrary set forth herein, to the extent any Class B Shares (the "IRA Shares")
are held for the benefit of the Executive in an IRA:
(a) the parties intend that the IRA Shares shall be subject
to the provisions of Section 4 of this Agreement and the custodian or
administrator of
<PAGE>
16
the Executive's IRA (the "IRA Administrator") shall be a signatory to this
Agreement;
(b) the obligations of the Executive, Holdings and the Company
hereunder shall become effective as of the date hereof, regardless of whether
the IRA Administrator executes this Agreement;
(c) if the IRA Administrator does not execute this Agreement
by January 31, 1997, Holdings shall exercise the Call Option (the "Call Option")
pursuant to Section 7(a) of that certain Management Subscription Agreement dated
as of April 14, 1993 between Holdings and the Executive's IRA Account (the
"Management Subscription Agreement") with respect to the IRA Shares;
(d) to the extent Holdings exercises the Call Option, the
purchase price to be paid by Holdings and the number of Class B Shares to be
delivered by the Executive pursuant to Section 4 hereof shall be appropriately
reduced to give effect to the exclusion of the IRA Shares from the transactions
contemplated by Section 4 hereof as a result of the exercise by Holdings of the
Call Options; and
(e) to the extent Holdings exercises the Call Option and (x)
the sum of the Initial Purchase Price and the Deferred Purchase Price is greater
than (y) the Call Purchase Price (as defined in the Management Subscription
Agreement), Holdings shall use commercially reasonable efforts to deliver the
Executive on the Final Payment Date (or the IRA, to the extent consistent with
applicable law) economic value substantially equivalent to the excess of (x)
over (y) above.
<PAGE>
17
12. ACKNOWLEDGMENT; EFFECTIVENESS.
(a) The Executive acknowledges that he has read this Agreement
carefully, has been advised to consult an attorney and any other advisors of his
choice, and fully understands that by signing below the Executive is giving up
any right which he may have to sue or bring any Released Executive Claims
against the Employer Releasees. The Executive acknowledges that he has not been
forced or pressured in any manner whatsoever to sign this Agreement and the
Executive agrees to all its terms voluntarily. To the extent that Executive has
executed this Agreement within less than twenty-one (21) days after its delivery
to the Executive, the Executive acknowledges that his decision to execute this
Agreement prior to the expiration of such twenty-one (21) day period was
entirely voluntary.
(b) The Executive has not relied on any representations,
promises or agreements of any kind made to him in connection with his decision
to accept the terms of the Agreement except for those set forth in this
Agreement.
(c) The parties hereto agree, and the Executive understands,
that the Executive has seven (7) days from the date he has signed this Agreement
below to revoke this Agreement and the release contained herein, that this
Agreement will not become effective until the eighth (8th) day following the
date that he has signed this Agreement, and that the Holdings and the Company
will have no obligation to make the payments set forth in this Agreement unless
and until this Agreement becomes effective.
(d) The parties hereto agree that the obligations of Holdings
and the Company hereunder shall be subject to the approval of this Agreement by
the
<PAGE>
18
Boards of Directors of Holdings and the Company and by the Compensation
Committee of the Board of Directors of Holdings.
13. ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof
and cannot be amended or modified except by a writing signed by all such
parties.
14. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York, without
giving effect to the choice-of-law provisions thereof. If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of such portion shall not affect
the force, effect and validity of the remaining portion hereof.
15. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
<PAGE>
19
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
NATIONAL/AUTO TRUCKSTOPS
HOLDINGS CORPORATION
By: /s/ James W. George
--------------------------------
Name: James W. George
Title: Sr. Vice President
NATIONAL/AUTO TRUCKSTOPS, INC.
By: /s/ James W. George
--------------------------------
Name: James W. George
Title: Sr. Vice President
/s/ C. William Osborne
-----------------------------------
C. William Osborne
Accepted and Agreed to as of the date first above written:
- --------------------------------
[Custodian for Executive's IRA]
Exhibit 10.23
SCHEDULE OF OMITTED TERMINATION, CONSULTING AND RELEASE AGREEMENTS
The following documents have been omitted as Exhibits to the Registration
Statement because they are on substantially identical terms as Exhibit 10.22 in
all material respects other than with respect to the amounts payable to the
executives under the agreements. For discussion of such amounts, see
"Management--Termination, Consulting and Release Agreements with C. William
Osborne, Kenneth W. Barrios and Daniel L. Tennant" in the Prospectus.
1. Termination, Consulting and Release Agreement, dated as of January 17,
1997, among the Company, the National Subsidiary and Kenneth W. Barrios
2. Termination, Consulting and Release Agreement, dated as of January 17,
1997, among the Company, the National Subsidiary and Daniel L. Tennant
EXHIBIT 10.24
Execution Copy
TRAVELCENTERS OF AMERICA, INC.
$125,000,000
10-1/4% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
------------------
March 24, 1997
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
TravelCenters of America, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell $125,000,000 aggregate principal amount
of its 10-1/4% Senior Subordinated Notes due 2007 (the "SECURITIES") to be
unconditionally guaranteed on a senior subordinated basis by the Company's
principal operating subsidiaries, TA Operating Corporation ("TA") and National
Auto/Truckstops, Inc. ("National"), each a Delaware corporation (together, the
"Subsidiary Guarantors"). The Securities will be issued pursuant to an Indenture
to be dated as of March 27, 1997 (the "INDENTURE") among the Company, the
Subsidiary Guarantors and Fleet National Bank, a national banking association,
as trustee (the "TRUSTEE"). The Company and each of the Subsidiary Guarantors
hereby confirms its agreement with Chase Securities Inc. ("CSI" or the "INITIAL
PURCHASER") concerning the purchase of the Securities from the Company by the
Initial Purchaser.
The Securities will be offered and sold to the Initial Purchaser
without being registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), in reliance upon exemptions therefrom. The Company has
prepared a preliminary offering memorandum dated March 10, 1997 (the
"PRELIMINARY OFFERING MEMORANDUM") and will prepare an offering memorandum dated
the date hereof (the "OFFERING MEMORANDUM") setting forth information concerning
the Company and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchaser pursuant to the terms of this Agreement. Any
references herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to include all amendments and supplements thereto,
unless otherwise noted. The Company hereby confirms that it has authorized the
use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Securities by the Initial
Purchaser in accordance with Section 2.
<PAGE>
2
Holders of the Securities (including the Initial Purchaser and its
direct and indirect transferees) will be entitled to the benefits of an Exchange
and Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company and
the Subsidiary Guarantors will agree to file with the Securities and Exchange
Commission (the "COMMISSION") (i) a registration statement under the Securities
Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") registering an issue of senior
subordinated notes of the Company (the "EXCHANGE SECURITIES") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "SHELF REGISTRATION STATEMENT").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
SUBSIDIARY GUARANTORS. The Company and the Subsidiary Guarantors jointly and
severally represent and warrant to, and agree with, the Initial Purchaser on and
as of the date hereof and the Closing Date (as defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date
the Offering Memorandum will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; PROVIDED
that the Company makes no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum or the
Offering Memorandum in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial
Purchaser specifically for use therein (the "INITIAL PURCHASER'S
INFORMATION") (it being understood that changes in the Offering Memorandum
from the Preliminary Offering Memorandum not relating to the terms and
conditions of the Securities are not material).
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchaser contained in Section 2 and its compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Securities to the Initial Purchaser and the
offer, resale and delivery of the Securities by the Initial Purchaser in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "TRUST
INDENTURE ACT").
<PAGE>
3
(d) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of Delaware, are duly qualified to do business and are in
good standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the failure
to so qualify or have such power or authority would not, singularly or in
the aggregate, have a material adverse effect on the condition (financial
or otherwise), results of operations, business or prospects of the Company
and its subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").
(e) The Company had an authorized capitalization on December 31,
1996, as set forth in the Offering Memorandum under the column "Actual"
under the heading "Capitalization;" all of the outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; and the capital stock of the
Company conforms in all material respects to the description thereof
contained in the Offering Memorandum. All of the outstanding shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, and after giving effect to the
Transactions shall be owned free and clear of any lien, charge,
encumbrance, security interest, restriction upon voting or transfer or any
other claim of any third party (collectively, "Liens") (other than Liens
created in connection with the Credit Agreement dated March 21, 1997,
among the Company, the Lenders party thereto and The Chase Manhattan Bank,
as agent (the "Credit Agreement") or in connection with the Senior Notes
and except as otherwise described in the Offering Memorandum).
(f) The Company has the requisite corporate power and authority to
execute and deliver this Agreement, the Indenture, the Registration Rights
Agreement and the Securities (the "TRANSACTION DOCUMENTS") and to perform
its obligations hereunder and thereunder; and all corporate actions
required to be taken by the Company for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby have been duly and
validly taken. Each of the Subsidiary Guarantors has the requisite
corporate power and authority to execute and deliver this Agreement, the
Indenture and the Registration Rights Agreement and to perform its
obligations hereunder and thereunder; and all corporate actions required
to be taken by each of the Subsidiary Guarantors for the due and proper
authorization, execution, and delivery of each of this Agreement, the
Indenture and the Registration Rights Agreement and the consummation of
the transactions contemplated thereby have been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and each of the Subsidiary Guarantors and constitutes a
valid
<PAGE>
4
and legally binding agreement of the Company and each of the Subsidiary
Guarantors enforceable in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law) and except to the extent that indemnification or contribution
provisions may be unenforceable.
(h) The Registration Rights Agreement has been duly authorized by
the Company and each of the Subsidiary Guarantors and, when duly executed
and delivered in accordance with its terms by each of the parties thereto,
will constitute a valid and legally binding agreement of the Company and
each of the Subsidiary Guarantors enforceable against the Company and each
of the Subsidiary Guarantors in accordance with its terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law) and except to the extent that indemnification or contribution
provisions may be unenforceable.
(i) The Indenture (including the Guarantees set forth therein) has
been duly authorized by the Company and each of the Subsidiary Guarantors
and, when duly executed and delivered in accordance with its terms by each
of the parties thereto, will constitute a valid and legally binding
agreement of the Company and each of the Subsidiary Guarantors enforceable
against the Company and each of the Subsidiary Guarantors in accordance
with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered
in a proceeding in equity or at law). On the Closing Date, the Indenture
will conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission applicable
to an indenture which is qualified thereunder.
(j) The Securities have been duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in the
Indenture and paid for as provided herein, will be duly and validly issued
and outstanding and will constitute valid and legally binding obligations
of the Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
(k) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
<PAGE>
5
(l) The execution, delivery and performance by the Company and each
of the Subsidiary Guarantors of each of the Transaction Documents, as
applicable, and the issuance, authentication, sale and delivery of the
Securities and compliance by the Company with the terms thereof and the
consummation of the transactions contemplated by the Transaction Documents
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to,
any material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any
of its subsidiaries is subject, other than the agreements relating to
existing indebtedness of the Company and its subsidiaries that is being
refinanced in connection with the Transactions, nor will such actions
result in any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries (each amended to date) or any statute
or any judgment, order, decree, rule or regulation of any court or
arbitrator or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or assets;
except for such conflicts, breaches, violations, defaults, liens, charges
or encumbrances that would not, singularly or in the aggregate, have a
Material Adverse Effect; and no consent, approval, authorization or order
of, or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for (i) the execution, delivery and
performance by the Company and each of the Subsidiary Guarantors, as
applicable, of each of the Transaction Documents, (ii) the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company with the terms thereof and (iii) the consummation of the
transactions contemplated by the Transaction Documents, except for such
consents, approvals, authorizations, filings, registrations or
qualifications (A) which shall have been obtained or made on or prior to
the Closing Date, (B) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement and (C) the failure of which to obtain or
make would not, singularly or in the aggregate, have a Material Adverse
Effect.
(m) Price Waterhouse LLP are independent certified public accoun
tants with respect to the Company and its subsidiaries within the meaning
of Rule 101 of the Code of Professional Conduct of the American Institute
of Certified Public Accountants ("AICPA") and its interpretations and
rulings thereunder. The historical financial statements (including the
related notes) contained in the Offering Memorandum (i) have been prepared
in accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby (other than the historical
financial statements of the TA Subsidiary for 1992 and 1993, which include
all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of such data and which were prepared on
a basis that is consistent with the audited financial statements for the
TA Subsidiary appearing in the
<PAGE>
6
Offering Memorandum; however, the financial data for the BP Predecessor
Business may not be comparable to the financial data for (i) the TA
Subsidiary for a number of reasons, including purchase accounting for the
TA Acquisition and the addition of significant interest expense following
the TA Acquisition) and (ii) fairly present in all material respects the
financial position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the audited financial
information contained in the Offering Memorandum under the headings
"Summary--Summary Supplemental and Pro Forma Consolidated Financial Data,"
"Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and "Management--Executive Compensation" are derived from the accounting
records of the Company and its subsidiaries and fairly present in all
material respects the information purported to be shown thereby. The PRO
FORMA financial information contained in the Offering Memorandum has been
prepared on a basis consistent with the historical financial statements
contained in the Offering Memorandum (except for the PRO FORMA adjustments
specified therein), gives effect to assumptions made on a reasonable basis
and fairly presents in all material respects the historical and proposed
transactions contemplated by the Offering Memorandum and the Transaction
Documents. The other historical financial and statistical information and
data included in the Offering Memorandum are, in all material respects,
accurately presented.
(n) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property
or assets of the Company or any of its subsidiaries is the subject which,
singularly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; and to the knowledge of the Company, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(o) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Securities or suspends the sale of
the Secu rities in any jurisdiction; no injunction, restraining order or
order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to the Company or any of its
subsidiaries which would prevent or suspend the issuance or sale of the
Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries before any court or
arbitrator or any governmental agency, body or official, domestic or
foreign, which could reasonably be expected to inter fere with or
adversely affect the issuance of the Securities or in any manner draw into
question the validity or enforceability of any of the Transaction
Documents or any action taken or to be taken pursuant thereto; and the
Company has complied with any and all requests by any securities authority
in
<PAGE>
7
any jurisdiction for additional information to be included in the
Preliminary Offering Memorandum and the Offering Memorandum.
(p) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws (as amended to date), (ii) in default
in any material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in
any material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject or (iii) in
violation in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject, except any violation or default under clauses (ii) or (iii)
that would not have a Material Adverse Effect.
(q) The Company and each of its subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state or
foreign regulatory agencies or bodies which are necessary for the
ownership of their respective properties or the conduct of their
respective businesses as described in the Offering Memorandum, except
where the failure to possess or make the same would not, singularly or in
the aggregate, have a Material Adverse Effect, and neither the Company nor
any of its subsidiaries has received notification of any revocation or
modification of any such license, certificate, authorization or permit or
has any reason to believe that any such license, certificate,
authorization or permit will not be renewed, except where such revocation,
modification or non renewal would not have a Material Adverse Effect.
(r) The Company and each of its subsidiaries have filed or requested
extensions with respect to all federal, state, local and foreign income
and franchise tax returns required to be filed through the date hereof and
have paid all taxes due thereon, other than returns or taxes being
contested in good faith or taxes currently payable without penalty or
interest, except where the failure to so file or make such payments would
not, singularly or in the aggregate, have a Material Adverse Effect, and
no tax deficiency has been determined adversely to the Company or any of
its subsidiaries which has had (nor does the Company or any of its
subsidiaries have any knowledge of any tax deficiency that could
reasonably be expected to have) a Material Adverse Effect.
(s) Neither the Company nor any of its subsidiaries is (i) required
to be registered as an "investment company" under the Investment Company
Act of 1940, as amended (the "INVESTMENT COMPANY ACT"), and the rules and
regulations of the Commission thereunder or (ii) a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" thereof within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
<PAGE>
8
(t) The Company and each of its subsidiaries maintain a system of
internal accounting controls which the Company believes is sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are re corded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(u) The Company and each of its subsidiaries have insurance
(including self-insurance, pursuant to customary deductibles and
exclusions) covering their respective properties, operations, personnel
and businesses, which insurance is in the opinion of the Company in
amounts and insures against such losses and risks as are adequate to
protect their respective businesses.
(v) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses as currently conducted, except where the failure to
so own or possess such rights would not reasonably be expected to have a
Material Adverse Effect; and the Company has no reason to believe that the
conduct of their respective businesses as currently conducted will
conflict in any material respect with, and the Company and its
subsidiaries have not received any notice of any claim of conflict with,
any such rights of others, in either case, which would reasonably be
expected to have a Material Adverse Effect.
(w) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of the Company and its subsidiaries, in each case, after
giving effect to the Transactions, free and clear of all liens,
encumbrances, claims and defects and imperfections of title except such as
(i) do not materially interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries, (ii) are
contemplated by or permitted under the Credit Agreement or the Senior
Secured Note Exchange Agreements, each dated as of March 21, 1997, among
the Company and each purchaser of Senior Notes (the "SENIOR NOTE EXCHANGE
AGREEMENTS") or (iii) could not reasonably be expected to have a Material
Adverse Effect.
(x) No labor disturbance by or dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the
Company, is contemplated or threatened, in either case which would
reasonably be expected to have a Material Adverse Effect.
<PAGE>
9
(y) No non-exempt "prohibited transaction" (as defined in Section
406 of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "CODE")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events set
forth in Section 4043(b) of ERISA (other than events with respect to which
the 30-day notice requirement under Section 4043 of ERISA has been waived)
has occurred with respect to any employee benefit plan of the Company or
any of its subsidiaries which could reasonably be expected to have a
Material Adverse Effect; each such employee benefit plan is in compliance
in all material respects with applicable law, including ERISA and the
Code; the Company and each of its subsidiaries have not incurred and do
not expect to incur any material liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any pension plan for
which the Company or any of its subsidiaries would have any liability; and
each such pension plan that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which could
reasonably be expected to cause the loss of such qualification.
(z) Except as disclosed in the Offering Memorandum, there has been
no storage, generation, transportation, handling, treatment, disposal,
discharge, emission or other release of any kind of toxic or other wastes
or other hazardous substances by, due to or caused by the Company or any
of its subsidiaries (or, to the knowledge of the Company, any other entity
(including any predecessor) for whose acts or omissions the Company or any
of its subsidiaries is or could reasonably be expected to be liable) upon
any of the property now or previously owned or leased by the Company or
any of its subsidiaries, or upon any other property, in violation of any
statute or any ordinance, rule, regulation, order, judgment, decree or
permit or which would, under any statute or any ordinance, rule (including
rule of common law), regulation, order, judgment, decree or permit, give
rise to any liability, except for any violation or liability that could
not reasonably be expected to have, singularly or in the aggregate with
all such violations and liabilities, a Material Adverse Effect; and except
as disclosed in the Offering Memorandum, there has been no disposal,
discharge, emission or other release of any kind onto such property or
into the environment surrounding such property of any toxic or other
wastes or other hazardous substances with respect to which the Company has
knowledge, except for any such disposal, discharge, emission or other
release of any kind which could not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect.
(aa) On and immediately after the Closing Date, the Company
together with its subsidiaries on a consolidated basis (after giving
effect to the issuance of the Securities and to the other
transactions related thereto as described in the Offering
Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such
date (i) the present fair saleable value of the assets of the
Company together with
<PAGE>
10
its subsidiaries on a consolidated basis is not less than the total
amount required to pay the probable liabilities of the Company
together with its subsidiaries on a consolidated basis on its total
existing debts and liabilities (including contingent liabilities) as
they become absolute and matured, (ii) the Company together with its
subsidiaries on a consolidated basis is able to realize upon its
assets and pay its debts and other liabilities, contingent
obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the Securities
as contemplated by this Agreement and the Offering Memorandum, the
Company together with its subsidiaries on a consolidated basis is
not incurring debts or liabilities beyond its ability to pay as such
debts and liabilities mature and (iv) the Company together with its
subsidiaries on a consolidated basis is not engaged in any business
or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably
small capital after giving due consideration to the prevailing
practice in the industry in which the Company is engaged. In
computing the amount of such contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount
that, in light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(bb) Except as described in the Offering Memorandum, there are
no outstanding subscriptions, rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the issuance of, any
shares of capital stock of or other equity or other ownership
interest in the Company or any of its subsidiaries of the Company
other than those owned or held by the Company or another subsidiary
of the Company.
(cc) Neither the Company nor any of its subsidiaries owns any
"mar gin securities" as that term is defined in Regulations G and U
of the Board of Governors of the Federal Reserve System (the
"FEDERAL RESERVE BOARD"), and none of the proceeds of the sale of
the Securities will be used, directly or indirectly, for the purpose
of purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally in curred
to purchase or carry any margin security or for any other purpose
which might cause any of the Securities to be considered a "purpose
credit" within the meanings of Regulation G, T, U or X of the
Federal Reserve Board.
(dd) Other than this Agreement or as disclosed in the Offering
Memorandum under "Certain Transactions," neither the Company nor any of
its subsidiaries is a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the Company
or the Initial Purchaser for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
(ee) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
<PAGE>
11
(ff) Neither the Company nor any of its affiliates has, directly or
through any agent (except that no representation is made with respect to
the activities of the Initial Purchaser), sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as such term is defined in the Securities Act), which is or will
be integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.
(gg) None of the Company or any of its affiliates or any other
person acting on its or their behalf has engaged, in connection with the
offering of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act.
(hh) There are no securities of the Company registered under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
listed on a national securities exchange or quoted in a U.S. automated
inter-dealer quotation system.
(ii) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act
in connection with the offering of the Securities.
(jj) Since the date as of which information is given in the Offering
Memorandum, except as otherwise disclosed or stated therein, (i) there has
been no material adverse change or any development reasonably likely to
cause a material adverse change in the condition, financial or otherwise,
results of operations, business, management or prospects of the Company
and its subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, (ii) the Company has not incurred any
material liability or obligation, direct or contingent, other than in the
ordinary course of business, (iii) the Company has not entered into any
material transaction other than in the ordinary course of business and
(iv) there has not been any change in the capital stock or long-term debt
of the Company, or any dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
2. PURCHASE AND RESALE OF THE SECURITIES. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, $125,000,000 principal amount of Securities at a purchase price equal
to 97% of the principal amount thereof, plus accrued unpaid interest, if any,
from the date of issuance. The Company shall not be obligated to deliver any of
the Securities except upon payment for all of the Securities to be purchased as
provided herein.
(b) The Initial Purchaser has advised the Company that it proposes
to offer the Securities for resale pursuant to the procedures upon the terms and
subject to the conditions set forth herein and in the Offering Memorandum. The
Initial Purchaser represents and warrants to, and agrees with, the Company and
each
<PAGE>
12
Subsidiary Guarantor that (i) it is purchasing the Securities pursuant to a
private sale exempt from registration under the Securities Act, (ii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("REGULATION D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of its initial
offering, only to (A) persons whom it reasonably believes to be qualified
institutional buyers ("QUALIFIED INSTITUTIONAL BUYERS") as defined in Rule 144A
under the Securities Act, or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A and (B) a limited number of other
accredited investors as defined in Rule 501(a)(1), (2), (3) or (7) under
Regulation D that are institutional investors ("INSTITUTIONAL ACCREDITED
INVESTORS") in private sales exempt from registration under the Securities Act.
The Initial Purchaser, represents, warrants and agrees to and with the Company
and the Subsidiary Guarantors that it is either a Qualified Institutional Buyer
or an Institutional Accredited Investor, in either case with such knowledge and
experience in financial and business matters as are necessary to evaluate the
merits and risks of an investment in the Securities, and is acquiring its
interest in the Securities not with a view to the distribution or resale
thereof, except in accordance with this Agreement and the Offering Memorandum.
The Initial Purchaser agrees that, prior to or simulta neously with the
confirmation of sale by the Initial Purchaser to any purchaser of any of the
Securities purchased by the Initial Purchaser from the Company pursuant hereto,
the Initial Purchaser shall furnish to that purchaser a copy of the Offering
Memorandum (including any amendment or supplement thereto that the Company shall
have furnished to the Initial Purchaser prior to the date of such confirmation
of sale). In addition to the foregoing, the Initial Purchaser acknowledges,
agrees and understands that the Company and, for purposes of the opinions to be
delivered to the Initial Purchaser pursuant to Sections 5(d) and (e), counsel
for the Company and for the Initial Purchaser, respectively, may rely upon the
accuracy of the representations and warranties of the Initial Purchaser and its
compliance with its agreements contained in this Section 2, and the Initial
Purchaser hereby consents to such reliance.
(c) The Company acknowledges and agrees that the Initial Purchaser
may sell Securities to any affiliate of the Initial Purchaser and that any such
affiliate may sell Securities purchased by it to the Initial Purchaser, to the
extent such sales are in compliance with the covenants, and do not conflict with
the representations and warranties, of the Initial Purchaser in this Section 2.
3. DELIVERY OF AND PAYMENT FOR THE SECURITIES. (a) Delivery of and
payment for the Securities shall be made at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison, New York, New York, or at such other place as shall be
agreed upon by the Initial Purchaser and the Company, at 10:00 A.M., New York
City time, on March 27, 1997, or at such other time or date, not later than
seven full business days thereafter, as shall be agreed upon by the Initial
Purchaser and the Company
<PAGE>
13
(such date and time of payment and delivery being referred to herein as the
"CLOSING DATE").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
immediately available same-day funds to such account or accounts as the Company
shall specify prior to the Closing Date or by such other means as the parties
hereto shall agree prior to the Closing Date against delivery to the Initial
Purchaser of the certificates evidencing the Securities. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as the Initial Purchaser shall have requested in writing not less
than two full business days prior to the Closing Date. The Company agrees to
make one or more global certificates evidencing the Securities available for
inspection by the Initial Purchaser in New York, New York at least 24 hours
prior to the Closing Date.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company and each of
the Subsidiary Guarantors agree with the Initial Purchaser:
(a) to advise the Initial Purchaser promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions (in respect of material
omissions) to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; to advise the Initial Purchaser promptly of any order
preventing or suspending the use of the Preliminary Offering Memorandum or
the Offering Memorandum, of any suspension of the qualification of the
Securities for offering or sale in any jurisdiction and of the initiation
or threatening of any proceeding for any such purpose; and to use its
reasonable best efforts to prevent the issuance of any such order
preventing or suspending the use of the Preliminary Offering Memorandum or
the Offering Memorandum or suspending any such qualification and, if any
such suspension is issued, to use its reasonable best efforts to obtain
the lifting thereof at the earliest possible time;
(b) to furnish promptly to each of the Initial Purchaser and counsel
for the Initial Purchaser, without charge, as many copies of the Offering
Memorandum (and any amendments or supplements thereto) as may be
reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchaser and
counsel for the Initial Purchaser and not to effect any such amendment or
supplement to which the Initial Purchaser shall reasonably object by
notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchaser, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Offering Memorandum in
<PAGE>
14
order that the Offering Memorandum will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances existing at
the time it is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Offering Memorandum to comply with
applicable law, to promptly prepare such amendment or supplement as may be
necessary to correct such untrue statement or omission or so that the
Offering Memorandum, as so amended or supplemented, will comply with
applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to sellers or prospective sellers of the
Securities and prospective purchasers of the Securities designated by such
sellers or prospective sellers, upon request of such sellers or
prospective sellers or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities
Act, unless the Company is then subject to and in compliance with Section
13 or 15(d) of the Exchange Act (the foregoing agreement being for the
benefit of the holders from time to time of the Securities that are
prospective sellers of the Securities and prospective purchasers of the
Securities designated by such holders);
(f) during the three-year period following the Closing Date, if the
Securities are then outstanding, to furnish to the Initial Purchaser
copies of any annual reports, quarterly reports and current reports filed
by the Company with the Commission on Forms 10-K, 10-Q and 8-K, or such
other similar forms as may be designated by the Commission, and such other
documents, reports and information as shall be furnished by the Company to
the Trustee or to the holders of the Securities pursuant to the Indenture
or the Exchange Act or any rule or regulation of the Commission
thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchaser may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchaser may designate and to continue such qualifications in
effect for so long as required for the resale of the Securities; and to
arrange for the determination of the eligibility for investment of the
Securities under the laws of such jurisdictions as the Initial Purchaser
may reasonably request; PROVIDED that the Company and its subsidiaries
shall not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified, to file a general consent
to service of process in any jurisdiction or to subject itself to taxation
in excess of a nominal dollar amount in any jurisdiction where it is not
so subject;
(h) to assist the Initial Purchaser in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to trading in the PORTAL Market and for the
Securities to
<PAGE>
15
be eligible for clearance and settlement through the Depository Trust
Company ("DTC");
(i) not to, and to use its reasonable best efforts to cause its
affiliates not to, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as such term is defined in
the Securities Act) which could be integrated with the sale of the
Securities in a manner which would require registration of the Securities
under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to use its reasonable best efforts to cause its
affiliates not to, and not to authorize or knowingly permit any person
acting on their behalf to, solicit any offer to buy or offer to sell the
Securities by means of any form of general solicitation or general
advertising within the meaning of Regulation D or in any manner involving
a public offering within the meaning of Section 4(2) of the Securities
Act; and not to offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any securities under circumstances where such
offer, sale, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act to cease to be applicable to the
offering and sale of the Securities as contemplated by this Agreement and
the Offering Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of its
subsidiaries (other than the Securities or Exchange Securities; it being
understood that, for the purposes of this Section 4(k), the term debt
securities does not include: (i) indebtedness incurred pursuant to the
Credit Facilities, (ii) indebtedness incurred under any other term,
revolving credit or bank facility provided by banks or bank syndicates,
(iii) the Senior Notes, (iv) any other senior indebtedness incurred by the
Company pursuant to a private placement transaction (but not pursuant to
Rule 144A) or (v) indebtedness issued to Operators, Franchisee-Owners or
third-party sellers in connection with the termination of TravelCenter
leases or the acquisition by the Company of travel centers, as the case
may be, whether or not, in each case, evidenced by a note) without the
prior written consent of the Initial Purchaser (which consent shall not be
unreasonably withheld);
(l) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchaser, not to, and not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by the
Company or any of its affiliates and resold in a transaction registered
under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment
<PAGE>
16
trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act, and to not be or
become, or be or become owned by, a closed-end investment company required
to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until the
Initial Purchaser shall have notified the Company of the completion of the
resale of the Securities, not to, and to use its reasonable best efforts
to cause its affiliated purchasers (as defined in Rule 100 of Regulation M
under the Exchange Act) not to, directly or indirectly, either alone or
with one or more other persons, bid for, purchase, or attempt to induce
any person to bid for or purchase, a covered security during the
applicable restricted period;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchaser;
(p) to furnish to the Initial Purchaser on the date hereof a copy of
the independent accountants' report included in the Offering Memorandum
signed by the accountants rendering such report;
(q) to do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date, and to use its reasonable best efforts to satisfy all
conditions precedent on its part to the delivery of the Securities;
(r) except as contemplated by or disclosed in the Offering
Memorandum, including, without limitation, the consummation of the
Transactions, to not take any action prior to the execution and delivery
of the Indenture which, if taken after such execution and delivery, would
have violated any of the covenants contained in the Indenture;
(s) to not take any action prior to the Closing Date which would
require the Offering Memorandum to be amended or supplemented pursuant to
Section 4(d);
(t) prior to the Closing Date, not to issue any press release or
other communication to the general public directly or indirectly or hold
any press conference with respect to the Company, its financial condition
or earnings or other results of operations or business prospects (except
for marketing communications in the ordinary course of business), without
the prior written consent of the Initial Purchaser, unless in the judgment
of the Company and its counsel, and after notification to the Initial
Purchaser, such press release or communication is required by law or
failure to issue such press release or communication could reasonably be
expected to have a Material Adverse Effect; and
(u) to apply the net proceeds from the sale of the Securities as
set forth in the Offering Memorandum under the heading "Use of Proceeds."
<PAGE>
17
Notwithstanding any provision of Sections 4(a) or 4(d) to the
contrary, the Company's obligations under Sections 4(a) and 4(d) shall terminate
on the earliest to occur of (i) 180 days after the Closing Date, (ii) the
effective date of an Exchange Offer Registration Statement pursuant to the
Registration Rights Agreement, (iii) the effective date of a Shelf Registration
Statement pursuant to the Registration Rights Agreement and (iv) the date upon
which the Initial Purchaser and its affiliates cease to hold Securities acquired
as part of the initial distribution, the occurrence of which the Initial
Purchaser shall promptly notify the Company and the Subsidiary Guarantors.
5. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The respective
obligations of the Initial Purchaser hereunder are subject to the accuracy in
all material respects, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Subsidiary Guarantors
contained herein, to the accuracy in all material respects of the statements of
the Company and its Subsidiary Guarantors and their officers made in any
certificates delivered pursuant hereto, to the performance in all material
respects by the Company and the Subsidiary Guarantors of their obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Offering Memorandum (including any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchaser as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial Purchaser
may agree; and no stop order suspending the sale of the Securities in any
ju risdiction shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(b) On the date thereof, the Offering Memorandum did not and on the
Closing Date the Offering Memorandum shall not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
reasonably satisfactory in all material respects to the Initial Purchaser,
and the Company shall have furnished to the Initial Purchaser all
documents and information that they or their counsel may reasonably
request to enable them to pass upon such matters.
(d) each of Paul, Weiss, Rifkind, Wharton & Garrison, Calfee, Halter
& Griswold and James F. Blackstock, Esq. shall have furnished to the
Initial Purchaser their written opinions, as counsel or special counsel to
the Company, addressed to the Initial Purchaser and dated the Closing
Date, substantially to the effect set forth in Annex B-1, Annex B-2 and
Annex B-3 hereto, respectively.
<PAGE>
18
(e) The Initial Purchaser shall have received from Cravath Swaine &
Moore, counsel for the Initial Purchaser, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Initial Purchaser
may reasonably require, and the Company shall have furnished to such
counsel such documents and information as they reasonably request for the
purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchaser a
letter (the "INITIAL LETTER") of Price Waterhouse LLP, addressed to the
Initial Purchaser and dated the date hereof, substantially to the effect
set forth in Annex C hereto.
(g) The Company shall have furnished to the Initial Purchaser a
letter (the "BRING-DOWN LETTER") of Price Waterhouse LLP, addressed to the
Initial Purchaser and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder, (ii)
stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Offering Memorandum,
as of a date not more than three business days prior to the date of the
Bring-Down Letter), that the conclusions and findings of such accountants
with respect to the financial information and other matters covered by the
Initial Letter are accurate in all material respects and (iii) confirming
in all material respects the conclusions and findings set forth in the
Initial Letter.
(h) The Company and the Subsidiary Guarantors shall have furnished
to the Initial Purchaser a certificate, dated the Closing Date, executed
by its chief executive officer and its chief financial officer, in such
capacities and on behalf of the Company and the Subsidiary Guarantors and
stating that (A) such officers have carefully examined the Offering
Memorandum, (B) to such officers' knowledge, the Offering Memorandum, as
of its date, did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and since the
date of the Offering Memorandum, no event has occurred which should have
been set forth in a supplement or amendment to the Offering Memorandum so
that the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (C) to such officers' knowledge
as of the Closing Date, the representations and warranties of the Company
in this Agreement are true and correct in all material respects, the
Company has complied in all material respects with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder on or prior to the Closing Date, and subsequent to the date of
the most recent financial statements contained in the Offering Memorandum,
there has been no
<PAGE>
19
event or development that could reasonably be expected to result in a
Material Adverse Effect.
(i) The Initial Purchaser shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company and by a duly authorized
officer of each of the Subsidiary Guarantors.
(j) The Indenture shall have been duly executed and delivered by the
Company, each of the Subsidiary Guarantors and the Trustee, and the
Securities shall have been duly executed and delivered by the Company and
duly authenticated by the Trustee.
(k) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(l) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchaser shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchaser.
(m) (i) The Company and each of the Subsidiary Guarantors shall have
entered into the Credit Facilities and agreements relating to the exchange
of the Senior Notes for the Existing Senior Notes and (ii) the
Transactions shall have been consummated or will be consummated
contemporaneously with the offering of the Securities in each case
substantially on the terms described in the Offering Memorandum.
(n) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the reasonable judgment of the Initial
Purchaser would materially impair the ability of the Initial Purchaser to
purchase, hold or effect resales of the Securities as contemplated hereby.
(o) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, event or development that would reasonably be expected to result
in a Material Adverse Effect, the effect of which is, in the reasonable
judgment of the Initial Purchaser, so material and adverse as to make it
impracticable to proceed with the sale or delivery of the Securities on
the terms and in the manner contemplated by this Agreement and the
Offering Memorandum (exclusive of any amendment or supplement thereto).
<PAGE>
20
(p) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Securities; and no injunction, restraining order or order
of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Securi ties.
(q) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities
or any of the Company's other debt securities or preferred stock by
Moody's Investors Service, Inc. or Standard & Poor's Ratings Services and
(ii) neither such organization shall have publicly announced that it has
under surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Securities or any
of the Company's other debt securities or preferred stock.
(r) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities
of the Company on any exchange or in the over-the-counter market shall
have been suspended or (ii) any moratorium on commercial banking
activities shall have been declared by federal or New York state
authorities or (iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or war or (iv) a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) the effect of which, in the
case of this clause (iv), is, in the reasonable judgment of the Initial
Purchaser, so material and adverse as to make it impracticable to proceed
with the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchaser. Such opinions, letters, evidence and
certificates shall be deemed so satisfactory if they are substantially in the
form of the appropriate annex or exhibit to this Agreement.
6. TERMINATION. The obligations of the Initial Purchaser hereunder
may be terminated by the Initial Purchaser, in its absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(n), (o), (p), (q) or (r) shall have occurred and be continuing.
<PAGE>
21
7. REIMBURSEMENT OF INITIAL PURCHASER'S EXPENSES. If (a) this
Agreement shall have been terminated pursuant to Section 6 (other than in
respect of paragraphs (n), (p) or (r) of Section 5), (b) the Company shall fail
to tender the Securities for delivery to the Initial Purchaser for any reason
permitted under this Agreement (other than a breach of this Agreement by the
Initial Purchaser) or (c) the Initial Purchaser shall decline to purchase the
Securities for any reason permitted under this Agreement (other than as a result
of a termination of this Agreement pursuant to Section 6 in respect of
paragraphs (n), (p) or (r) of Section 5), the Company shall reimburse the
Initial Purchaser for such out-of-pocket expenses (including reasonable fees and
disbursements of counsel) as shall have been reasonably incurred by the Initial
Purchaser in connection with this Agreement and the proposed purchase and resale
of the Securities.
8. INDEMNIFICATION. (a) The Company and each of the Subsidiary
Guarantors shall jointly and severally indemnify and hold harmless the Initial
Purchaser, its affiliates, its respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Initial
Purchaser within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 8(a) and Section 9 as an
Initial Purchaser), from and against any loss, claim, damage or liability, joint
or several, or any action in respect thereof (including, without limitation, any
loss, claim, damage, liability or action relating to purchases and sales of the
Securities), to which the Initial Purchaser may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering Memorandum
or in any information provided by the Company pursuant to Section 4(e) or (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and shall
reimburse the Initial Purchaser for any legal or other expenses reasonably
incurred by the Initial Purchaser (upon presentation of a statement or
statements therefor in reasonable detail) in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred; PROVIDED, HOWEVER, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with the Initial Purchaser's Information; and
PROVIDED, FURTHER, that with respect to any such untrue statement in or omission
from the Preliminary Offering Memorandum, the indemnity agreement contained in
this Section 8(a) shall not inure to the benefit of the Initial Purchaser to the
extent that the sale to the person asserting any such loss, claim, damage,
liability or action was an initial resale by the Initial Purchaser and any such
loss, claim, damage, liability or action of or with respect to the Initial
Purchaser results from the fact that both (A) a copy of the Offering Memorandum
was not sent or given to such person at or prior to the written confirmation of
the sale of such Securities to such person and (B) the untrue statement in or
omission from the Preliminary Offering
<PAGE>
22
Memorandum was corrected in the Offering Memorandum unless, in either case, such
failure to deliver the Offering Memorandum was a result of non-compliance by the
Company with Section 4(b).
(b) The Initial Purchaser, shall indemnify and hold harmless the
Company, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 8(b) and Section 9 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering Memorandum
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial Purchaser's Information, and shall
reimburse the Company for any legal or other expenses reasonably incurred by the
Company (upon presentation of a statement or statements therefor in reasonable
detail) in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying
party in writing of the claim or the commencement of that action; PROVIDED,
HOWEVER, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except to the extent
that it has been materially prejudiced by such failure; and, PROVIDED, FURTHER,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; PROVIDED,
HOWEVER, that an indemnified party shall have the right to employ its own
counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has
<PAGE>
23
been authorized in writing by the indemnifying party, (2) the indemnified party
has reasonably concluded (based upon advice of counsel to the indemnified party)
that there may reasonably be legal defenses available to it or other indemnified
parties that are different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict exists (based upon
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any appropriate local counsel) at any
one time for all such indemnified party or parties, or for fees or expenses that
are not reasonable. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 8(a) and 8(b), shall use its reasonable best
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. No indemnifying party shall be liable for any settlement of any
such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
reasonably or could have been a party and indemnity reasonably could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
The obligations of the Company and the Initial Purchaser in this
Section 8 and in Section 9 are in addition to any other liability that the
Company or the Initial Purchaser, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
9. CONTRIBUTION. If the indemnification provided for in Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a) or 8(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchaser on
the other from the offering of the Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on
<PAGE>
24
the one hand and the Initial Purchaser on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchaser on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities purchased under this Agreement (before deducting expenses)
received by or on behalf of the Company, on the one hand, and the total
discounts and commissions received by the Initial Purchaser with respect to the
Securities purchased under this Agreement, on the other, bear to the total gross
proceeds from the sale of the Securities under this Agreement, in each case as
set forth in the table on the cover page of the Offering Memorandum. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to the Company or information
supplied by the Company on the one hand or to the Initial Purchaser's
Information on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, the Subsidiary Guarantors and the
Initial Purchaser agree that it would not be just and equitable if contributions
pursuant to this Section 9 were to be determined by PRO RATA allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 9 shall be deemed to include, for
purposes of this Section 9, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 9, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by the Initial Purchaser with respect to the Securities purchased by it
under this Agreement exceeds the amount of any damages which the Initial
Purchaser has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission to state a material
fact or a breach of a representation or warranty set forth in this Agreement. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
10. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchaser, the Company,
each of the Subsidiary Guarantors and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except as provided in Sections 8 and 9 with respect to
affiliates, officers, directors, employees, representatives, agents and
controlling persons of the Company and the Initial Purchaser and in Section 4(e)
with respect to holders and prospective purchasers of the Securities. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 10, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
<PAGE>
25
11. EXPENSES. The Company agrees with the Initial Purchaser to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum (including any amendments or
supplements thereto); (c) the costs of reproducing and distributing each of the
Transaction Documents; (d) the costs incident to the preparation, printing and
delivery of the certificates evidencing the Securities, including stamp duties
and transfer taxes, if any, payable upon issuance of the Securities to the
Initial Purchaser; (e) the fees and expenses of the Company's counsel and
independent accountants; (f) the fees and expenses of qualifying the Securities
under the securities laws of the several jurisdictions as provided in Section
4(h) and of preparing, printing and distributing Blue Sky Memoranda (including
related fees and expenses of counsel for the Initial Purchaser); (g) any fees
charged by rating agencies for rating the Securities; (h) the fees and expenses
of the Trustee and any paying agent (including related fees and expenses of any
counsel to such parties); (i) all expenses and application fees incurred in
connection with the application for the inclusion of the Securities on the
PORTAL Market and the approval of the Securities for book-entry transfer by DTC;
and (j) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement which are not otherwise
specifically provided for in this Section 11; PROVIDED, HOWEVER, that, except as
otherwise provided in this Section 11 and Section 7, the Initial Purchaser shall
pay its own costs and expenses including, without limitation, the costs of
travel and lodging, 50% of the costs of chartering aircraft in connection with
the roadshow, the costs and expenses of its counsel, any transfer taxes payable
by it on the Securities which it may sell and the expenses of advertising any
offering of the Securities made by the Initial Purchaser.
12. SURVIVAL. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Subsidiary
Guarantors and the Initial Purchaser contained in this Agreement or made by or
on behalf of the Company, the Subsidiary Guarantors or the Initial Purchaser
pursuant to this Agreement or any certificate delivered pursuant hereto shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any of them or any of
their respective affiliates, officers, directors, employees, representatives,
agents or controlling persons.
13. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New
York, New York 10017, Attention: Mr. Thomas H. Walker (telecopier no.:
(212) 270-0994); or
<PAGE>
26
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum,
24601 Center Ridge Road
Westlake, OH 44145
Attention: Mr. James W. George
(telecopier no.: (216) 808-3301)
With a copy to:
The Clipper Group, L.P.
11 Madison Avenue, 26th Floor
New York, NY 10010
Attention: Rolf H. Towe
Rowan G.P. Taylor
(telecopier no.: (212) 448-5463)
Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof.
PROVIDED that any notice to the Initial Purchaser pursuant to Section 8(c) shall
also be delivered or sent by mail to the Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
14. DEFINITION OF TERMS. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
15. INITIAL PURCHASER'S INFORMATION. The parties hereto acknowledge
and agree that the Initial Purchaser's Information consists solely of the
following information in the Preliminary Offering Memorandum and the Offering
Memorandum: (i) the last paragraph on the front cover page concerning the terms
of the offering by the Initial Purchaser; (ii) the legend on the inside front
cover page concerning over-allotment and trading activities by the Initial
Purchaser; and (iii) the statements concerning the Initial Purchaser contained
in the third, fourth and sixth paragraphs under the heading "Plan of
Distribution".
16. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an
<PAGE>
27
original, but all such counterparts shall together constitute one and the same
instrument.
18. AMENDMENTS. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
19. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Subsidiary
Guarantors and the Initial Purchaser in accordance with its terms.
Very truly yours,
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
-------------------------------
Name: James W. George
Title: Senior Vice President and
Assistant Secretary
TA OPERATING CORPORATION
By /s/ James W. George
-------------------------------
Name: James W. George
Title: Senior Vice President and
Assistant Secretary
NATIONAL AUTO/TRUCKSTOPS, INC.
By /s/ James W. George
-------------------------------
Name: James W. George
Title: Senior Vice President and
Assistant Secretary
Accepted:
CHASE SECURITIES INC.
By /s/ James C. Neary
---------------------------------
Authorized Signatory
James C. Neary
<PAGE>
28
Address for notices pursuant to Section 8(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
EXHIBIT 10.25
CREDIT AGREEMENT dated as of March 21, 1997, among the
Borrower, the Lenders, the Agent, the Fronting Bank and the
Swingline Lender (each such term and each other term used but
not defined in this introductory statement having the meaning
assigned thereto in Article I).
The Borrower will be recapitalized pursuant to a series of
transactions in which (a) TA Operating Corporation, a Delaware corporation
("TA") that is currently indirectly wholly owned by the Borrower through TA
Holdings Corporation, a Delaware corporation ("TA Holdings"), will become a
direct wholly owned subsidiary of the Borrower and TA Holdings will merge with
and into the Borrower, (b) TA Franchise Systems Inc., a Delaware corporation
("TAFSI") that is currently indirectly wholly owned by the Borrower through TA
Holdings and TA, will become a direct wholly owned subsidiary of the Borrower,
(c) National Auto/Truckstops, Inc., a Delaware corporation ("National") that is
a direct wholly owned subsidiary of the Borrower, will repay in full (i) all
amounts outstanding under the National Credit Agreement and (ii) the National
Subordinated Notes and (d) TA will repay in full (i) all amounts outstanding
under the TA Credit Agreement and (ii) the TA Subordinated Notes. The foregoing
transactions are referred to herein collectively as the "Recapitalization".
In connection with the Recapitalization, (a) the Borrower will issue
the Subordinated Notes, (b) the Borrower will issue the Tranche A Exchange Notes
in exchange for (i) $65,000,000 aggregate principal amount of the National
Senior Notes and (ii) $20,500,000 aggregate principal amount of the TA Senior
Notes and (c) the Borrower will make capital contributions or advances to
National and TA in amounts sufficient to enable them to pay their respective
Existing Indebtedness, to redeem certain TA Senior Notes, to pay accrued
interest relating to all of the foregoing and to pay related expenses.
The Borrower has requested the Lenders to extend credit in the form
of (a) Term Loans in an aggregate principal amount of $80,000,000, (b) Swingline
Loans, at any time and from time to time prior to the Revolving Credit Maturity
Date, in an aggregate principal amount at any time outstanding not in excess of
$5,000,000 and (c) Revolving Loans, at any time and from time to time prior to
the Revolving Credit Maturity Date, in an aggregate principal amount at any time
outstanding not in excess of $40,000,000 MINUS the sum of (i) the aggregate
principal amount of Swingline Loans outstanding at such time and (ii) the LC
Exposure at such time. The Borrower has requested the Fronting Bank to issue
Letters of Credit, in an aggregate face amount at any time outstanding not in
excess of $20,000,000, to be used solely for general corporate purposes in the
ordinary course of business of the Borrower and its subsidiaries. The proceeds
of the Term Loans, together with the net proceeds of the issuance of the
Subordinated Notes and a portion of the Borrower's excess cash, are to be used
solely (a) to repay in full (i) all the Existing Indebtedness and (ii)
$4,500,000 aggregate principal amount of the TA Senior Notes, including, in each
case, the payment of accrued interest with respect thereto, (b) to pay all
accrued interest with respect to the National Senior Notes and the TA Senior
Notes to be exchanged for the Tranche A Exchange Notes, (c) to fund certain
operator lease repurchase costs (including the repurchase of all shares of the
Borrower's Common Stock held by such operators), inventory purchases and
anticipated capital expenditures of the Borrower and its subsidiaries and (d) to
pay the fees and expenses incurred in connection with the Recapitalization and
to pay certain other related expenses. The proceeds of the Swingline Loans and
the Revolving Loans are to be used solely for general corporate purposes of the
Borrower and its subsidiaries.
<PAGE>
2
The Lenders and the Swingline Lenders are willing to extend such
credit to the Borrower and the Fronting Bank is willing to issue Letters of
Credit for the account of the Borrower, in each case on the terms and subject to
the conditions set forth herein. Accordingly, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II.
"ABR Spread" shall mean (a) in the case of Term Loans, 2.00% per
annum and (b) in the case of Revolving Loans, 1.50% per annum, in each case
subject to adjustment pursuant to Section 2.06(c).
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Accredited Lessee" shall have the meaning assigned to such term in
the Senior Note Purchase Agreements as in effect on the date hereof.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product (a) the LIBO Rate in
effect for such Interest Period and (b) Statutory Reserves. For purposes hereof,
the term "LIBO Rate" shall mean the rate (rounded upwards, if necessary, to the
next 1/16 of 1%) at which dollar deposits approximately equal in principal
amount to the Agent's portion of such Eurodollar Borrowing and for a maturity
comparable to such Interest Period are offered to the principal London office of
the Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Administrative Fees" shall have the meaning assigned to such term
in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
Person specified.
"Agent" shall mean The Chase Manhattan Bank, a New York banking
corporation, in its capacity as agent for the Lenders.
<PAGE>
3
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. For purposes hereof, the term "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as being effective. The term "Base CD Rate" shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and
(b) the Assessment Rate. The term "Three-Month Secondary CD Rate" shall mean,
for any day, the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a Business
Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day) or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market the quotations for three-month certificates
of deposit of major money center banks in New York City received at
approximately 10:00 a.m., New York City time, on such day (or, if such day shall
not be a Business Day, on the next preceding Business Day) by the Agent from
three New York City negotiable certificate of deposit dealers of recognized
standing selected by it. The term "Federal Funds Effective Rate" shall mean, for
any day, 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 on the next succeeding 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 quotations for the day of such transactions
received by the Agent from three Federal funds brokers of recognized standing
selected by it. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any
reason, including the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate shall
be determined without regard to clause (b) or (c), or both, of the first
sentence of this definition, as appropriate, until the circumstances giving rise
to such inability no longer exist. Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such change in
the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"Ancillary Agreements" shall mean the TA Ancillary Agreements and
the National Ancillary Agreements.
"Applicable Percentage" of any Participating Lender shall mean the
percentage of the aggregate Revolving Credit Commitments represented by such
Participating Lender's Revolving Credit Commitment.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Agent as the then-current net annual assessment rate that will be employed in
determining amounts payable by the Agent to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or such
successor) of time deposits made in dollars at the Agent's domestic offices.
"Asset Purchase Agreements" shall mean the TA Asset Purchase
Agreement and the National Asset Purchase Agreement.
<PAGE>
4
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Agent, in the form
of Exhibit B or such other form as shall be approved by the Agent.
"Assignments of Leases and Rents" shall mean the Assignments of
Leases and Rents, each substantially in the form of Exhibit C, between the
Borrower and the Collateral Agent.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall mean TravelCenters of America, Inc., a Delaware
corporation.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day (other than a Saturday, Sunday or
legal holiday in the State of New York) on which banks are open for business in
New York City; PROVIDED, HOWEVER, that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" shall mean, for any period, the sum of all
amounts that would, in accordance with GAAP, be included as additions to
property, plant and equipment and other capital expenditures on a consolidated
statement of cash flows for the Borrower and its subsidiaries during such period
(including the amount of assets leased under any Capital Lease Obligation).
Notwithstanding the foregoing, the term "Capital Expenditures" shall not include
(a) capital expenditures in respect of the reinvestment of sales proceeds,
insurance proceeds and condemnation proceeds received by the Borrower or its
subsidiaries in connection with the sale, transfer or other disposition of the
Borrower's or its subsidiaries' business units, assets or properties, if (as
contemplated in the definition of the term "Prepayment Event") such reinvestment
(including, in the case of insurance proceeds, reinvestment in the form of
restoration or replacement of damaged property) shall have resulted in the event
giving rise to the receipt of such amounts not being considered a "Prepayment
Event" as contemplated in the definition of such term, or (b) Transition Capital
Expenditures made during such period.
"Capital Lease Obligations" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Cash Interest Expense" shall mean, for any period, the net interest
expense of the Borrower and its subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, excluding (a) any fees and expenses
payable or amortized during such period by the Borrower or its subsidiaries in
connection with the Transactions and (b) any interest on the Subordinated Notes
not paid in cash prior to maturity of the Subordinated Notes. For purposes of
the foregoing, net interest expense shall be determined after giving effect to
any net payments made or received by the Borrower with respect to Rate
Protection Agreements.
<PAGE>
5
"Casualty" shall have the meaning assigned to such term in Section 9
of the Guarantee Agreement.
"CERCLA" shall have the meaning assigned to such term in the
definition of the term "Environmental and Safety Laws".
A "Change in Control" shall be deemed to have occurred if:
(a) any Person or group (within the meaning of Rule 13d-5 of the
Securities and Exchange Commission as in effect on the date hereof), other
than (i) the Institutional Investors (including the First Boston Entities
(as defined below)) or (ii) the Management Purchasers and their Permitted
Transferees (as set forth in Section 2(b) of the Stockholders Agreement),
shall directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, have the ability to elect a majority
of the board of directors of the Borrower;
(b)(i) the Institutional Investors (including the First Boston
Entities) or (ii) the First Boston Entities, respectively, shall cease to
own in the aggregate, directly or indirectly, beneficially and of record,
shares representing at least 65% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower
held by such Persons on the date hereof, PROVIDED that such 65% shall be
reduced by the dilution suffered by such Persons as a result of any
issuance by the Borrower after the Closing Date of any capital stock
representing ordinary voting power (A) for fair value for cash to
non-Affiliates of the applicable parties under clause (i) or (ii) above,
as the case may be, or (B) to its employees to the extent that the shares
issued to such employees do not exceed 15% of the then-outstanding capital
stock having ordinary voting power;
(c) any Person or group (within the meaning of Rule 13d-5 of the
Securities and Exchange Commission as in effect on the date hereof), other
than the Institutional Investors (including the First Boston Entities),
shall own directly or indirectly, beneficially or of record, shares
representing more than the lesser at any time of (i) 35% of the aggregate
ordinary voting power represented by the issued and outstanding capital
stock of the Borrower and (ii) the percentage of the aggregate ordinary
voting power represented by the shares owned directly or indirectly,
beneficially or of record, by the Institutional Investors (including the
First Boston Entities) at such time;
(d) a majority of the seats (other than vacant seats) on the board
of directors of the Borrower shall at any time be occupied by Persons who
were neither (i) nominated by the Institutional Investors (including the
First Boston Entities) or the Management Purchasers and their Permitted
Transferees nor (ii) elected by directors so nominated;
(e) any "Change in Control" (however denominated) shall have
occurred under the Tranche A Exchange Note Purchase Agreements or the
Subordinated Note Indenture;
(f) the Borrower shall cease to own and control directly, of record
and beneficially, 100% of each class of outstanding capital stock of each
Guarantor and TAFSI free and clear of all Liens (other than any Liens
created under the Pledge Agreement);
(g) either Guarantor or TAFSI shall issue any class of capital stock
(or security convertible into any of its capital stock) that is not
pledged to the Collateral Agent for the ratable benefit of the Secured
Parties.
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6
For purposes of this definition, the term "First Boston Entities" shall mean
Credit Suisse First Boston Corporation, The Clipper Group, L.P., Merchant
Truckstops, L.P., Clipper Capital Associates, L.P. and Clipper/Merchant I, L.P.
and their Affiliates and any of their designees on the Closing Date. For
purposes of clause (b) of this definition, the Convertible Preferred Stock and
the Senior Convertible Participating Preferred Stock shall be deemed to
constitute capital stock with ordinary voting power. For purposes only of
clauses (a), (c) and (d) of this definition, the term "Institutional Investor"
shall be deemed to include any other holder or holders of shares of the Borrower
having ordinary voting power if any Institutional Investor or First Boston
Entity (other than an Institutional Investor deemed to be an Institutional
Investor solely by virtue of this provision) shall hold the irrevocable general
proxy of each such holder in respect of the shares held by such holder.
"Class" (a) when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are Revolving
Loans or Term Loans, (b) when used in reference to any Commitment, refers to
whether such Commitment is a Revolving Credit Commitment or a Term Loan
Commitment and (c) when used in reference to any Lender, refers to whether such
Lender is a Term Lender or a Revolving Lender.
"Closing Date" shall mean the date of the first Borrowing hereunder.
"Code" shall mean the Internal Revenue Code of 1986, or any
successor statute thereto, as the same may be amended from time to time.
"Collateral" shall mean all the "Collateral" as defined in any
Security Document and shall also include the Lockbox Collateral and the
Mortgaged Properties.
"Collateral Account" shall have the meaning given such term in the
Collateral Account Agreement.
"Collateral Account Agreement" shall mean the Collateral Account
Agreement, substantially in the form of Exhibit D, between the Borrower and the
Collateral Agent for the benefit of the Secured Parties.
"Collateral Agent" shall mean The Chase Manhattan Bank, as
Collateral Agent under the Intercreditor Agreement, the Security Documents and
the Guarantee Agreement.
"Collateral Assignment" shall mean the Collateral Assignment,
substantially in the form of Exhibit E, from the Borrower, TAFSI and the
Guarantors to the Collateral Agent, providing for the assignment to the
Collateral Agent of the Environmental Agreements, the Ancillary Agreements, the
Franchise Agreements, the Rate Protection Agreements and certain other
agreements specified in such Collateral Assignment.
"Commitment" shall mean, with respect to each Lender, such Lender's
Term Loan Commitment and Revolving Credit Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Common Stock" shall have the meaning assigned to such term in
Section 4.20.
"Condemnation Proceeds" shall have the meaning assigned to such term
in Section 9 of the Guarantee Agreement.
<PAGE>
7
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated February 1997.
"Consolidated Net Worth" shall mean, at any date, on a consolidated
basis for the Borrower and its subsidiaries, (a) the sum of (i) common stock
taken at par or stated value, (ii) preferred stock (other than preferred stock
that is mandatorily redeemable on or prior to the first anniversary of the
latest final maturity of the then outstanding Tranche A Exchange Notes) taken at
its liquidation value, (iii) capital surplus relating to common stock and (iv)
retained earnings (or deficit) at such date minus (b) the sum of treasury stock
at such date (other than treasury stock repurchased pursuant to Section 7.06),
all determined in accordance with GAAP and after giving effect to all
adjustments required thereby, but excluding any adjustments required by purchase
accounting.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Convertible Preferred Stock" shall mean the convertible perpetual
preferred stock of the Borrower, par value $.01 per share, which stock is
convertible into the Common Stock of the Borrower.
"Credit Event" shall have the meaning assigned to such term in
Article V.
"Current Assets" as of any date shall mean the total assets that
would properly be classified as current assets of the Borrower and its
subsidiaries on a consolidated basis as of such date in accordance with GAAP.
"Current Liabilities" as of any date shall mean the total
liabilities that would properly be classified as current liabilities (other than
the current portion of Funded Debt) of the Borrower and its subsidiaries on a
consolidated basis as of such date in accordance with GAAP.
"Default" shall mean any event or condition that upon notice, lapse
of time or both would constitute an Event of Default.
"Default Rate" shall have the meaning assigned to such term in
Section 2.07.
"dollars" or "$" shall mean lawful money of the United States.
"EBITDA" with respect to the Borrower and its subsidiaries for any
period shall mean the sum of (a) Net Income for such period, (b) all Federal,
state, local and foreign income taxes deducted in determining such Net Income,
(c) interest expense deducted in determining such Net Income, (d) depreciation,
amortization and other noncash charges deducted in determining such Net Income
and (e) to the extent deducted in determining such Net Income with respect to
any fiscal quarter ending on or prior to December 31, 2000, transition costs
paid during such period, PROVIDED that the aggregate amount of all transition
costs incurred after the Closing Date and permitted to be added back to Net
Income pursuant to this definition shall not exceed $11,000,000. For the
purposes of calculating the Interest Expense Coverage Ratio, the term "EBITDA"
shall not include the gain on the initial sale of assets to any lessee in
connection with the leasing of any Truckstop in accordance with Section 7.08.
<PAGE>
8
"Environmental Agreements" shall mean (a) the Environmental
Agreement dated as of July 22, 1993 (as amended, supplemented or otherwise
modified from time to time), among BP Exploration & Oil Inc., TA and certain
other parties and (b) the Environmental Agreement dated as of November 23, 1992
(as amended, supplemented or otherwise modified from time to time), between
Union Oil Company of California and National.
"Environmental and Safety Laws" shall mean any and all applicable
current and future treaties, laws, regulations, enforceable requirements,
binding determinations, orders, decrees, judgments, injunctions, permits,
approvals, authorizations, licenses, permissions, notices or binding agreements
issued, promulgated or entered by any Governmental Authority, relating to the
environment, to employee health or safety as it pertains to the use or handling
of, or exposure to, Hazardous Substances, to preservation or reclamation of
natural resources or to the management, release or threatened release of
contaminants or noxious odors, including the Hazardous Materials Transportation
Act, the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, the Clean Air Act of 1970, as amended, the Toxic
Substances Control Act of 1976, the Occupational Safety and Health Act of 1970,
as amended, the Emergency Planning and Community Right-to-Know Act of 1986, the
Safe Drinking Water Act of 1974, as amended, and any similar or implementing
state or local laws and all amendments or regulations promulgated thereunder.
"Environmental Claim" shall mean any written notice of any
Governmental Authority alleging potential liability for damage to the
environment or by any Person alleging potential liability for personal injury
(including sickness, disease or death), in either case, resulting from or based
upon (a) the presence or Release (including intentional and unintentional,
negligent and nonnegligent, sudden or nonsudden, accidental or nonaccidental
leaks or spills) of any Hazardous Substance at, in or from the property, whether
or not owned or leased by the Borrower or a Guarantor or (b) any other
circumstances forming the basis of any violation, or alleged violation, of any
Environmental and Safety Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, or any successor statute, together with the regulations thereunder, as the
same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is, was or hereafter becomes a member of a group of which the
Borrower is a member and which is treated as a single employer under Section 414
of the Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean any Eurodollar Term Loan or Eurodollar
Revolving Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
<PAGE>
9
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at
a rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VIII.
"Excess Cash Flow" shall mean, for any period, the consolidated Net
Income of the Borrower and its subsidiaries during such period PLUS, without
duplication, (a) (i) the aggregate amounts deducted in determining such Net
Income in respect of all deferred charges and depreciation, amortization and
other noncash charges (including any interest expense other than Cash Interest
Expense), (ii) all noncash losses deducted in determining such Net Income, (iii)
to the extent not included in such Net Income, the aggregate amount of all
income tax refunds received during such period, (iv) the principal amount of any
Indebtedness incurred or assumed pursuant to Section 7.01(c) during such period,
(v) the aggregate amount of Indebtedness with respect to Capital Lease
Obligations incurred pursuant to Sections 7.01(d) and 7.11(c) during such period
and (vi) the net negative change, if any, in Net Working Capital during such
period MINUS (b) (i) all noncash gains and credits included in such Net Income,
(ii) scheduled payments during such period of the principal of Term Loans, (iii)
scheduled payments during such period of the principal of Indebtedness permitted
under Section 7.01 other than the Loans (including the Tranche A Exchange Notes
and the Subordinated Notes), but only to the extent that such payments cannot by
their terms be reborrowed or redrawn, (iv) prepayments during such period of
Term Loans pursuant to Section 2.12 and Tranche A Exchange Notes (as
contemplated by Section 2.12), (v) the aggregate amount of Capital Expenditures
and Transition Capital Expenditures of the Borrower and its subsidiaries made
and permitted hereunder during such period (other than the amount of such
Transition Capital Expenditures that were financed during such period with funds
released to the Borrower from the Collateral Account), (vi) repayments during
such period of the portion of Capital Lease Obligations of the Borrower and its
subsidiaries not allocable to Cash Interest Expense and (vii) the net positive
change, if any, in Net Working Capital during such period, in each case
determined in accordance with GAAP.
"Existing Indebtedness" shall mean the aggregate principal amount
outstanding under (a) the National Credit Agreement, (b) the National
Subordinated Notes, (c) the TA Credit Agreement and (d) the TA Subordinated
Notes.
"Existing Letter of Credit" shall mean cash Letter of Credit
previously issued for the account of TA that (a) is outstanding on the Closing
Date and (b) is listed on Schedule 1.01(b).
"Facilities" shall mean, collectively, the Term Facility and the
Revolving Facility.
"Fees" shall mean the Administrative Fees, the Commitment Fees, the
LC Fees, the fees specified in Section 2.05(c) and the fees specified in Section
3.08.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, Treasurer or Controller of such
corporation.
"First Plaza" shall mean the First Plaza Group Trust, a trust
organized under the laws of the State of New York.
"Franchise Agreements" shall mean the Franchise Agreements pursuant
to which the Franchisees have or shall become franchisees of any Guarantor or
TAFSI.
"Franchisee" shall mean each party who has executed, or will
execute, a Franchise Agreement with either Guarantor or TAFSI.
<PAGE>
10
"Fronting Bank" shall mean The Chase Manhattan Bank, a New York
banking corporation, in its capacity as fronting bank for Letters of Credit.
"Funded Debt" as to any Person shall mean all Indebtedness of such
Person that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including
all amounts of Funded Debt required to be paid or prepaid within one year from
the date of its creation and, in the case of the Borrower, Indebtedness in
respect of the Loans and the Swingline Loans.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any Person shall mean any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that
the term "Guarantee" shall not include endorsements for collection or deposit,
in either case in the ordinary course of business.
"Guarantee Agreement" shall mean the Guarantee Agreement,
substantially in the form of Exhibit F, between the Guarantors and the
Collateral Agent.
"Guarantors" shall mean TA and National.
"Hazardous Substances" shall mean any toxic, radioactive, caustic or
otherwise hazardous substance, material or waste, including petroleum, its
derivatives, by-products and other hydrocarbons, or any substance having any
constituent elements, displaying any of the foregoing characteristics, including
polychlorinated biphenyls ("PCBs"), asbestos or asbestos-containing material,
and any substance, waste or material regulated under Environmental and Safety
Laws.
"Indebtedness" of any Person shall mean, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
assets purchased by such Person, (e) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (excluding trade
accounts payable and accrued expenses arising in the ordinary course of business
in accordance with customary trade terms), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed by such Person, (g) all Guarantees by such Person of Indebtedness
of others, (h) all Capital Lease Obligations of such Person, (i) all
<PAGE>
11
obligations of such Person in respect of interest rate protection agreements,
foreign currency exchange agreements or other interest or exchange rate hedging
arrangements, (j) all obligations of such Person as an account party to
reimburse any bank or any other Person in respect of letters of credit and
bankers' acceptances and (k) all obligations of such Person in respect of
fuel-supply hedging agreements and arrangements. The Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or member, other than to the extent that the
instrument or agreement evidencing such Indebtedness expressly limits the
liability of such Person in respect thereof pursuant to provisions and terms
reasonably satisfactory to the Agent.
"Indemnity and Subrogation Agreement" shall mean the Indemnity,
Subrogation and Contribution Agreement, substantially in the form of Exhibit G,
between the Borrower, the Guarantors and the Collateral Agent.
"Institutional Investors" shall mean The Clipper Group, L.P., First
Plaza, Credit Suisse First Boston Corporation, Barclays USA, Inc., Olympus
Private Placement Fund, L.P., Clipper/ Merchant I, L.P., Clipper Capital
Associates, L.P., National Partners, L.P., National Partners II, L.P., National
Partners III, L.P., UBS Capital Corporation, The Travelers Indemnity Company,
The Phoenix Insurance Co. and their respective Affiliates.
"Insurance Proceeds" shall have the meaning assigned to such term in
Section 9 of the Guarantee Agreement.
"Intercreditor Agreement" shall mean the Master Collateral and
Intercreditor Agreement, substantially in the form of Exhibit H, among the
Secured Parties and the Collateral Agent, and, from and after the incurrence of
any Tranche A Exchange Note Refinancing Indebtedness pursuant to Section
7.01(g), the term "Intercreditor Agreement" shall include any intercreditor
agreement entered into in connection with the incurrence of such Tranche A
Exchange Note Refinancing Indebtedness.
"Interest Expense Coverage Ratio" shall mean with respect to the
Borrower and its subsidiaries on a consolidated basis, for any period, the ratio
of (a) EBITDA for such period to (b) Cash Interest Expense for such period.
"Interest Payment Date" shall mean, with respect to any Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of
more than three months' duration, each day that would have been an Interest
Payment Date had successive Interest Periods of three months' duration been
applicable to such Borrowing and, in addition, the date of any refinancing or
conversion of such Borrowing with or to a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter, as the Borrower may elect, and (b) as to any ABR
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be and ending on the earliest of (i) the next succeeding March
31, June 30, September 30 or December 31, (ii) the Revolving Credit Maturity
Date or the Term Loan Maturity Date, as applicable, and (iii) the date such
Borrowing is converted to a Borrowing of a different Type in accordance with
Section 2.10 or repaid or prepaid in accordance with Section 2.11, 2.12 or 2.13;
<PAGE>
12
PROVIDED, HOWEVER, that, if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Interest Rate Spreads" shall mean the ABR Spread and LIBOR Spread.
"LC Commitment" shall mean $20,000,000, as the same may be reduced
from time to time pursuant to Section 3.07. The LC Commitment shall
automatically and permanently terminate on LC Maturity Date.
"LC Disbursement" shall mean any payment or disbursement made by the
Fronting Bank under or pursuant to a Letter of Credit.
"LC Exposure" shall mean, at any time of determination, the sum of
(a) the aggregate undrawn amount of all Letters of Credit outstanding at such
time and (b) the aggregate amount that has been drawn under such Letters Of
Credit but for which the Fronting Bank or the Lenders, as the case may be, have
not been reimbursed by the Borrower at such time.
"LC Fee" shall have the meaning assigned to such term in Section
3.03.
"LC Maturity Date" shall mean the fifth Business Day prior to the
seventh anniversary of the Closing Date.
"Leasehold Mortgage" shall mean any Mortgage that is a leasehold or
subleasehold mortgage.
"Lenders" shall mean the financial institutions party hereto.
"Letters of Credit" shall mean letters of credit issued by the
Fronting Bank for the account of the Borrower pursuant to Section 3.01(a).
"Leverage Ratio" shall mean, on any date, the ratio of (a) Total
Debt of the Borrower and its subsidiaries determined on a consolidated basis as
of such date to (b) EBITDA of the Borrower and its subsidiaries determined on a
consolidated basis for the period of four consecutive fiscal quarters most
recently ended as of such date.
"LIBOR Spread" shall mean (a) in the case of Term Loans, 3.00% per
annum and (b) in the case of Revolving Loans, 2.50% per annum, in each case
subject to readjustment pursuant to Section 2.06(c).
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, assignment for security (whether collateral or
otherwise), hypothecation, encumbrance, easement, restriction, covenant, lease,
sublease, charge or security interest in or on such asset, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement or financing lease having substantially the same economic
effect as any of the foregoing relating to such asset, (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities and (d) zoning or land use restrictions.
<PAGE>
13
"Loan Documents" shall mean this Agreement, the Intercreditor
Agreement, the Security Documents, the Guarantee Agreement and the Indemnity and
Subrogation Agreement.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Lockbox Agreements" shall mean the lockbox agreements among the
Borrower, TAFSI, each of the Guarantors, the Collateral Agent and a Sub-Agent
(as defined in each Lockbox Agreement), substantially in the form of Annex 1 to
the Security Agreement or in such other form as the Collateral Agent may
specify.
"Lockbox Collateral" shall have the meaning assigned to such term in
each of the Lockbox Agreements.
"Management Purchasers" shall mean the officers, directors or
employees of the Borrower or its subsidiaries who have purchased or will
purchase Common Stock of the Borrower.
"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect
on the business, assets, operations, prospects or condition, financial or
otherwise, or the material agreements of the Borrower and its subsidiaries,
taken as a whole, (b) a material impairment of the ability of the Borrower,
either of the Guarantors or TAFSI to perform any of its obligations under any
Transaction Document to which it is or will be a party or (c) a material
impairment of the rights of or benefits available to the Agent, the Fronting
Bank, the Swingline Lender, the Collateral Agent or the Lenders under any Loan
Document.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgaged Properties" shall mean the owned real properties and
leasehold and subleasehold interests of the Guarantors specified on Schedule
1.01(a).
"Mortgages" shall mean the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, assignments of leases and rents (including
any Assignments of Leases and Rents, substantially in the form of Exhibit C),
modifications and other security documents, delivered pursuant to clause (i) of
Section 5.02(l) or pursuant to Section 6.10, each (except in the case of any
leasehold Mortgage) substantially in the form of Exhibit I.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"National" shall have the meaning assigned to such term in the
introductory statement to this Agreement.
"National Ancillary Agreements" shall have the meaning assigned to
the term "Ancillary Agreements" in the National Asset Purchase Agreement and
shall include the Bill of Sale, the Assignment and Assumption Agreement, the
Non-Competition Agreement, the Office Sublease, the Credit Card Agreement, the
Trademark License Agreement, the Software License
<PAGE>
14
Agreement and the Services Agreement (each as defined in the National Asset
Purchase Agreement).
"National Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated as of November 23, 1992, between National and Union Oil Company
of California, as amended, supplemented or otherwise modified from time to time
in accordance with the terms of this Agreement.
"National Credit Agreement" shall mean the Credit Agreement dated as
of April 13, 1993 (as amended, supplemented or otherwise modified from time to
time), among National, National Auto/Truckstops Holdings Corporation, the
financial institutions from time to time party thereto, The Chase Manhattan
Bank, as Agent and Fronting Bank, and First American National Bank, as Swingline
Lender.
"National Senior Notes" shall mean National's 8.76% Senior Secured
Notes due 2002.
"National Subordinated Notes" shall mean all of National's
outstanding Senior Subordinated Notes due 2003.
"Net Cash Proceeds" shall mean, with respect to any Prepayment Event
or any issuance of equity of the Borrower or its subsidiaries, (a) the gross
cash proceeds (including insurance proceeds, condemnation awards and payments
from time to time in respect of installment obligations, if applicable) received
by or on behalf of the Borrower or any subsidiary thereof in respect of such
Prepayment Event or equity issuance, less (b) the sum of (i) in the case of a
Prepayment Event, the amount, if any, of all taxes (other than income taxes)
payable by the Borrower or any subsidiary thereof in connection with such
Prepayment Event and the Borrower's good-faith best estimate of the amount of
all income taxes payable in connection with such Prepayment Event (to the extent
that such amount shall have been set aside for the purpose of paying such income
taxes), (ii) in the case of a Prepayment Event that is an asset sale or
disposition, (A) the amount of any reasonable reserve established in accordance
with GAAP against any liabilities associated with the assets sold or disposed of
and retained by the Borrower or any subsidiary thereof, PROVIDED that the amount
of any subsequent reduction of such reserve (other than in connection with a
payment in respect of any such liability) shall be deemed to be Net Cash
Proceeds of a Prepayment Event occurring on the date of such reduction, and (B)
the amount applied to repay any Indebtedness (other than the Term Loans and the
Tranche A Exchange Notes) to the extent such Indebtedness is required by its
terms to be repaid as a result of such Prepayment Event and (iii) reasonable and
customary fees, commissions and expenses and other costs paid by the Borrower or
any subsidiary thereof in connection with such Prepayment Event or equity
issuance (other than those payable to the Borrower or any Affiliate of the
Borrower (other than customary financial advisory fees payable to The Clipper
Group, L.P. or its Affiliates in connection therewith to the extent that such
fees are no greater than the financial advisory fees that a third party could
have obtained for the same services after negotiation at arm's-length)), in each
case only to the extent not already deducted in arriving at the amount referred
to in clause (a).
"Net Income" shall mean, for any period, the aggregate net income
(or net deficit) of the Borrower and its subsidiaries determined on a
consolidated basis for such period, which shall be equal to gross revenues for
the Borrower and its subsidiaries determined on a consolidated basis during such
period less the aggregate for the Borrower and its subsidiaries determined on a
consolidated basis during such period of, without duplication, (a) cost of goods
sold, (b) interest expense, (c) operating expenses, (d) selling, general and
administrative expenses, (e) taxes, (f) depreciation, depletion and amortization
of properties and (g) any other items that are
<PAGE>
15
treated as expense under GAAP, all computed in accordance with GAAP; PROVIDED,
HOWEVER, that the term "Net Income" shall exclude, for all purposes other than
for the purposes of calculating Consolidated Net Worth, (i) extraordinary gains
or losses from the sale of assets other than in the ordinary course of business,
(ii) one-time charges taken in connection with the Recapitalization and the
other Transactions and (iii) any write-up in the value of any asset.
"Net Working Capital" shall mean, with respect to any Person and its
subsidiaries on a consolidated basis at any date, (a) the sum of inventory,
current receivables (including trade receivables and current rent receivables)
and prepaid expenses minus (b) the sum of accrued expenses payable and trade
payables, as each of such items would appear on a consolidated balance sheet of
such Person and its subsidiaries as of the date of determination in accordance
with GAAP.
"Network Operator" shall mean each independent auto/truckstop
operator who will lease or sublease a Truckstop from either Guarantor.
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreement and the Security Documents.
"Offering Memorandum" shall mean the Offering Memorandum dated March
24, 1997, relating to the Subordinated Notes, as amended, supplemented or
otherwise modified from time to time.
"Operators" shall mean independent auto/truckstop operators who
lease or sublease their facilities from National.
"Outstanding Letters of Credit" shall mean at any time the Letters
of Credit outstanding at such time.
"Participating Lender" shall mean at any time any Lender with a
Revolving Credit Commitment at such time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"Perfection Certificate" shall mean the Perfection Certificate,
substantially in the form of Annex 2 to the Security Agreement, prepared by the
Borrower.
"Permitted Business Acquisition" shall mean any acquisition of
assets from, or shares or other equity interests in, any Person if (a)
immediately after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing or would result therefrom, (b) all transactions
related thereto shall be consummated in accordance with applicable laws, (c) in
the case of any acquisition of shares or other equity interests in any Person,
such acquisition is an acquisition of 100% of the shares or other equity
interests of such Person and, simultaneously with or immediately following such
acquisition, such acquired Person is merged with and into one of the Guarantors
and (d) neither the Borrower nor any of its subsidiaries shall assume or
otherwise become liable for any Indebtedness in connection with such acquisition
(except for Indebtedness permitted by Section 7.01).
"Permitted Developer" shall have the meaning assigned to such term
in Section 10 of the Guarantee Agreement.
<PAGE>
16
"Permitted Development Entity" shall be a corporation or limited
partnership that does not satisfy the criteria to be considered a "subsidiary"
as contemplated in the definition thereof.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within three months from the date of acquisition
thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within three months from the date
of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from Standard & Poor's and from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits (including Eurodollar time deposits) maturing within three
months from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, (i)
any domestic office of the Agent or (ii) any domestic office of any other
commercial bank of recognized standing organized under the laws of the
United States of America or any state thereof that has a combined capital
and surplus and undivided profits of not less than $250,000,000 and which
is rated (or the senior debt securities of the holding company of such
commercial bank are rated) A or better by Standard & Poor's or A2 by
Moody's, or carrying an equivalent rating by another nationally recognized
rating agency if neither of the two named rating agencies shall rate such
commercial bank (or the holding company of such commercial bank);
(d) investments in commercial paper maturing within three months
from the date of acquisition thereof and issued by (i) the holding company
of the Agent or (ii) the holding company of any other commercial bank of
recognized standing organized under the laws of the United States of
America or any state thereof that has (A) a combined capital and surplus
in excess of $250,000,000 and (B) commercial paper rated at least A-1 or
the equivalent thereof by Standard & Poor's or at least P-1 or the
equivalent thereof by Moody's, or carrying an equivalent rating by another
nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of investments;
(e) repurchase agreements having a term of seven days or less with
(i) any domestic office of the Agent or (ii) any domestic office of any
other commercial bank of recognized standing organized under the laws of
the United States of America or any state thereof that has combined
capital and surplus and undivided profits of not less than $250,000,000
and which is rated (or the senior debt securities of the holding company
of such commercial bank are rated) A or better by Standard & Poor's or A2
by Moody's, or carrying an equivalent rating by another nationally
recognized rating agency if neither of the two named rating agencies shall
rate such bank relating to marketable direct obligations issued or
unconditionally guaranteed by the United States but only if the securities
collateralizing such repurchase agreements are delivered to or to the
order of the Collateral Agent;
(f) other investment instruments approved in writing by the Required
Lenders and offered by financial institutions that have a combined capital
and surplus and undivided profits of not less than $250,000,000; and
<PAGE>
17
(g) investments consisting of Rate Protection Agreements.
"Permitted Joint Venture" shall have the meaning assigned to such
term in Section 7.04(h).
"Person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code that
is maintained for employees of the Borrower or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit J, among the Borrower, each of the Guarantors, TAFSI and the
Collateral Agent.
"Prepayment Event" shall mean (a) any sale, transfer or other
disposition of any business units, assets or other properties of the Borrower or
any subsidiary thereof (including dispositions in the nature of casualties (to
the extent covered by insurance) or condemnations (including any Casualty or
Condemnation in respect of a Mortgaged Property as contemplated in Section 9 of
the Guarantee Agreement), (b) any sale and leaseback of any asset or the
mortgaging of any real property other than (i) any Sale and Lease-Back
Transaction permitted by Section 7.03 or (ii) pursuant to a Mortgage (or a
modification thereof) by the Borrower or any subsidiary thereof or (c) the
issuance or incurrence by the Borrower or any subsidiary thereof of any
Indebtedness (excluding any Indebtedness permitted under Section 7.01), or the
issuance or sale by the Borrower or any subsidiary thereof of any debt
securities or any obligations convertible into or exchangeable for, or giving
any Person or entity any right, option or warrant to acquire from the Borrower
or any subsidiary thereof any Indebtedness or any such debt securities or any
such convertible or exchangeable obligations (excluding any Indebtedness
permitted under Section 7.01). Notwithstanding the foregoing, the term
"Prepayment Event" shall not include:
(i) sales, transfers and other dispositions of used or surplus
equipment, vehicles and other assets in the ordinary course of business
permitted pursuant to Section 7.05(b) not exceeding in the aggregate
$1,000,000 in any fiscal year, PROVIDED that (A) at any time when such
sales, transfers and other dispositions in the ordinary course of business
shall exceed $1,000,000 in any fiscal year, the resultant Prepayment Event
shall include the entire amount of such sales, transfers and dispositions
since the date of such most recent payment, if any, with respect to such
fiscal year and not just amounts above such dollar threshold and (B) to
the extent that the Borrower or any of its subsidiaries shall have
reinvested on the date of such Prepayment Event (or certified to the Agent
that it intends to reinvest within 180 days of such Prepayment Event) any
of the proceeds of such sales, transfers and dispositions in equipment,
vehicles or other assets used in the principal lines of business of the
Borrower's subsidiaries, the resultant Prepayment Event shall be reduced
by the lesser of (1) $1,000,000 and (2) the amount so reinvested or to be
reinvested;
(ii) sales of inventory in the ordinary course of business;
(iii) sales, transfers and other dispositions of Truckstops and the
related assets permitted pursuant to Sections 7.05(d) and 7.05(g)
resulting in Net Cash Proceeds in an aggregate amount not exceeding (A)
during the period commencing on the Closing Date and ending on March 31,
2000, $50,000,000 and (B) during each period of four consecutive fiscal
quarters ending on each March 31 thereafter, $7,500,000, PROVIDED that
<PAGE>
18
(1) such Net Cash Proceeds are either (x) used to repay or voluntarily
prepay Loans or Tranche A Exchange Notes, in accordance with this
Agreement and the Tranche A Exchange Note Purchase Agreements, on such
date as may be elected by the Borrower or (y) reinvested in other
Truckstop properties and related assets, (2) in connection with any such
reinvestment, the Borrower (x) provides the Agent and the Collateral Agent
with such opinions, documents, certificates, title insurance policies (as
required by Section 5.02(l)), surveys and other insurance policies as they
may reasonably request and (y) takes such other actions as the Agent and
the Collateral Agent may reasonably deem necessary or appropriate
(including actions with respect to the delivery to the Collateral Agent of
a first priority Mortgage as required by Section 5.02(l) and assignment
with respect to the related real property for the ratable benefit of the
Secured Parties) and (3) the Borrower, pending any such repayment,
voluntary prepayment or reinvestment, promptly deposits such Net Cash
Proceeds in a cash collateral account established with the Collateral
Agent for the benefit of the Secured Parties;
(iv) the receipt of insurance or condemnation proceeds (other than
Condemnation Proceeds and Insurance Proceeds in respect of Mortgaged
Properties), PROVIDED that (A) such proceeds are reinvested in equipment,
vehicles or other assets used in the principal lines of business of the
Borrower's subsidiaries within 180 days after the receipt thereof and (B)
the Borrower, pending such reinvestment, promptly deposits such proceeds
so received and unreinvested in a cash collateral account established with
the Collateral Agent for the benefit of the Secured Parties;
(v) the receipt of Condemnation Proceeds and Insurance Proceeds in
respect of Mortgaged Properties to the extent that (A) such Condemnation
Proceeds or Insurance Proceeds are used to restore, repair or locate,
acquire and replace the related Mortgaged Property in accordance with
Section 9 of the Guarantee Agreement, (B) such Condemnation Proceeds or
Insurance Proceeds, pursuant to Section 9 of the Guarantee Agreement, are
not otherwise required to be applied as a mandatory prepayment pursuant to
Section 2.13(b) or (C) to the extent permitted by Section 9 of the
Guarantee Agreement, any Condemnation Proceeds or Insurance Proceeds are
(1) reinvested in equipment, vehicles or other assets used in the
principal lines of business of the Borrower's subsidiaries within 180 days
after the receipt thereof and (2) the Borrower, pending such reinvestment,
has deposited such amounts in an escrow account with the Collateral Agent
as contemplated in Section 9 of the Guarantee Agreement;
(vi) except as otherwise specified in Section 10 of the Guarantee
Agreement, any sale, transfer and other disposition of any portion of a
Mortgaged Property in connection with the development of such property as
permitted in, and in accordance with, the provisions of Section 10 of the
Guarantee Agreement; and
(vii) in respect of any Mortgaged Property, sales, transfers and
other dispositions of any portion of the Land (as defined in the related
Mortgage) on which there are no significant improvements that are
permitted pursuant to Section 7.05(f) in an aggregate amount not exceeding
$2,000,000 in any fiscal year or $8,000,000 since the Closing Date,
PROVIDED that (A) the proceeds of each such sale are reinvested in
equipment, vehicles or other assets used in the principal lines of
business of the Borrower's subsidiaries within 180 days of the date of
such sale and (B) the Borrower, pending such reinvestment, promptly
deposits such proceeds so received and unreinvested in a cash collateral
account established with the Collateral Agent for the benefit of the
Secured Parties.
<PAGE>
19
"Pro Forma Balance Sheet" shall have the meaning assigned to such
term in Section 4.05(a).
"Pro Rata Share" shall mean, in relation to any amount, (a) with
respect to all the Lenders as a group, a share of such amount determined by
multiplying such amount by a fraction, the numerator of which shall be the sum
of the aggregate principal amount of Loans and Swingline Loans outstanding at
the time plus the aggregate face amount of all Letters of Credit outstanding at
the time plus the aggregate unused amount of the Revolving Credit Commitments in
effect at the time (the sum of the foregoing amounts being referred to as the
"Lenders' Amount"), and the denominator of which shall be the sum of the
Lenders' Amount and the aggregate outstanding principal amount of Tranche A
Exchange Notes outstanding at the time (the sum of the foregoing amounts being
referred to as the "Denominator Amount"), and (b) with respect to the Tranche A
Exchange Note Purchasers, a share of such amount determined by multiplying such
amount by a fraction, the numerator of which shall be the aggregate outstanding
principal amount of Tranche A Exchange Notes outstanding at the time, and the
denominator of which shall be the Denominator Amount. After the incurrence of
any Tranche A Exchange Note Refinancing Indebtedness, the Pro Rata Share shall
be determined, MUTATIS MUTANDIS, with respect to the analogous provisions of the
Tranche A Exchange Note Refinancing Indebtedness.
"Rate Protection Agreements" shall mean (a) interest rate cap
agreements, (b) interest rate swap agreements, (c) interest rate collar
agreements or (d) similar agreements, in each case entered into by Borrower to
provide protection to the Borrower against fluctuations in interest rates. Each
Rate Protection Agreement shall be on terms satisfactory to the Agent with a
counterparty satisfactory to the Agent.
"Recapitalization" shall have the meaning assigned to such term in
the introductory statement to this Agreement.
"Register" shall have the meaning assigned to such term in Section
10.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Release" shall mean any discharge, emission, release, or threat
thereof, including a "Release" as defined in CERCLA at 42 U.S.C. ss. 9601(22),
and the term "Released" has a meaning correlative thereto.
"Reportable Event" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
"Required Lenders" shall mean, at any time, Lenders holding Loans, a
share of the used LC Commitment and unused Commitments representing more than
50% of the aggregate of (a) the aggregate principal amount of the Loans and
Swingline Loans at such time, (b) the LC Exposure at such time and (c) the
aggregate unused Commitments at such time.
<PAGE>
20
"Resellers" shall mean independent auto/truckstop operators who own
their facilities and who are part of the National network.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans hereunder as set
forth in clause (b) of Section 2.01, as the same may be reduced from time to
time pursuant to Section 2.09.
"Revolving Credit Maturity Date" shall mean the seventh anniversary
of the Closing Date.
"Revolving Credit Utilization" shall mean, at any time of
determination, the sum of (a) the aggregate principal amount of Revolving Loans
outstanding at such time, (b) the aggregate principal amount of Swingline Loans
outstanding at such time and (c) the LC Exposure at such time.
"Revolving Facility" shall mean the aggregate of the Lenders'
Revolving Credit Commitments.
"Revolving Lender" shall mean any Lender that has a Revolving Credit
Commitment.
"Revolving Loans" shall mean the revolving loans made by the Lenders
to the Borrower pursuant to clause (b) of Section 2.01. Each Revolving Loan
shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Secured Parties" shall have the meaning assigned to such term in
the Security Agreement.
"Security Agreement" shall mean the Security Agreement,
substantially in the form of Exhibit K, among the Borrower, each of the
Guarantors, TAFSI and the Collateral Agent.
"Security Documents" shall mean the Mortgages (including any
Assignment of Leases and Rents and any leasehold mortgage), the Security
Agreement, the Pledge Agreement, the Collateral Assignment, the Lockbox
Agreements, the Trademark Security Agreement, the Collateral Account Agreement
and each of the security agreements, mortgages and other instruments and
documents executed and delivered pursuant to any of the foregoing or pursuant to
Section 6.10.
"Senior Convertible Participating Preferred Stock" shall mean the
Borrower's Series I Senior Convertible Participating Preferred Stock, par value
$.01 per share, and the Borrower's Series II Senior Convertible Participating
Preferred Stock, par value $.01 per share.
"Senior Funded Debt" means all Funded Debt of the Borrower and its
subsidiaries other than the Subordinated Notes (or the Subordinated Note
Refinancing Indebtedness).
<PAGE>
21
"Series I Tranche A Exchange Note Purchasers" shall mean the Series
I Tranche A Exchange Note Purchasers party to the Tranche A Exchange Note
Purchase Agreements and their successors and assigns, including the holders of
the Series I Tranche A Exchange Notes from time to time.
"Series I Tranche A Exchange Notes" shall mean the 8.94% Series I
Senior Secured Notes due 2002 of the Borrower issued pursuant to the Tranche A
Exchange Note Purchase Agreements in an aggregate principal amount of
$35,500,000.
"Series II Tranche A Exchange Note Purchasers" shall mean the Series
II Tranche A Exchange Note Purchasers party to the Tranche A Exchange Note
Purchase Agreements and their successors and assigns, including the holders of
the Series II Tranche Exchange Notes from time to time.
"Series II Tranche A Exchange Notes" shall mean the Series II Senior
Secured Notes due 2005 of the Borrower issued pursuant to the Tranche A Exchange
Note Purchase Agreements in an aggregate principal amount of $50,000,000.
"Standard & Poor's" shall mean Standard & Poor's Rating Group.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum applicable reserve percentages,
including any marginal, special, emergency or supplemental reserves (expressed
as a decimal) established by the Board and any other banking authority to which
the Agent is subject (a) with respect to the Base CD Rate (as such term is used
in the definition of the term "Alternate Base Rate") for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for Eurocurrency Liabilities (as defined in Regulation D of the Board).
Such reserve percentages shall include those imposed pursuant to Regulation D of
the Board. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offset that may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Stockholders Agreement" shall mean the Stockholders Agreement dated
as of April 14, 1993, as amended as of March 6, 1997, and as further amended,
supplemented or otherwise modified from time to time in accordance with the
terms of this Agreement, among certain Institutional Investors, certain
Resellers, certain Operators and the Borrower.
"Subordinated Note Documents" shall mean the Subordinated Note
Guarantees, the Subordinated Note Indenture and the Subordinated Notes.
"Subordinated Note Guarantees" shall mean, collectively, the
Guarantees of the Guarantors guaranteeing repayment of the Subordinated Notes.
"Subordinated Note Indenture" shall mean the Senior Subordinated
Note Indenture dated as of March 24, 1997, among the Borrower, the Guarantors
and Fleet National Bank, as trustee, as amended from time to time in accordance
with the terms hereof and thereof.
<PAGE>
22
"Subordinated Note Refinancing Indebtedness" shall mean any
Indebtedness incurred by the Borrower as contemplated in Section 7.01(h) in
connection with the refinancing of the Subordinated Notes.
"Subordinated Notes" shall mean (a) the Senior Subordinated Notes
due 2007 issued by the Borrower pursuant to the Subordinated Note Indenture and
(b) all senior subordinated notes of the Borrower issued in exchange for
Subordinated Notes on terms substantially identical to the terms of the
Subordinated Notes.
"subsidiary" shall mean, with respect to any Person (herein referred
to as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held or (b) that is, at the time any
determination is made, otherwise Controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Swingline Lender" shall mean The Chase Manhattan Bank, in its
capacity as Swingline lender.
"Swingline Loans" shall mean the Swingline loans made by the
Swingline Lender pursuant to Section 2.21.
"TA" shall have the meaning assigned to such term in the
introductory statement to this Agreement.
"TA Ancillary Agreements" shall have the meaning assigned to the
term "Ancillary Agreements" in the TA Asset Purchase Agreement and shall include
the Non-Competition Agreement, the Credit Card Agreement, the Services
Agreement, the Office Sub-Lease, the Assignment and Assumption Agreement, the
TAFSI Assumption Agreement, the Jobber Agreement, the Supplemental Agreement,
the Trademark Assignment and the Software License Agreement (each as defined in
the TA Asset Purchase Agreement).
"TA Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated as of July 22, 1993, as amended by Amendment No. 1 thereto dated
as of December 9, 1993, and as further amended, supplemented or otherwise
modified from time to time in accordance with the terms set forth in this
Agreement, among TA, BP Exploration & Oil, Inc. and Truckstops Corporation of
America, Inc.
"TA Credit Agreement" shall mean the Credit Agreement dated as of
December 9, 1993 (as amended, supplemented or otherwise modified from time to
time), among TA, the financial institutions from time to time party thereto, The
Chase Manhattan Bank, as Agent and Fronting Bank, Credit Suisse and The
Long-Term Credit Bank of Japan, as Co-Agents, and First American National Bank,
as Swingline Lender.
"TAFSI" shall mean TA Franchise Systems Inc., a Delaware
corporation.
"TA Senior Notes" shall mean TA's 8.63% Senior Secured Notes due
2002.
"TA Stockholders Agreement" shall mean the Stockholders Agreement
dated as of December 10, 1993, among the Borrower and the stockholders party
thereto, as amended in
<PAGE>
23
accordance with the Borrower's Consent Solicitation dated February 13, 1997, as
the same may be further amended, modified or supplemented in accordance with the
provisions of this Agreement.
"TA Subordinated Notes" shall mean all of TA's outstanding Series A
and Series B Senior Subordinated Notes due 2003.
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Facility" shall mean the aggregate amount of the Lenders' Term
Loan Commitments.
"Term Lender" shall mean any Lender that has a Term Loan Commitment.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans hereunder as set forth in clause
(a) of Section 2.01, as the same may be reduced from time to time pursuant to
Section 2.09.
"Term Loan Maturity Date" shall mean the eighth anniversary of the
Closing Date.
"Term Loan Repayment Amount" shall have the meaning set forth in
Section 2.11(a).
"Term Loan Repayment Date" shall have the meaning set forth in
Section 2.11(a).
"Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to clause (a) of Section 2.01. Each Term Loan shall be a
Eurodollar Term Loan or an ABR Term Loan.
"The Clipper Group, L.P." shall mean The Clipper Group, L.P., a
limited partnership organized under the laws of the State of Delaware.
"Total Debt" shall mean, with respect to the Borrower and its
subsidiaries on a consolidated basis at any time, all Capital Lease Obligations,
Indebtedness for borrowed money and Indebtedness in respect of deferred purchase
price of property or services of the Borrower and its subsidiaries at such time
and mandatorily redeemable preferred stock at such time less the amount of cash
and cash equivalents set forth on the Borrower's consolidated balance sheet at
such time (including all amounts on deposit in the Collateral Account at such
time) in excess of $2,500,000.
"Trademark Security Agreement" shall mean the Trademark Security
Agreement, substantially in the form of Exhibit L, among the Borrower, the
Guarantor, TAFSI and the Collateral Agent.
"Tranche A Exchange Note Documents" shall mean the Tranche A
Exchange Note Purchase Agreements, the Tranche A Exchange Notes, the Guarantee
Agreement, the Security Documents and the Intercreditor Agreement.
"Tranche A Exchange Note Purchase Agreements" shall mean the Senior
Secured Note Exchange Agreements, each dated as of the date hereof, between the
Borrower and the Tranche A Exchange Note Purchasers party thereto, as amended,
supplemented or otherwise
<PAGE>
24
modified from time to time in accordance with the terms of this Agreement. After
the incurrence of any Tranche A Exchange Note Refinancing Indebtedness, the term
"Tranche A Exchange Note Purchase Agreements" shall include all agreements (or
comparable documents, such as loan agreements or indentures) entered into by the
Borrower in connection with the sale or issuance of such refinancing
Indebtedness.
"Tranche A Exchange Note Purchasers" shall mean the Series I Tranche
A Exchange Note Purchasers and the Series II Tranche A Exchange Note Purchasers
party to the Tranche A Exchange Note Purchase Agreements and their successors
and assigns, including the holders of the Tranche A Exchange Notes from time to
time. After the incurrence of any Tranche A Exchange Note Refinancing
Indebtedness, the term "Tranche A Exchange Note Purchasers" shall include all
original purchasers of such refinancing Indebtedness and their successors and
assigns, including the holders of the Tranche A Exchange Notes from time to
time.
"Tranche A Exchange Note Refinancing Indebtedness" shall mean any
Indebtedness incurred by the Borrower as contemplated in Section 7.01(g) in
connection with the refinancing of either series of the Tranche A Exchange
Notes.
"Tranche A Exchange Notes" shall mean the Series I Tranche A
Exchange Notes and the Series II Tranche A Exchange Notes, in each case issued
pursuant to the Tranche A Exchange Note Purchase Agreements. After the
incurrence of any Tranche A Exchange Note Refinancing Indebtedness, the term
"Tranche A Exchange Notes" shall include all notes issued in respect of the
Tranche A Exchange Note Refinancing Indebtedness.
"Transaction Documents" shall mean the Loan Documents, the Tranche A
Exchange Note Documents and the Subordinated Note Documents.
"Transactions" shall have the meaning assigned to such term in
Section 4.02.
"Transition Capital Expenditures" shall mean, for any period, all
capital expenditures made by the Borrower and its subsidiaries during such
period to the extent that such capital expenditures (a) are in an amount in
excess of the Capital Expenditures permitted to be made during such period under
Section 7.13(a) of this Agreement and (b) are capital expenditures substantially
similar to those described in Section 10 of the Confidential Information
Memorandum.
"Truckstop" shall mean each full service truckstop facility that, as
of any date, is part of the network and that is owned by the Borrower or its
subsidiaries or leased by the Borrower or its subsidiaries as lessee or
sublessee.
"Type" when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"Voting Trust" shall mean the Voting Trust established pursuant to
the terms of the Voting Trust Agreement.
"Voting Trust Agreement" shall mean the Voting Trust Agreement dated
as of April 14, 1993, as amended as of March 6, 1997, among the Borrower,
certain Resellers, certain Operators and United States Trust Company of New
York, as trustee, as the same may be amended, modified or supplemented in
accordance with the provisions of this Agreement.
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25
"Voting Trust Certificates" shall mean the Voting Trust Certificates
issued pursuant to the terms of the Voting Trust Agreement.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed to be references to Articles and Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP as
in effect from time to time, applied on a basis consistent with the application
used in the financial statements referred to in Section 4.05(b).
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. On the terms and subject to the
conditions and relying upon the representations and warranties herein set forth,
each Lender agrees, severally and not jointly, (a) to make Terms Loans to the
Borrower on the Closing Date in an aggregate principal amount not to exceed the
Term Loan Commitment set forth opposite such Lender's name on Schedule 2.01, and
(b) to make Revolving Loans to the Borrower, at any time and from time to time
on or after the Closing Date and prior to the earlier of the Revolving Credit
Maturity Date and the termination of the Revolving Credit Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal amount at
any time outstanding not to exceed (after giving effect to all Revolving Credit
Loans repaid, and all reimbursements of LC Disbursements made, concurrently with
the making of any Revolving Credit Loans) an amount equal to the difference
between (i) the Revolving Credit Commitment set forth opposite such Lender's
name on Schedule 2.01, as the same may be reduced from time to time pursuant to
Section 2.09, and (ii) such Lender's Applicable Percentage of the sum of (A) the
aggregate principal amount of Swingline Loans outstanding at such time and (B)
the LC Exposure at such time. Within the limits set forth in clause (b) of the
preceding sentence, the Borrower may borrow, pay or prepay and reborrow
Revolving Loans on or after the Closing Date and prior to the Revolving Credit
Maturity Date, on the terms and subject to the conditions and limitations set
forth herein. Amounts paid or prepaid in respect of Term Loans may not be
reborrowed.
SECTION 2.02. LOANS. (a) Each Loan shall be made as part of
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Term Loan Commitments or Revolving Credit Commitments, as the
case may be; PROVIDED, HOWEVER, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its obligation to lend hereunder
(it being understood, however, that no Lender shall be responsible for the
failure of any other Lender to make any Loan required to be made by such other
Lender). The Loans comprising each Borrowing shall be in an aggregate principal
amount that is an integral multiple of
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26
$500,000 and not less than $3,000,000 (or in the case of the Revolving Credit
Commitments, the lesser of $3,000,000 and an aggregate principal amount equal to
the remaining balance of the Revolving Credit Commitments).
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans, as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option fulfill its Commitment
with respect to any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan, PROVIDED that any exercise of such
option shall not (i) affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement or (ii) impose any additional
obligation on the part of the Borrower pursuant to Section 2.14. Borrowings of
more than one Type may be outstanding at the same time; PROVIDED, HOWEVER, that
the Borrower shall not be entitled to request any Borrowing that, if made, would
result in an aggregate of more than six separate Eurodollar Loans of any Lender
being outstanding hereunder at any one time. For purposes of the foregoing,
Loans having different Interest Periods, regardless of whether they commence on
the same date, shall be considered separate Loans.
(c) Subject to paragraph (e) below and except with respect to Loans
made pursuant to paragraph (f) below, each Lender shall make a Loan in the
amount of its pro rata portion, as determined under Section 2.17, of each
Borrowing hereunder on the proposed date thereof by wire transfer of immediately
available funds to such account in New York City as the Agent may designate not
later than 12:00 noon, New York City time, and the Agent shall by 3:00 p.m., New
York City time, credit the amounts so received to the general deposit account of
the Borrower maintained with the Agent or, if a Borrowing shall not occur on
such date because any condition precedent herein specified shall not have been
met, return the amounts so received to the respective Lenders. Unless the Agent
shall have received notice from a Lender prior to the date of any Borrowing that
such Lender will not make available to the Agent such Lender's portion of such
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Borrowing in accordance with this paragraph (c)
and the Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have made such portion available to the Agent, such Lender and
the Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, for the first such day, the Federal Funds Effective Rate,
and thereafter, the Alternate Base Rate. If such Lender shall repay to the Agent
such corresponding amount, such amount shall constitute such Lender's Loan as
part of such Borrowing for purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Revolving Credit Borrowing if the
Interest Period requested with respect thereto would end after the Revolving
Credit Maturity Date.
(e) The Borrower may refinance all or any part of any Revolving
Credit Borrowing with a Revolving Credit Borrowing of the same or a different
Type, subject to the conditions and limitations set forth in this Agreement. Any
Revolving Credit Borrowing or part thereof so refinanced shall be deemed to be
repaid or prepaid in accordance with Section 2.04 or 2.12, as applicable, with
the proceeds of a new Revolving Credit Borrowing, and the proceeds of the new
Revolving Credit Borrowing, to the extent they do not exceed the principal
amount of the Revolving Credit Borrowing being refinanced, shall not be paid by
the Lenders to the Agent or by the Agent to the Borrower pursuant to paragraph
(c) above.
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27
(f) If the Agent has not received from the Borrower the payment
required by Section 3.04(a) by 11:00 a.m., New York City time, on the date on
which the Fronting Bank has notified the Borrower that payment of a draft
presented under any Letter of Credit will be made (or such later time as is not
later than three hours after the Borrower shall have received such notice or, if
the Borrower shall have received such notice later than 2:00 p.m., New York City
time, on such Business Day, not later than 10:00 a.m., New York City time, on
the immediately following Business Day), as provided in Section 3.04(a), the
Agent will notify not later than 12:00 noon, New York City time, the Fronting
Bank and each Participating Lender of the LC Disbursement and, in the case of
each Participating Lender, its Applicable Percentage of such LC Disbursement.
Each Participating Lender will pay by wire transfer of immediately available
funds to the Agent not later than 4:00 p.m., New York City time, on such date an
amount equal to such Participating Lender's Applicable Percentage of such LC
Disbursement (it being understood that such amount shall constitute an ABR
Revolving Loan of such Lender and such payment shall be deemed to have reduced
the LC Exposure), and the Agent will promptly pay such amount to the Fronting
Bank. The Agent will promptly remit to each Participating Lender its Applicable
Percentage of any amounts subsequently received by the Agent from the Borrower
in respect of such LC Disbursement. If any Lender shall not have made its
Applicable Percentage of such LC Disbursement available to the Fronting Bank as
provided above, such Lender agrees to pay interest on such amount, for each day
from and including the date such amount is required to be paid in accordance
with this paragraph (f) to but excluding the date an amount equal to such amount
is paid to the Agent for prompt payment to the Fronting Bank at, for the first
such day, the Federal Funds Effective Rate, and thereafter, the Alternate Base
Rate.
SECTION 2.03. NOTICE OF BORROWINGS. The Borrower shall give the
Agent written or telecopy notice (or telephone notice promptly confirmed in
writing or by telecopy) (a) in the case of a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three Business Days before a proposed
borrowing and (b) in the case of an ABR Borrowing, not later than 12:00 noon,
New York City time, one Business Day before a proposed borrowing. Such notice
shall be irrevocable and shall in each case refer to this Agreement and specify
(i) whether the Borrowing then being requested is to be a Term Borrowing or a
Revolving Credit Borrowing, and whether such Borrowing is to be a Eurodollar
Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which shall be a
Business Day) and the amount thereof; and (iii) if such Borrowing is to be a
Eurodollar Borrowing, the Interest Period with respect thereto. If no election
as to the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. If the
Borrower shall not have given notice in accordance with this Section 2.03 of its
election to refinance a Revolving Credit Borrowing prior to the end of the
Interest Period in effect for such Borrowing, then the Borrower shall (unless
such Borrowing is repaid at the end of such Interest Period) be deemed to have
given notice of an election to refinance such Borrowing with an ABR Borrowing.
The Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.03 and of each Lender's portion of the requested Borrowing and shall
promptly notify each Lender of the determination of the Adjusted LIBO Rate
applicable to any Eurodollar Loan.
SECTION 2.04. EVIDENCE OF DEBT; REPAYMENT OF LOANS. (a) The
outstanding principal balance of each Loan shall be payable (i) in the case of a
Revolving Loan or a Swingline Loan, on the Revolving Credit Maturity Date and
(ii) in the case of a Term Loan, as provided in Section 2.11.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan
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28
made by such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this Agreement.
(c) The Agent shall maintain accounts in which it will record (i)
the amount of each Loan made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Agent hereunder from the Borrower or
any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; PROVIDED, HOWEVER, that the failure
of any Lender or the Agent to maintain such accounts or any error therein shall
not in any manner affect the obligations of the Borrower to repay the Loans in
accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the
event any Lender shall request and receive a promissory note payable to such
Lender and its registered assigns, the interests represented by such note shall
at all times (including after any assignment of all or part of such interests
pursuant to Section 10.04) be represented by one or more promissory notes
payable to the payee named therein or its registered assigns.
SECTION 2.05. FEES. (a) The Borrower agrees to pay to each Lender,
through the Agent, the following fees (each, a "Commitment Fee") on the Closing
Date and on the last day of March, June, September and December in each year and
on each date on which any of the Commitments of such Lender shall expire or be
terminated as provided herein, a commitment fee of 0.50% per annum on the
average daily unused amount of each of the Term Loan Commitment and the
Revolving Credit Commitment (without giving effect to any deemed reduction
thereto in connection with the issuance of Swingline Loans) of such Lender
during the preceding quarter (or other period commencing with the date upon
which such Lender's Commitments were accepted or the Closing Date, as
applicable, or ending with the date on which any of such Commitments of such
Lender shall expire or be terminated). The Commitment Fee due to each Lender in
respect of its Term Loan Commitment and Revolving Credit Commitment pursuant to
the immediately preceding sentence shall accrue from and including the date upon
which such Commitments of such Lender were accepted. For purposes of calculating
Commitment Fees in respect of Revolving Credit Commitments, any portion of such
Revolving Credit Commitments unavailable due to outstanding Letters of Credit
shall be deemed to be used amounts. All Commitment Fees shall be computed on the
basis of the actual number of days elapsed in a year of 360 days.
(b) The Borrower agrees to pay to the Agent, for its own account,
fees (the "Administrative Fees") at the time and in the amounts agreed upon in
the fee letter agreement dated February 14, 1997 (the "Fee Letter"), between the
Borrower and the Agent.
(c) The Borrower agrees to pay to the Agent, for payment to the
other Lenders (to the extent applicable), on the Closing Date the fees specified
in the Fee Letter, and the Agent shall pay to each Lender on the Closing Date
that portion of such fees as is owing to such Lender.
(d) The Borrower agrees to pay to the Fronting Bank, for its own
account, the fees specified in Section 3.08.
(e) All Fees (other than the fees payable to the Fronting Bank under
Section 3.08) shall be paid on the dates due, in immediately available funds, to
the Agent for distribution, if and
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as appropriate, among the Lenders. Once paid, none of the Fees shall be
refundable under any circumstances (other than corrections of error in payment).
SECTION 2.06. INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus the ABR Spread in effect at
such time, subject to adjustment pursuant to Section 2.06(c).
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the LIBOR Spread in effect from time to time, subject to adjustment
pursuant to Section 2.06(c).
(c) So long as no Default or Event of Default shall have occurred
and be continuing, the Interest Rate Spreads in respect of Term Loans and, after
the first anniversary of the Closing Date, the Interest Rate Spreads in respect
of Revolving Loans shall be reduced by 0.25% at any time that the Facilities or
the Series II Tranche A Exchange Notes, as the case may be, are rated at least
Ba2 by Moody's or BB by Standard & Poor's so long as the Facilities or the
Series II Tranche A Exchange Notes, as the case may be, are rated at least Ba3
by Moody's and BB- by Standard & Poor's at such time.
(d) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Agent, and such determination shall be presumptively correct absent
manifest error.
SECTION 2.07. DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or Swingline Loan or any
other amount becoming due hereunder or under any Security Document, by
acceleration or otherwise, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted amount up to (but
not including) the date of actual payment (after as well as before judgment) at
a rate per annum (the "Default Rate") (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to (a) in the case of any
Loan or Swingline Loan, the rate applicable to such Loan under Section 2.06 plus
2% per annum and (b) in the case of any other amount, the rate that would be
applicable to an ABR Revolving Loan under Section 2.06 plus 2% per annum.
SECTION 2.08. ALTERNATE RATE OF INTEREST. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Agent shall have determined that
dollar deposits in the principal amounts of the Loans comprising such Borrowing
are not generally available in the London interbank market, or that the rates at
which such dollar deposits are being offered will not adequately and fairly
reflect the cost to any Lender of making or maintaining its Eurodollar Loan
during such Interest Period, or that reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, the Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such determination to the
Borrower and the Lenders. In the event of any such determination, any request by
the Borrower for a Eurodollar Borrowing pursuant to Section 2.03 or 2.10 shall,
until the Agent shall have advised the Borrower and the Lenders that the
circumstances giving rise to such notice no
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30
longer exist, be deemed to be a request for an ABR Borrowing. Each determination
by the Agent hereunder shall be conclusive absent manifest error.
SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Term
Loan Commitments shall be automatically terminated at 5:00 p.m., New York City
time, on the Closing Date. The Revolving Credit Commitments and the LC
Commitment shall be automatically terminated at 5:00 p.m., New York City time,
on the Revolving Credit Maturity Date and the LC Maturity Date, respectively.
Notwithstanding the foregoing, all the Commitments and the LC Commitment shall
be automatically terminated at 5:00 p.m., New York City time, on April 30, 1997,
if the initial borrowing under either of the Facilities has not occurred by such
time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Commitments;
PROVIDED, HOWEVER, that (i) each partial reduction of the Commitments shall be
in an integral multiple of $500,000 and in a minimum principal amount of
$3,000,000 and (ii) the Borrower shall not be permitted to terminate or reduce
the Revolving Credit Commitments if, as the result of such termination or
reduction, (A) the LC Commitment would exceed the aggregate remaining amount of
the Revolving Credit Commitments or (B) the Revolving Credit Utilization would
exceed the aggregate remaining Revolving Credit Commitments. The LC Commitments
may be voluntarily terminated or reduced by the Borrower as provided in Section
3.07
(c) The Revolving Credit Commitments and the LC Commitments shall be
permanently reduced as provided in Section 2.13(e).
(d) Each reduction in the Commitments hereunder shall be made
ratably among the applicable Lenders in accordance with their respective
applicable Commitments. The Borrower shall pay to the Agent for the account of
the applicable Lenders, on the date of each termination or reduction, the
Commitment Fees on the amount of the Commitments so terminated or reduced
accrued to but excluding the date of such termination or reduction.
(e) Nothing in this Section 2.09 shall prejudice any rights that the
Borrower may have against any Lender that fails to lend as required hereunder
prior to the date of termination of any Commitment.
SECTION 2.10. CONVERSION AND CONTINUATION OF TERM BORROWINGS. The
Borrower shall have the right at any time (subject to Section 2.08) upon prior
irrevocable notice to the Agent (i) not later than 12:00 noon, New York City
time, one Business Day prior to conversion, to convert any Eurodollar Term
Borrowing into an ABR Term Borrowing, (ii) not later than 11:00 a.m., New York
City time, three Business Days prior to conversion or continuation, to convert
any ABR Term Borrowing into a Eurodollar Term Borrowing or to continue any
Eurodollar Term Borrowing as a Eurodollar Term Borrowing for an additional
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Interest Period and (iii) not later than 11:00 a.m., New York City time, three
Business Days prior to conversion, to convert the Interest Period with respect
to any Eurodollar Term Borrowing to another permissible Interest Period, subject
in each case to the following:
(a) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Term Borrowings;
(b) if less than all the outstanding principal amount of any Term
Borrowing shall be converted or continued, then each resulting Borrowing
shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b)
regarding the principal amount and maximum number of Borrowings of the
relevant Type;
(c) each conversion shall be effected by each Lender by applying the
proceeds of the new Term Loan of such Lender resulting from such
conversion to the Term Loan (or portion thereof) of such Lender being
converted, and accrued interest on a Term Loan (or portion thereof) being
converted shall be paid by the Borrower at the time of conversion;
(d) if any Eurodollar Term Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower shall
pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16;
(e) any portion of a Term Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as a
Eurodollar Term Borrowing;
(f) any portion of a Eurodollar Term Borrowing that cannot be
converted into or continued as a Eurodollar Term Borrowing by reason of
subparagraph (e) above shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Term Borrowing;
and
(g) no Interest Period may be selected for any Eurodollar Term
Borrowing that would end later than a Term Loan Repayment Date occurring
on or after the first day of such Interest Period if, after giving effect
to such selection, the aggregate outstanding amount of (i) the Eurodollar
Term Borrowings with Interest Periods ending on or prior to such Term Loan
Repayment Date and (ii) the ABR Term Borrowings would not be at least
equal to the principal amount of Term Borrowings to be paid on such Term
Loan Repayment Date.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Term Borrowing that the Borrower requests be converted or continued, (ii)
whether such Term Borrowing is to be converted to or continued as a Eurodollar
Term Borrowing or an ABR Term Borrowing, (iii) if such notice requests a
conversion, the date of such conversion (which shall be a Business Day) and (iv)
if such Term Borrowing is to be converted to or continued as a Eurodollar Term
Borrowing, the Interest Period with respect thereto. If no Interest Period is
specified in any such notice with respect to any conversion to or continuation
as a Eurodollar Term Borrowing, the Borrower shall be deemed to have selected an
Interest Period of one month's duration. The Agent shall advise the other
Lenders of any notice given pursuant to this Section 2.10, of the Agent's
determination, if applicable, of the Adjusted LIBO Rate of any Eurodollar Loan
and of each Lender's portion of any converted or continued Term Borrowing. If
the Borrower shall not have given notice in accordance with this Section 2.10 to
continue any Term Borrowing into a subsequent Interest Period (and shall not
otherwise have given notice in accordance with this Section 2.10 to convert
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32
such Term Borrowing), such Term Borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Term Borrowing.
SECTION 2.11. REPAYMENT OF TERM BORROWINGS. (a) The Borrower shall
pay to the Agent, for the account of the Lenders, on each March 31, June 30,
September 30 and December 31 in any period set forth below (each such date being
a "Term Loan Repayment Date") a principal amount of the Term Loans (such amount,
as adjusted from time to time pursuant to Sections 2.12(b) and 2.13(e), being
called the "Term Loan Repayment Amount") equal to one-quarter of the amount set
forth below for such period, together in each case with accrued and unpaid
interest on the principal amount to be paid to but excluding the date of such
payment:
From and Including: To and Including: Amount:
April 1, 1997 March 31, 1998 $500,000
April 1, 1998 March 31, 1999 $500,000
April 1, 1999 March 31, 2000 $500,000
April 1, 2000 March 31, 2001 $500,000
April 1, 2001 March 31, 2002 $500,000
April 1, 2002 March 31, 2003 $500,000
April 1, 2003 March 31, 2004 $30,000,000
April 1, 2004 Term Loan Maturity Date $47,000,000
On each Term Loan Repayment Date, the Agent shall apply the Term Loan Repayment
Amount paid to the Agent to pay the Term Loans.
(b) To the extent not previously paid, all Term Borrowings shall be
due and payable on the Term Loan Maturity Date, together with accrued and unpaid
interest on the principal amount to be paid to but excluding the date of
payment.
(c) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12 OPTIONAL PREPAYMENT. (a) The Borrower shall have the
right at any time and from time to time to prepay (i) Revolving Credit
Borrowings, (ii) Term Borrowings or (iii) if the Borrower specifically elects,
Term Borrowings and outstanding Tranche A Exchange Notes in accordance with the
provisions of the Tranche A Exchange Note Purchase Agreements, in each case in
whole or in part, upon at least three Business Days' prior written or telecopy
notice (or telephone notice promptly confirmed by written or telecopy notice) to
the Agent; PROVIDED, HOWEVER, that each partial prepayment shall be in an amount
that is an integral multiple of $500,000.
(b) Each prepayment of principal of the Term Borrowings pursuant to
paragraph (a) above shall be applied FIRST, to reduce the scheduled payments of
principal due under Section 2.11(a) during the 12 month period following the
date of such prepayment and SECOND, pro rata against the remaining scheduled
payments of principal due under Section 2.11(a).
(c) Each notice of prepayment shall specify (i) the amount to be
prepaid, (ii) the prepayment date, (iii) whether the prepayment relates to
Revolving Credit Borrowings, to Term Borrowings or to both Term Borrowings and
outstanding Tranche A Exchange Notes and (iv) the principal amount to be prepaid
of (A) Revolving Credit Borrowings (or portion thereof) or
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33
(B) Term Borrowings (or portion thereof). Each such notice shall be irrevocable
and shall commit the Borrower to prepay such obligations by the amount specified
therein on the date specified therein. All prepayments of Borrowings under this
Section 2.12 shall be subject to Section 2.16 but otherwise without premium or
penalty. All prepayments under this Section 2.12 shall be accompanied by accrued
interest on the principal amount being prepaid to but excluding the date of
payment.
(d) On each prepayment date with respect to the prepayment of any
Term Borrowing in respect of which the Borrower shall also be making a voluntary
prepayment of Tranche A Exchange Notes, the Borrower shall deliver to the Agent
for application pursuant to paragraph (a) above an amount equal to the Lenders'
Pro Rata Share of such prepaid amounts. On or before the delivery of all amounts
to be prepaid with respect to the Term Borrowings, the Borrower shall with
respect to the Pro Rata Share of such prepaid amounts attributable to the
Tranche A Exchange Notes give notice of such optional prepayment of such Pro
Rata Share pursuant to Section 5.2 of the Tranche A Exchange Note Purchase
Agreements (or the analogous provision, if any, in respect of the Tranche A
Exchange Note Refinancing Indebtedness). Pending payment to the Tranche A
Exchange Note Purchasers, the Borrower shall deposit the Pro Rata Share of such
prepaid amounts attributable to the Tranche A Notes in an escrow account with
the Collateral Agent pursuant to paragraph (f) below.
(e) At any time that (i) the Borrower shall elect to prepay both
Term Borrowings and Tranche A Exchange Notes pursuant to paragraph (d) above or
(ii) an offer notice is required to be delivered to the Tranche A Exchange Note
Purchasers pursuant to Section 2.13(d), the Borrower shall give (or cause to be
given) to the Agent an additional written notice (which notice shall be
included, as applicable, in the prepayment notice delivered pursuant to
paragraph (a) above or the Financial Officer's Certificate delivered pursuant to
Section 2.13(f)). Such written notice shall, (i) in the case of an optional
prepayment pursuant to paragraph (d) above, set forth a reasonably detailed
calculation of the amounts to be paid to the Lenders and the amounts to be paid
to the Tranche A Exchange Note Purchasers as contemplated in paragraph (d) above
and (ii) in the case of a notice relating to a Prepayment Event, describe in
reasonable detail the facts and circumstances giving rise to such Prepayment
Event and a reasonably detailed calculation of the Net Cash Proceeds therefrom
and the amounts to be paid to the Lenders and to be offered to the Tranche A
Exchange Note Purchasers in accordance with Section 2.13(d).
(f) If (i) any voluntary prepayment of Tranche A Exchange Notes is
to be made in connection with an optional prepayment of Term Borrowings pursuant
to paragraph (d) above or (ii) there is a prepayment in connection with any
Prepayment Event pursuant to Section 2.13(d), the Borrower will, concurrently
with any such prepayment under this Agreement, make effective provision whereby
the Tranche A Exchange Note Purchasers' Pro Rata Share of the related prepaid
amount, together with interest to the related prepayment date, is placed in
escrow with the Collateral Agent until the related prepayment date in respect of
the Tranche A Exchange Notes, whereupon such amounts shall be applied to the
prepayment of the Tranche A Exchange Notes or, in the case of amounts
attributable to rejected or deemed rejected offers as contemplated in Section
2.13(d), prepayments of (A) obligations outstanding under this Agreement and (B)
if applicable, Series I Tranche A Exchange Notes, in each case as contemplated
under Section 2.13(d).
(g) Except as contemplated in the definition of the term "Excess
Cash Flow", no optional prepayment of Term Borrowings made by the Borrower
pursuant to this Section 2.12 shall reduce the Borrower's obligation to make
mandatory prepayments pursuant to Section 2.13(d) or Section 2.13(e).
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34
SECTION 2.13. MANDATORY PREPAYMENTS. (a) On the date of any
termination or reduction of the Revolving Credit Commitments pursuant to Section
2.09, the Borrower shall pay or prepay so much of the Swingline Loans and
Revolving Credit Borrowings as shall be necessary in order that (i) the
aggregate principal amount of Swingline Loans and Revolving Loans outstanding at
such time will not exceed (ii) the aggregate Revolving Credit Commitments (after
giving effect to such termination or reduction and after giving effect to each
deemed reduction to the Revolving Credit Commitments in connection with the
making of a Swingline Loan) less the aggregate LC Exposure at such time.
(b) Substantially simultaneously with (and in any event not later
than the Business Day next following) the occurrence of a Prepayment Event, the
Borrower shall apply an amount equal to 100% of the Net Cash Proceeds therefrom
to prepay obligations outstanding under this Agreement and the outstanding
Tranche A Exchange Notes in accordance with paragraph (d) below.
(c) No later than the earlier of (i) 105 days after the end of each
fiscal year, commencing with the fiscal year ending on December 31, 1997, and
(ii) the date on which the financial statements with respect to such period are
delivered pursuant to Section 6.04(a), the Borrower shall apply an amount equal
to 50% of Excess Cash Flow for such period to prepay obligations outstanding
under this Agreement and the outstanding Tranche A Exchange Notes in accordance
with paragraph (d) below.
(d) Upon the occurrence of any event described in paragraph (b) or
(c) above, the Borrower shall (i) offer to pay to the Agent (for application to
the prepayment of obligations outstanding under this Agreement in accordance
with paragraph (e) below) an amount equal to the Lenders' Pro Rata Share of the
amount to be prepaid as a result of such event (such amount, the "Prepayment
Amount") and (ii) offer to prepay the Tranche A Exchange Notes in the manner set
forth in Section 5.3 of the Tranche A Exchange Note Purchase Agreements (or the
analogous provision, if any, in respect of any Tranche A Exchange Note
Refinancing Indebtedness) in an amount equal to the Pro Rata Share of the
Prepayment Amount attributable to the Tranche A Exchange Notes. If any Series I
Tranche A Exchange Note Purchaser rejects or is deemed to reject (as provided in
Section 5.3 of the Tranche A Exchange Note Purchase Agreements (or the analogous
provision, if any, in respect of any Tranche A Exchange Note Refinancing
Indebtedness)) such offer, then on the related date for payment the Collateral
Agent shall (i) allocate such Series I Tranche A Exchange Note Purchaser's share
of such Net Cash Proceeds pro rata between the Series II Tranche A Exchange
Notes and the Term Loans and (ii) offer to apply such pro rata amount to (A) the
prepayment of Series II Tranche A Exchange Notes in the manner set forth in
Section 5.3 of the Tranche A Exchange Note Purchase Agreements (or the analogous
provision, if any, in respect of any Tranche A Exchange Note Refinancing
Indebtedness) and (B) to the prepayment of obligations outstanding under this
Agreement in accordance with paragraphs (e) and (f) below.
(e) Mandatory prepayments of outstanding obligations under this
Agreement made by the Borrower pursuant to paragraphs (b) and (c) above shall be
applied, subject to paragraph (h) below, FIRST, to prepay scheduled payments of
principal due on the Term Borrowings under Section 2.11(a) after the date of
such prepayment in the manner described in the immediately following sentence
and SECOND, following the payment in full of all Term Loans, permanently to
reduce Swingline Loans, Revolving Loans and the Revolving Credit Commitments.
Each such mandatory prepayment of principal of the Term Borrowings shall be
applied to reduce the scheduled payments of principal due under Section 2.11(a)
after the date of such prepayment (i) in the case of mandatory prepayments
described in clause (c) of the definition of the term "Prepayment Event", in the
inverse order of maturity and (ii) in the case of mandatory
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35
prepayments described in paragraph (c) above, all other Prepayment Events and
any prepayment pursuant to paragraph (h) below, pro rata.
(f) The Borrower shall deliver to the Agent, (i) at the time of each
prepayment required under paragraph (b) or paragraph (c) of this Section 2.13, a
certificate signed by a Financial Officer of the Borrower setting forth in
reasonable detail the calculation of the amount of such prepayment and (ii) at
least three Business Days prior to the time of each prepayment required under
this Section 2.13 (if known at such time), a notice of such prepayment. In the
case of a prepayment pursuant to paragraph (d) above, such officer's certificate
shall also set forth the information required to be included therein pursuant to
Section 2.12(e)(ii). Each required notice of prepayment shall specify the
prepayment date, whether the related prepayment relates solely to obligations
under this Agreement or if it also relates to outstanding Tranche A Exchange
Notes, the Type of each Borrowing being prepaid, the principal amount of each
Borrowing (or portion thereof) to be prepaid and, if outstanding Tranche A
Exchange Notes are to be prepaid, the principal amount of such outstanding
Tranche A Exchange Notes (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such obligations by the
amount stated therein on the date stated therein. All prepayments of Borrowings
and Swingline Loans under this Section 2.13 shall be subject to Section 2.16,
but shall otherwise be without premium or penalty. All prepayments of Borrowings
and Swingline Loans under this Section 2.13 (other than prepayments pursuant to
paragraph (c) above) shall be accompanied by accrued interest on the principal
amount being prepaid to but excluding the date of payment. All prepayments of
Borrowings and Swingline Loans pursuant to paragraph (c) of this Section 2.13
shall be applied first to the payment of accrued interest and then to the
payment of principal.
(g) Net Cash Proceeds and such other amounts to be applied pursuant
to this Section 2.13 to the prepayment of Term Borrowings and Revolving Credit
Borrowings shall be applied, as applicable, first to reduce outstanding ABR Term
Borrowings and ABR Revolving Credit Borrowings. Any amounts remaining after each
such application shall, at the option of the Borrower, be applied to prepay
Eurodollar Term Borrowings or Eurodollar Revolving Credit Borrowings, as the
case may be, immediately or shall be deposited in the Prepayment Account (as
defined below). The Agent shall apply any cash deposited in the Prepayment
Account (i) allocable to Term Borrowings to prepay Eurodollar Term Borrowings
and (ii) allocable to Revolving Credit Borrowings to prepay Eurodollar Revolving
Credit Borrowings, in each case on the last day of their respective Interest
Periods (or, at the direction of the Borrower, on any earlier date) until all
outstanding Term Borrowings or Revolving Credit Borrowings, as the case may be,
have been prepaid or until all the allocable cash on deposit with respect to
such Borrowings has been exhausted. For purposes of this Agreement, "Prepayment
Account" shall mean an account established by the Borrower with the Agent and
over which the Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph
(g). The Agent will, at the request of the Borrower, invest amounts on deposit
in the Prepayment Account in Permitted Investments maturing prior to the last
day of the applicable Interest Periods of the Eurodollar Term Borrowings or
Eurodollar Revolving Credit Borrowings to be prepaid, as the case may be;
PROVIDED, HOWEVER, that (i) the Agent shall not be required to make any
investment that, in its sole judgment, would require or cause the Agent to be
in, or would result in any, violation of any law, statute, rule or regulation
and (ii) the Agent shall have no obligation to invest amounts on deposit in the
Prepayment Account if a Default or Event of Default shall have occurred and be
continuing. The Borrower shall indemnify the Agent for any losses relating to
the investments so that the amount available to prepay Eurodollar Borrowings on
the last day of the applicable Interest Periods is not less than the amount that
would have been available had no investments been made pursuant thereto. Other
than any interest earned on such investments, the Prepayment Account shall not
bear interest. Interest or profits, if any, on such investments shall be
deposited in the Prepayment Account and reinvested as specified
<PAGE>
36
above. If the maturity of the Loans has been accelerated pursuant to Article
VIII, the Agent may, in its sole discretion, apply all amounts on deposit in the
Prepayment Account to satisfy any of the Obligations. The Borrower hereby grants
to the Agent, for its benefit and the benefit of the Fronting Bank, the
Swingline Lender and the Lenders, a security interest in the Prepayment Account.
(h) Any Term Lender may, subject to the following sentence, elect by
notice to the Agent in writing or by telecopy (or by telephone promptly
confirmed in writing or by telecopy) at least one Business Day prior to any
prepayment of Term Loans required to be made by the Borrower for the account of
such Lender pursuant to this Section 2.13, to decline all or a portion of such
prepayment (including any amount rejected by any Series I Tranche A Exchange
Note Purchaser and offered to such Term Lender pursuant to paragraph (d) above)
and, under such circumstances, the Borrower shall retain all amounts (such
amounts, together with all amounts declined by the Series II Tranche A Exchange
Note Purchasers pursuant to Section 5.3(c) of the Tranche A Exchange Note
Purchase Agreements, the "Declined Amounts") that would otherwise be used to
repay Term Loans pursuant thereto. In the event that any portion of the Declined
Amounts has not been invested in assets used in the principal lines of business
of the Borrower or its subsidiaries or used by the Borrower to make an optional
prepayment pursuant to Section 2.12 during the one-year period after such
Declined Amounts were so declined, the Borrower shall be required, on the last
day of such one-year period, to apply an amount equal to 100% of the remaining
portion of such Declined Amounts in accordance with paragraph (d) above to the
same extent as if such Declined Amounts constituted a mandatory prepayment
pursuant to paragraph (b) or (c) above, PROVIDED that (i) any amounts declined
by the Series I Tranche A Exchange Note Purchasers shall be allocated pro rata
between the Term Lenders and the Series II Tranche A Exchange Note Purchasers
and (ii) no Term Lender and no Series II Tranche A Exchange Note Purchasers
shall be entitled to decline to accept any such mandatory prepayment. The
provisions of this Section 2.13 are subject to the Intercreditor Agreement as
long as any Tranche A Exchange Notes are outstanding.
SECTION 2.14. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any
Letter of Credit reimbursement obligations, Fees or other amount payable
hereunder (other than changes in respect of income and franchise taxes imposed
on such Lender by the jurisdiction in which such Lender is organized or has its
principal office or by any political subdivision or taxing authority thereof or
therein), or shall impose, modify, or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by such Lender (except any such reserve
requirement that is reflected in the Adjusted LIBO Rate or in the Alternate Base
Rate) or shall impose on such Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or
any Letter of Credit issued hereunder, and the result of any of the foregoing
shall be to increase the cost to such Lender of making or maintaining any
Eurodollar Loan or increase the cost to any Lender of issuing or maintaining any
Letter of Credit or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise) by an amount
deemed by such Lender to be material, then the Borrower will pay to such Lender
following receipt of a certificate of such Lender to such effect in accordance
with Section 2.14(c) such additional amount or amounts as will compensate such
Lender for such additional costs incurred or reduction suffered.
<PAGE>
37
(b) If any Lender, the Swingline Lender or the Fronting Bank shall
have determined that the applicability of any law, rule, regulation, agreement
or guideline adopted pursuant to or arising out of the July 1988 report of the
Basic Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards", or the
adoption after the date hereof of any other law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change in any of the foregoing or
in the interpretation or administration of any of the foregoing by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender), the Swingline Lender or the Fronting Bank or any
Lender's, the Swingline Lender's or the Fronting Bank's holding company with any
request or directive regarding capital adequacy issued under any law, rule,
regulation or guideline (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's, the Swingline Lender's or the
Fronting Bank's capital or on the capital of such Lender's, the Swingline
Lender's or the Fronting Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by such Lender, the Swingline Loans made by the
Swingline Lender or the Letters of Credit issued by the Fronting Bank pursuant
hereto to a level below that which such Lender, the Swingline Lender or the
Fronting Bank or such Lender's, the Swingline Lender's or the Fronting Bank's
holding company could have achieved but for such applicability, adoption, change
or compliance (taking into consideration such Lender's, the Swingline Lender's
or the Fronting Bank's policies and the policies of such Lender's, the Swingline
Lender's or the Fronting Bank's holding company with respect to capital
adequacy) by an amount deemed by such Lender, the Swingline Lender or the
Fronting Bank to be material, then from time to time the Borrower shall pay to
such Lender, the Swingline Lender or the Fronting Bank following receipt of a
certificate of such Lender, the Swingline Lender or the Fronting Bank to such
effect in accordance with Section 2.14(c) such additional amount or amounts as
will compensate such Lender, the Swingline Lender or the Fronting Bank or such
Lender's, the Swingline Lender's or the Fronting Bank's holding company for any
such reduction suffered. Notwithstanding any other provision in this paragraph
(b), none of any Lender, the Swingline Lender or the Fronting Bank shall be
entitled to demand compensation pursuant to this paragraph (b) if it shall not
be the general practice of such Lender, the Swingline Lender or the Fronting
Bank, as applicable, to demand such compensation in similar circumstances under
comparable provisions of other comparable credit agreements.
(c) A certificate of each Lender, the Swingline Lender or the
Fronting Bank setting forth such amount or amounts as shall be necessary to
compensate such Lender, the Swingline Lender or the Fronting Bank or its holding
company as specified in paragraph (a) or (b) above, as the case may be, and
setting forth in reasonable detail an explanation of the basis of requesting
such compensation in accordance with paragraph (a) or (b) above, shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay each Lender, the Swingline Lender or the Fronting Bank the
amount shown as due on any such certificate delivered by it within 10 days after
its receipt of the same.
(d) Failure on the part of any Lender, the Swingline Lender or the
Fronting Bank to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on capital with respect to
any period shall not constitute a waiver of such Lender's, the Swingline
Lender's or the Fronting Bank's right to demand compensation with respect to
such period or any other period, except that none of any Lender, the Swingline
Lender or the Fronting Bank shall be entitled to compensation under this Section
2.14 for any costs incurred or reductions suffered with respect to any date
unless such Lender, the Swingline Lender or the Fronting Bank, as applicable,
shall have notified the Borrower that it will demand compensation for such costs
or reductions under paragraph (c) above not more than six months after the later
of (i) such date and (ii) the date on which such Lender, the Swingline Lender or
the
<PAGE>
38
Fronting Bank, as applicable, shall have become aware of such costs or
reductions. The protection of this Section 2.14 shall be available to each
Lender, the Swingline Lender or the Fronting Bank regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition that shall have occurred or been imposed.
(e) Each Lender will, at the request of the Borrower, designate a
different lending office if such designation (i) will avoid the need for, or
minimize the amount of, any compensation to which such Lender is entitled
pursuant to this Section 2.14 and (ii) will not, in the sole judgment of such
Lender, be otherwise disadvantageous to such Lender.
(f) With respect to any Lender that is entitled to any compensation
pursuant to paragraph (a) above, the Borrower shall have the right to elect by
notice to such Lender that all outstanding Eurodollar Loans made by such Lender
be automatically converted to ABR Loans as of the effective date of such notice
and that any requests thereafter by the Borrower for a Eurodollar Borrowing
shall, as to such Lender only, be deemed a request for an ABR Loan.
SECTION 2.15. CHANGE IN LEGALITY. (a) Notwithstanding any other
provision herein, if after the date hereof any change in any law or regulation
or in the interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by
such Lender hereunder, whereupon any request by the Borrower for a
Eurodollar Borrowing shall, as to such Lender only, be deemed a request
for an ABR Loan unless such declaration shall be subsequently withdrawn;
and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last
day of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.16. INDEMNITY. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any failure by the Borrower to fulfill on the date of any
borrowing hereunder the applicable conditions set forth in Article V, (b) any
failure by the Borrower to borrow or to refinance, convert or continue any Loan
hereunder after irrevocable notice of such borrowing, refinancing, conversion or
continuation has been given pursuant to Section 2.03 or 2.10, (c) any payment,
prepayment or conversion of a Eurodollar Loan required by any other provision of
this Agreement or otherwise made or deemed made on a date other than the last
day of the Interest Period applicable thereto, (d) any default in payment or
prepayment of the principal amount of any Loan or any part thereof
<PAGE>
39
or interest accrued thereon, as and when due and payable (at the due date
thereof, whether by scheduled maturity, acceleration, irrevocable notice of
prepayment or otherwise) or (e) the occurrence of any Event of Default,
including, in each such case, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to effect or maintain such Loan or any part thereof
as a Eurodollar Loan. Such loss or reasonable expense shall be equal to the sum
of (a) such Lender's actual costs and expenses incurred (other than any lost
profits) in connection with, or by reason of, any of the foregoing events and
(b) an amount equal to the excess, if any, as reasonably determined by such
Lender of (i) its cost of obtaining the funds for the Loan being paid, prepaid,
converted or not borrowed, converted or continued (assumed to be the Adjusted
LIBO Rate applicable thereto) for the period from and including the date of such
payment, prepayment, conversion or failure to borrow, convert or continue to but
excluding the last day of the Interest Period for such Loan (or, in the case of
a failure to borrow, convert or continue, the Interest Period for such Loan that
would have commenced on the date of such failure) over (ii) the amount of
interest (as reasonably determined by such Lender) that would be realized by
such Lender in reemploying the funds so paid, prepaid, converted or not
borrowed, converted or continued for such period or Interest Period, as the case
may be. A certificate of any Lender setting forth in reasonable detail any
amount or amounts that such Lender is entitled to receive pursuant to this
Section 2.16 shall be delivered to the Borrower and shall be conclusive absent
manifest error.
SECTION 2.17. PRO RATA TREATMENT. Except as required under Section
2.15, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the Commitment Fees, each
payment of the LC Fees, each reduction of the Term Loan Commitments or the
Revolving Credit Commitments and each refinancing of any Borrowing with,
conversion of any Borrowing to or continuation of any Borrowing as a Borrowing
of any Type shall be allocated pro rata among the Lenders in accordance with
their respective applicable Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal amounts
of their applicable outstanding Loans). Each Lender agrees that in computing
such Lender's portion of any Borrowing to be made hereunder, the Agent may, in
its discretion, round each Lender's percentage of such Borrowing, computed in
accordance with Section 2.01, to the next higher or lower whole dollar amount.
SECTION 2.18. SHARING OF SETOFFS. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, or pursuant to a claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency, or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans or LC
Exposure as a result of which the unpaid principal portion of its Loans or its
LC Exposure shall be proportionately less than the unpaid principal portion of
the Loans of any other Lender or any other Lender's LC Exposure, such Lender
shall be deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for, a
participation in the Loans of such other Lender or the LC Exposure of such other
Lender, so that the aggregate unpaid principal amount of the Loans, LC Exposures
and participations in Loans and LC Exposures held by each Lender shall be in the
same proportion to the aggregate unpaid principal amount of all Loans and LC
Exposures then outstanding as the principal amount of such Lender's Loans and LC
Exposures prior to such exercise of banker's lien, setoff or counterclaim or
other event was to the principal amount of all Loans and LC Exposures
outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; PROVIDED, HOWEVER, that, if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.18 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded
<PAGE>
40
to the extent of such recovery and the purchase price or prices or adjustment
restored without interest. The Borrower expressly consents to the foregoing
arrangements and agrees that any Lender holding a participation in a Loan or LC
Exposure deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower to such Lender by reason thereof as fully as if such Lender had
made a Loan directly to the Borrower in the amount of such participation.
SECTION 2.19. PAYMENTS. (a) Except as provided in Sections 2.05(d),
the Borrower shall make each payment (including principal of or interest on any
Borrowing or any Fees or other amounts but excluding payments in respect of
Swingline Loans) hereunder and under any other Loan Document not later than
12:00 noon, New York City time, on the date when due in dollars to the Agent
(for the account of the Agent, the Fronting Bank or the Lenders, as the case may
be), at its offices at 270 Park Avenue, New York, New York, in immediately
available funds. The Agent shall promptly remit in dollars to the Agent, the
Fronting Bank or the Lenders, as the case may be, its share of such payments
received by the Agent.
(b) The Borrower shall make each payment in respect of Swingline
Loans not later than 12:00 noon, New York City time, on the date when due to the
Swingline Lender at its offices at 270 Park Avenue, New York, New York.
(c) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. TAXES. (a) Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 2.19, free and clear of and
without deduction for any and all current or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
EXCLUDING taxes imposed on the net income of the Agent, the Fronting Bank, the
Swingline Lender or any Lender (or any transferee or assignee thereof, including
a participation holder (any such entity being called a "Transferee")) and
franchise taxes imposed on the Agent, the Fronting Bank, the Swingline Lender or
any Lender (or Transferee) by the United States or any jurisdiction under the
laws of which the Agent, the Fronting Bank, the Swingline Lender or any such
Lender (or Transferee) is organized or has its principal office or lending
office or any political subdivision or taxing authority thereof or therein (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Taxes are required
to be deducted from or in respect of any sum payable hereunder to any Lender (or
any Transferee), the Agent, the Swingline Lender or the Fronting Bank, (i) the
sum payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.20) such Lender (or Transferee), the Agent, the Swingline
Lender or the Fronting Bank (as the case may be) shall receive an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deduction, and (iii) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other Governmental Authority
in accordance with applicable law; PROVIDED, HOWEVER, that no Transferee of any
Lender shall be entitled to receive any greater payment under this paragraph (a)
than such Lender would have been entitled to receive with respect to the rights
assigned, participated or otherwise transferred unless such assignment,
participation or transfer shall have been made at a time when the circumstances
giving rise to such greater payment did not exist.
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(b) In addition, the Borrower agrees to pay any current or future
stamp, intangible or documentary taxes or any other excise or property taxes,
charges or similar levies (including mortgage recording taxes and similar fees),
together with interest, penalties and fees, that arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement, any Assignment and Acceptance entered into at the
request of the Borrower or any other Loan Document (hereinafter referred to as
"Other Taxes").
(c) The Borrower will indemnify each Lender (or Transferee), the
Agent, the Swingline Lender and the Fronting Bank for the full amount of Taxes
and Other Taxes paid by such Lender (or Transferee), the Agent, the Swingline
Lender or the Fronting Bank, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Lender (or
Transferee), the Agent, the Swingline Lender or the Fronting Bank, as the case
may be, makes written demand therefore. If a Lender (or Transferee), the Agent,
the Swingline Lender or the Fronting Bank shall become aware that it is entitled
to receive a refund in respect of Taxes or Other Taxes as to which it has been
indemnified by the Borrower pursuant to this Section 2.20, it shall promptly
notify the Borrower of the availability of such refund and shall, within 30 days
after receipt of a request by the Borrower, apply for such refund at the
Borrower's expense. If any Lender (or Transferee), the Agent, the Swingline
Lender or the Fronting Bank receives a refund in respect of any Taxes or Other
Taxes as to which it has been indemnified by the Borrower pursuant to this
Section 2.20, it shall promptly notify the Borrower of such refund and shall,
within 15 days of receipt, repay such refund to the Borrower, net of all
out-of-pocket expenses of such Lender, the Agent, the Swingline Lender or the
Fronting Bank and without any interest (other than the interest, if any,
included in such refund); PROVIDED, HOWEVER, that the Borrower, upon the request
of such Lender (or Transferee), the Agent, the Swingline Lender or the Fronting
Bank, agrees to return such refund (plus penalties, interest or other charges)
to such Lender (or Transferee), the Agent, the Swingline Lender or the Fronting
Bank in the event such Lender (or Transferee), the Agent, the Swingline Lender
or the Fronting Bank is required to repay such refund. Nothing contained in this
paragraph (c) shall require any Lender (or Transferee), the Agent, the Swingline
Lender or the Fronting Bank to make available any of its tax returns (or any
other information relating to its taxes that it deems to be confidential).
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender (or
Transferee), the Agent, the Swingline Lender or the Fronting Bank, the Borrower
will furnish to the Agent, at its address referred to in Section 10.01, the
original or a certified copy of a receipt evidencing payment thereof or other
evidence reasonably satisfactory to such Lender (or Transferee), the Agent, the
Swingline Lender or the Fronting Bank, as the case may be.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.20
shall survive the payment in full of the principal of and interest hereunder or
any Loan Document.
(f) Each Lender (or Transferee) or successor Fronting Bank that is
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "Non-U.S. Lender") shall deliver to
the Borrower and the Agent two copies of either United States Internal Revenue
Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming
exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. lender
delivers a Form W-8, a certificate
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42
representing that such Non-U.S. Lender is not a bank for purposes of Section
881(c) of the Code, is not a 10-percent shareholder (within the meaning of
Section 872(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 Non-U.S. Lender
claiming complete exemption from U.S. Federal withholding tax on payments of
interest by the Borrower under this Agreement and the other Loan Documents. Such
forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement. Notwithstanding any provision of Section
2.20(a) to the contrary, the Borrower shall not have any obligation to pay any
Taxes or Other Taxes (except to the extent required by law) pursuant to Section
2.20 to the extent that such Taxes or Other Taxes result from (i) the failure of
any Lender (or Transferee), the Agent, the Fronting Bank or the Swingline Bank
to comply with its obligations pursuant to this Section 2.20(f) or (ii) any
representation made on Form 1001 or 4224 or successor applicable form on
certification by the Lender (or Transferee), the Agent, the Fronting Bank, or
the Swingline Bank incurring such Taxes or Other Taxes proving to have been
incorrect, false or misleading in any material respect when so made or deemed to
be made.
(g) Any of the Agent, the Fronting Bank, the Swingline Lender or any
Lender (or Transferee) claiming any additional amounts payable pursuant to this
Section 2.20 shall use reasonable efforts, consistent with legal and regulatory
restrictions (including reasonable efforts to change the jurisdiction of its
applicable lending office), to avoid the need for or reduce the amount of any
such additional amounts that may thereafter accrue, PROVIDED that such efforts
would not, in the sole determination of such Lender (or Transferee), Agent,
Fronting Bank, or Swingline Lender, as the case may be, be otherwise
disadvantageous to such Lender (or Transferee), the Agent, the Fronting Bank, or
the Swingline Lender.
SECTION 2.21. SWINGLINE LOANS. (a) On the terms and subject to the
conditions and relying upon the representations and warranties herein set forth,
the Swingline Lender agrees, at any time and from time to time from and
including the Closing Date to but excluding the earlier of the Revolving Credit
Maturity Date and the termination of the Revolving Credit Commitments, in
accordance with the terms hereof, to make Swingline Loans (which shall be ABR
Borrowings) to the Borrower in an aggregate principal amount at any time
outstanding not to exceed the lesser of (i) $5,000,000 and (ii) the difference
between (A) the lesser of (I) the aggregate Revolving Credit Commitments, as the
same may be reduced from time to time pursuant to Section 2.09, at such time and
(II) the LC Exposure at such time. Each Lender's Revolving Credit Commitment
shall be deemed utilized by an amount equal to such Lender's pro rata share
(based upon the percentage that such Lender's Revolving Credit Commitment bears
to the aggregate amount of the Revolving Loan Commitments on such date) of each
Swingline Loan. Immediately upon the making of each Swingline Loan, the
Swingline Lender shall be deemed to have sold and transferred to each Lender,
and each Lender shall be deemed to have purchased and received from the
Swingline Lender, in each case irrevocably and without any further action by any
party, an undivided interest and participation in such Swingline Loan and the
Obligations of the Borrower under this Agreement in respect thereof in an amount
equal to the pro rata share (determined as aforesaid) of such Swingline Loan.
Each Swingline Loan shall be in a principal amount that is an integral multiple
of $500,000 and shall be made available to the Borrower by means of a credit to
the general deposit account of the Borrower by 3:00 p.m. on the date such
Swingline Loan is requested to be made pursuant to paragraph (b) below. Within
the limits set forth in the first sentence of this paragraph, the Borrower may
borrow, pay or prepay and reborrow Swingline Loans on or after the Closing Date
and prior to the Revolving Credit Maturity Date on the terms and subject to the
conditions and limitations set forth herein.
(b) The Borrower shall give the Swingline Lender telephonic, written
or telecopy notice (in the case of telephonic notice, such notice shall be
promptly confirmed in writing or by
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telecopy) not later than 12:00 noon, New City time, on the day of a proposed
borrowing. Such notice shall be delivered on a Business Day, shall be
irrevocable and shall refer to this Agreement and shall specify the requested
date (which shall be a Business Day) and amount of such Swingline Loan. The
Swingline Lender shall give the Agent prompt written or telecopy advice of any
notice received from the Borrower pursuant to this paragraph (b).
(c) Forthwith upon demand by the Swingline Lender, each Lender shall
pay to the Agent, as payment for its participation, such Lender's pro rata
percentage (as determined in paragraph (a) above) of each outstanding Swingline
Loan (but without any requirement for compliance with the provisions of Sections
2.01, 2.02 and 2.03 or the applicable conditions set forth in Article V) and
shall make available to the Agent for the account of the Swingline Lender, in
the same day funds if the Swingline Lender makes such demand prior to 11:00
a.m., New York City time, and otherwise in funds available on the next Business
Day, the amount of its participation. If any Lender shall not have made such
amount available to the Agent, such Lender and the Borrower severally agree to
pay to the Agent forthwith on demand such amount together with interest thereon,
for each day from the date of demand by the Swingline Lender until the date such
amount is paid to the Agent at (i) in the case of the Borrower, the interest
rate applicable at such time under Section 2.06 to an ABR Revolving Loan and
(ii) in the case of such Lender, the Federal Funds Effective Rate. If such
Lender shall pay to the Agent such amount, such amount so paid shall constitute
such Lender's Revolving Credit Loan for purposes of this Agreement and the
aggregate amount of Swingline Loans outstanding shall be reduced by the amount
of each such Revolving Credit Loan (it being understood that (i) each Lender's
obligation to make such payment is absolute and unconditional and shall not be
affected by any event or circumstance whatsoever, including the occurrence of
any Default or Event of Default hereunder or the failure of any condition
precedent set forth in Article V to be satisfied, or any delay on the Swingline
Lender's part in demanding payment, and (ii) each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever).
ARTICLE III
Letters of Credit
SECTION 3.01. ISSUANCE OF LETTERS OF CREDIT. (a) The Fronting Bank
agrees, on the terms and subject to the conditions hereinafter set forth, to
issue Letters of Credit, in a form reasonably acceptable to the Agent and the
Fronting Bank, appropriately completed, for the account of the Borrower, at any
time and from time to time on and after the Closing Date until the earlier of
the LC Maturity Date and the termination of the LC Commitment in accordance with
the terms hereof; PROVIDED, HOWEVER, that any Letter of Credit shall be issued
by the Fronting Bank only if, and each request by the Borrower for the issuance
of any Letter of Credit shall be deemed a representation and warranty of the
Borrower that, immediately following the issuance of any such Letter of Credit,
(i) the LC Exposure shall not exceed the LC Commitment in effect at such time
and (ii) the Revolving Credit Utilization at such time shall not exceed the
aggregate Revolving Credit Commitments at such time.
(b) Each Letter of Credit shall expire at the close of business on
the earlier of the date that is 12 months after the date of issuance of such
letter of Credit and the LC Maturity Date, unless such Letter of Credit expires
by its terms on an earlier date. Each Letter of Credit shall provide for
payments of drawings in dollars.
(c) Each issuance of any Letter of Credit shall be made on at least
three Business Days' prior written or telecopy notice from the Borrower to the
Fronting Bank and the Agent
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(which shall give prompt notice thereof to each Participating Lender) specifying
the date of issuance, the date on which such Letter of Credit is to expire
(which shall comply with paragraph (b) above), the amount of such Letter of
Credit, the name and address of the beneficiary of such Letter of Credit and
such other information as may be necessary or desirable to complete such Letter
of Credit. The Fronting Bank will give the Agent and the Agent will give to each
Participating Lender reasonably prompt notice of the issuance and amount of each
Letter of Credit and the expiration of each Letter Of Credit.
SECTION 3.02. PARTICIPATIONS; UNCONDITIONAL OBLIGATIONS. (a) By the
issuance of a Letter of Credit and without any further action on the part of the
Fronting Bank or the Participating Lenders in respect thereof, the Fronting Bank
hereby grants to each Participating Lender, and each Participating Lender hereby
agrees to acquire from the Fronting Bank, a participation in such Letter of
Credit equal to such Participating Lender's Applicable Percentage of the face
amount of such Letter of Credit, effective upon the issuance of such Letter of
Credit. In addition, the Fronting Bank hereby grants to each Participating
Lender, and each Participating Lender hereby acquires from the Fronting Bank, a
participation in each Existing Letter of Credit equal to such Participating
Lender's Applicable Percentage of the face amount of such Existing Letter of
Credit effective on the Closing Date and the Borrower hereby acknowledges and
agrees that it shall be the account party under each Existing Letter of Credit
as though such Existing Letters of Credit were issued hereunder. In
consideration and in furtherance of the foregoing, each Participating Lender
hereby absolutely and unconditionally agrees to pay to the Agent, on behalf of
the Fronting Bank in accordance with Section 2.02(f), such Participating
Lender's Applicable Percentage of each LC Disbursement made by the Fronting
Bank; PROVIDED, HOWEVER, that the Participating Lenders shall not be obligated
to make any such payment to the Fronting Bank with respect to any wrongful
payment or disbursement made under any Outstanding Letter of Credit as a result
of the gross negligence or wilful conduct of the Fronting Bank.
(b) Each Participating Lender acknowledges and agrees that its
obligation to acquire participations pursuant to paragraph (a) of this Section
3.02 in respect of Letters of Credit is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including the occurrence and
continuance of an Event of Default or Default hereunder, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
SECTION 3.03. LC FEE. The Borrower agrees to pay to the Agent for
the account of the Participating Lenders for each calendar quarter (or shorter
period commencing with the date hereof or ending with the first date on which
the LC Commitment shall have expired or been terminated and there shall be no
Outstanding Letters of Credit) a fee (the "LC Fee") on the average daily amount
of the Outstanding Letters of Credit at a rate per annum equal to the LIBOR
Spread in effect for Revolving Loans at the beginning of such period. The LC Fee
shall be computed on the basis of the actual number of days elapsed over a year
of 360 days. The Agent agrees to disburse to each Participating Lender its pro
rata portion of such LC Fee promptly upon receipt. The LC Fee shall be paid in
arrears on the last day of March, June, September and December of each year and
on the Revolving Credit Maturity Date (or the first date on which the LC
Commitment shall have expired or been terminated and there shall be no
Outstanding Letters of Credit, if earlier), commencing on the first such date
following the Closing Date. Once paid, the LC Fee shall not be refundable in any
circumstances (other than corrections of error in payment).
SECTION 3.04. AGREEMENT TO REPAY LC DISBURSEMENTS. (a) If the
Fronting Bank shall pay any draft presented under a Letter of Credit, the
Borrower shall pay to the Agent, on behalf of the Fronting Bank an amount equal
to the amount of such draft before 11:00 a.m., New York City time, on the
Business Day on which the Fronting Bank shall have notified the
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45
Borrower that payment of such draft will be made (or such later time as is not
later than three hours after the Borrower shall have received such notice or, if
the Borrower shall have received such notice later than 2:00 p.m., New York City
time, on any Business Day, not later than 10:00 a.m., New York City Time, on the
immediately following Business Day). The Agent will promptly pay any such
amounts received by it to the Fronting Bank. In the event that, after the
payment of any such amount to the Fronting Bank, the Fronting Bank, shall not
pay such amount in respect of such draft, the Fronting Bank shall return to the
Agent, for the account of the Borrower, any such unpaid amount, together with
interest thereon accrued at the Federal Funds Effective Rate then in effect from
and including the date such amount was paid by the Borrower to the Agent to but
excluding the date such amount was repaid by the Fronting Bank to the Agent.
(b) The Borrower's obligation to repay the Fronting Bank for LC
Disbursements made by the Fronting Bank under the Outstanding Letters of Credit
shall be absolute, unconditional and irrevocable under any and all circumstances
and irrespective of the following:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right that
the Borrower or any other Person may at any time have against the
beneficiary under any Letter of Credit, the Fronting Bank, the Agent or
any other Lender (other than the defense of payment in full in accordance
with the terms of this Agreement or a defense based on the gross
negligence or wilful misconduct of the Fronting Bank) or any other Person
in connection with this Agreement or any other agreement or transaction;
(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect,
PROVIDED that payment by the Fronting Bank under such Letter of Credit
against presentation of such draft or document shall not have constituted
gross negligence or wilful misconduct of the Fronting Bank;
(iv) payment by the Fronting Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of such Letter of Credit, PROVIDED that such payment shall not have
constituted gross negligence or wilful misconduct of the Fronting Bank;
and
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing, PROVIDED that such other circumstance or
event shall not have been the result of gross negligence or wilful
misconduct of the Fronting Bank.
It is understood that in making any payment under a Letter of Credit
(A) the Fronting Bank's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever, and (B) any noncompliance in any immaterial respect of the
documents presented under a Letter of Credit with the terms thereof shall, in
each case, not be deemed wilful misconduct or gross negligence of the Fronting
Bank.
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46
SECTION 3.05. LETTER OF CREDIT OPERATIONS. The Fronting Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under an Outstanding Letter of Credit to
ascertain that the same appear on their face to be in conformity with the terms
and conditions of such Outstanding Letter of Credit. The Fronting Bank shall as
promptly as possible, but in no event later than two hours after such demand for
payment, give oral notification, confirmed by facsimile notice, to the Agent and
the Borrower of such demand for payment and shall as promptly as possible, but
in no event later than two hours prior to any payment in respect of such demand,
give oral notification, confirmed by facsimile notice, to the Agent and the
Borrower of the determination by the Fronting Bank as to whether such demand for
payment was in accordance with the terms and conditions of such Outstanding
Letter of Credit and whether the Fronting Bank has made or will make an LC
Disbursement thereunder, PROVIDED that the failure to give such notice shall not
relieve the Borrower of its obligation to reimburse the Fronting Bank with
respect to any such LC Disbursement, and the Agent shall promptly give each
Participating Lender notice thereof.
SECTION 3.06. CASH COLLATERALIZATION. If any Event of Default shall
occur and be continuing, the Borrower shall on the Business Day it receives
notice from the Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Participating Lenders holding participations in
Outstanding Letters of Credit representing at least 51% of the aggregate undrawn
amount of all Outstanding Letters of Credit) therefor, deposit in an account
with the Collateral Agent, for the benefit of the Participating Lenders, an
amount in cash equal to the LC Exposure as of such date. Such deposit shall be
held by the Collateral Agent as collateral for the payment and performance of
the Obligations. The Collateral Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits in Permitted Investments,
which investments shall be made at the option and sole discretion of the
Collateral Agent, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall (a) automatically be applied by the Agent to reimburse the
Fronting Bank for LC Disbursements, (b) be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time and
(c) if the maturity of the Loans has been accelerated (but subject to the
consent of Participating Lenders holding participations in Outstanding Letters
of Credit representing at least 51% of the aggregate undrawn amount of all
Outstanding Letters of Credit), such amount (to the extent not applied as
aforesaid) shall be applied to satisfy the Obligations. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of an
Event of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three Business Days after all Events of Default
have been cured or waived. The provisions of this Section 3.06 are subject to
the provisions of the Intercreditor Agreement as long as any Tranche A Exchange
Notes are outstanding.
SECTION 3.07. TERMINATION OF LC COMMITMENT. (a) The Borrower may
permanently terminate, or from time to time in part permanently reduce, the LC
Commitment, in each case upon at least three Business Days' prior written or
facsimile notice to the Agent and the Fronting Bank; PROVIDED that, after giving
effect to such termination or reduction, the LC Commitment shall not be less
than the LC Exposure at such time or greater than the aggregate Revolving Credit
Commitments at such time. The Borrower shall pay to the Agent for the account of
the Participating Lenders, on the date of such termination or reduction, the LC
Fees on the amount of the LC Commitment so terminated or reduced accrued to but
excluding the date of such termination or reduction.
(b) The LC Commitment shall be permanently reduced as provided in
Section 2.13(e).
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SECTION 3.08. FRONTING BANK FEES. (a) The Borrower shall pay to the
Fronting Bank, for its own account, such commissions, issuance fees, transfer
fees and other fees and charges in connection with the issuance or
administration of each Letter of Credit as the Borrower and the Fronting Bank
shall agree.
(b) The Borrower shall pay to the Fronting Bank, for its own
account, a fronting fee (the "Fronting Fee") on the average daily aggregate
maximum amount available to be drawn (assuming compliance with all conditions to
drawing) under all outstanding Letters of Credit at the rate of 0.20% per annum,
payable in arrears on the last day of each March, June, September and December
of each year and on the Revolving Credit Maturity Date (or the first date on
which the LC Commitment shall have expired or been terminated and there shall be
no Outstanding Letters of Credit, if earlier), commencing on the first such date
following the Closing Date. The Fronting Fee shall be computed on the basis of
the actual number of days elapsed over a year of 360 days.
SECTION 3.09. RESIGNATION OF REMOVAL OF FRONTING BANK. (a) The
Fronting Bank may resign at any time by giving 180 days' prior written notice to
the Agent, the Lenders and the Borrower, and may be removed at any time by the
Borrower by notice to the Fronting Bank, the Agent and the Lenders. Upon any
such resignation or removal, the Borrower shall (within 180 days after such
notice of resignation or removal) either appoint a Lender (with the consent of
such Lender) as successor, or terminate the unutilized LC Commitment; PROVIDED,
HOWEVER, that, if the Borrower elects to terminate the unutilized LC Commitment,
the Borrower may at any time thereafter that the Revolving Credit Commitments
are in effect reinstate by notice to the Agent and the Lenders the LC Commitment
in connection with the appointment of a successor Fronting Bank. Subject to
paragraph (b) below, upon the acceptance of any appointment as Fronting Bank
hereunder by a successor Fronting Bank, such successor shall succeed to and
become vested with all the interests, rights and obligations of the retiring
Fronting Bank and the retiring Fronting Bank shall be discharged from its
obligations to issue additional Letters of Credit hereunder. At the time such
removal or resignation shall become effective, the Borrower shall pay all
accrued and unpaid fees pursuant to Section 2.05(d). The acceptance of any
appointment as Fronting Bank hereunder by a successor Fronting Bank shall be
evidenced by an agreement entered into by such successor, in a form satisfactory
to the Borrower and the Agent, and, from and after the effective date of such
agreement, (i) such successor shall be a party hereto and have all the rights
and obligations of the Fronting Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the
"Fronting Bank" shall be deemed to refer to such successor or to any previous
Fronting Bank, or to such successor and all previous Fronting Banks, as the
context shall require.
(b) After the resignation or removal of the Fronting Bank hereunder,
the retiring Fronting Bank shall remain a party hereto and shall continue to
have all the rights and obligations of the Fronting Bank under this Agreement
and the other Loan Documents with respect to Letters of Credit issued by it
prior to such resignation or removal, but shall not be required to issue
additional Letters of Credit.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders, the
Agent, the Swingline Lender and the Fronting Bank that:
SECTION 4.01. ORGANIZATION; POWERS. Each of the Borrower, TAFSI and
the Guarantors (a) is a corporation duly, organized, validly existing and in
good standing under the laws of the State of Delaware, (b) has all requisite
power and authority to own its property and assets and to carry on its business
as now conducted and as proposed to be conducted, (c) is qualified to do
business and in good standing in every jurisdiction where such qualification is
required (after giving effect to the Recapitalization), except where the failure
so to qualify or be in good standing would not result in a Material Adverse
Effect and (d) has the corporate power and authority to execute, deliver and
perform its obligations under each of the Transaction Documents and each other
agreement or instrument contemplated thereby to which it is or will be a party
and, in the case of Borrower, to borrow hereunder.
SECTION 4.02. AUTHORIZATION. The execution, delivery and performance
by the Borrower, each Guarantor and TAFSI, as applicable, of each of the
Transaction Documents to which it is a party, the borrowings hereunder, the
creation of the security interests contemplated by the Security Documents and
the other transactions contemplated by the Transaction Documents (including (x)
the Recapitalization and (y) the agreements executed and delivered in connection
with the offering of and the issuance by the Borrower of its Tranche A Exchange
Notes and Subordinated Notes) (all the foregoing, collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation, other than any law, statute, rule or
regulation, the violation of which will not result in a Material Adverse Effect,
or of the certificate of incorporation or other constitutive documents or
by-laws of the Borrower, either Guarantor or TAFSI, (B) any order of any
Governmental Authority or (C) any provision of any material indenture, agreement
or other instrument to which the Borrower, either Guarantor or TAFSI is a party
or by which either of them or any of their property (including the Mortgaged
Properties) or assets is or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or (iii) result
in the creation or imposition of any Lien (other than any Lien created under the
Security Documents) upon or with respect to any property or assets now owned or
hereafter acquired by the Borrower, either Guarantor or TAFSI.
SECTION 4.03. ENFORCEABILITY. This Agreement has been duly executed
and delivered by the Borrower and constitutes, and each other Transaction
Document to which the Borrower, each Guarantor or TAFSI is a party when executed
and delivered by it will constitute, a legal, valid and binding obligation of
the Borrower, such Guarantor or TAFSI, as the case may be, enforceable against
it in accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
SECTION 4.04. GOVERNMENTAL APPROVALS. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority by either Guarantor, TAFSI or the Borrower is or will be required in
connection with the Transactions, except such as have been made or obtained and
are in full force and effect and other than filings, recordings and approvals
(i) to record deeds and leases with respect to real properties, (ii) to record
and/or
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perfect the security interest created by the Security Documents, (iii) to record
a leasehold memorandum, if currently unrecorded, in respect of any leasehold
interest to which a Leasehold Mortgage relates and (iv) that are not material to
the Borrower, either Guarantor or TAFSI individually or in the aggregate.
SECTION 4.05. FINANCIAL STATEMENTS. (a) The unaudited pro forma
consolidated balance sheet of the Borrower and its subsidiaries as of December
31, 1996 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies
of which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the Transactions
(including the Recapitalization and the Borrowings under this Agreement
contemplated to be made on the Closing Date) and (ii) the payment of fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet has been
prepared based on the assumptions used to prepare the pro forma financial
information contained in the Confidential Information Memorandum, is based on
the best information available to the Borrower as of the date of delivery
thereof, and presents fairly on a pro forma basis the estimated consolidated
financial position of the Borrower and its subsidiaries as of December 31, 1996,
assuming that the events specified in the preceding sentence had actually
occurred at December 31, 1996.
(b) The Borrower has heretofore furnished to the Lenders its
consolidated and consolidating balance sheets and related statements of
operations, stockholders' equity and cash flows as of and for the fiscal years
ended December 31, 1996, 1995 and 1994, audited by and accompanied by the
opinion of Price Waterhouse, independent public accountants. Such financial
statements present fairly the financial condition and results of operations and
cash flows of the Borrower and its consolidated subsidiaries as of such dates
and for such periods. Such financial statements and the notes thereto disclose
all material liabilities required under GAAP to be disclosed, direct or
contingent, of the Borrower and its consolidated subsidiaries as of the dates
thereof. Such financial statements were prepared in accordance with GAAP applied
on a consistent basis.
SECTION 4.06. NO MATERIAL ADVERSE CHANGE. There has been no material
adverse change in the business, assets, operations, properties, financial
condition, contingent liabilities, prospects or material agreements of the
Borrower and its subsidiaries, taken as a whole, since December 31, 1996.
SECTION 4.07. TITLE TO PROPERTIES; POSSESSION UNDER LEASES. (a)
After giving effect to the consummation of the Transactions on the Closing Date,
each of the Borrower, the Guarantors and TAFSI will have good and marketable
title to, or valid leasehold interests in, all its material properties and
assets (including, in the case of the Guarantors, all Mortgaged Property); all
such material properties and assets shall be free and clear of Liens, other than
Liens expressly permitted by Section 7.02; and, except for leases of Mortgaged
Properties set forth on Schedule 7.02, no material portion of any Mortgaged
Property shall be subject to any lease, license, sublease or other agreement
granting to any Person any right to use, occupy, or enjoy the same.
(b) Except as set forth on Schedule 4.07(b), after giving effect to
the consummation of the Transactions on the Closing Date, each Guarantor shall
have complied with all material obligations under all material leases to which
such Guarantor shall then be a party, and all such leases shall be in full force
and effect; each Guarantor shall enjoy peaceful and undisturbed possession under
all such material leases under which it is tenant. Neither the Borrower nor
TAFSI is a party to any lease.
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(c) Except as set forth on Schedule 4.07(c), neither the Borrower
nor any Guarantor has received any notice of, or has any knowledge of, any
pending or contemplated condemnation proceeding affecting the Mortgaged
Properties or any sale or disposition thereof in lieu of condemnation.
(d) Neither the Borrower nor either Guarantor is obligated under any
right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
SECTION 4.08. SUBSIDIARIES. As of the Closing Date and after giving
effect to the Recapitalization (a) the Borrower has no subsidiaries other than
the Guarantors and TAFSI and (b) none of the Guarantors or TAFSI has any
subsidiaries.
SECTION 4.09. LITIGATION; COMPLIANCE WITH LAWS. (a) Except as set
forth on Schedule 4.09, there are no actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower, either
Guarantor or TAFSI or any business, property (including the network of
Truckstops operated by the Borrower's subsidiaries), assets or rights of any
such Person (i) that involve any Transaction Document or the Transactions or
(ii) as to which there is a reasonable possibility of an adverse determination
and which, if adversely determined, could, individually or in the aggregate,
result in a Material Adverse Effect.
(b) None of the Borrower, the Guarantors or TAFSI, nor any of their
respective material properties or assets, are in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate any material law, rule, regulation or statute (including any
zoning, building, Environmental and Safety Law, ordinance, code or approval or
any building permits) or any restrictions of record or agreements affecting the
Mortgaged Property or are in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect.
The issuance of the Letters of Credit will not violate any applicable law or
regulation or violate or be prohibited by any judgment, writ, injunction, decree
or order of any Governmental Authority, where such violation would have a
Material Adverse Effect.
(c) Certificates of occupancy and permits are in effect for 80% of
the aggregate value of the Mortgaged Properties, as currently constructed.
SECTION 4.10. AGREEMENTS. After giving effect to the
Recapitalization and the Transactions, none of the Borrower, the Guarantors or
TAFSI is in default in any manner under any provision of any indenture or other
agreement or instrument evidencing Indebtedness, or any other material agreement
or instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 4.11. FEDERAL RESERVE REGULATIONS. (a) None of the Borrower,
the Guarantors or TAFSI is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Letter of Credit or any Loan or
Swingline Loan will be used by the Borrower, any Guarantor or TAFSI, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to buy or carry Margin Stock or to extend credit to others for the purpose of
buying or carrying Margin Stock or to refund indebtedness originally incurred
for such purpose or (ii) for any purpose that entails a violation of, or is
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51
inconsistent with, the provisions of the Regulations of the Board, including
Regulations G, U and X.
SECTION 4.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. None of the Borrower, the Guarantors or TAFSI (a) is an "investment
company" as defined in, or is subject to regulation under, the Investment
Company Act of 1940 or (b) is a "holding company" as defined in, or is subject
to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 4.13. USE OF PROCEEDS. The Borrower will use the Letters of
Credit and the proceeds of the Loans and any Swingline Loans only for the
purposes specified in the preamble to this Agreement.
SECTION 4.14. TAX RETURNS. Each of the Borrower, TAFSI and the
Guarantors has filed or caused to be filed all material Federal, state and local
tax returns required to have been filed by it or with respect to it and has paid
or caused to be paid all taxes shown to be due and payable on such returns or on
any assessments received by it or with respect to it, except taxes that are
being contested in good faith by appropriate proceedings and for which the
Borrower, TAFSI or such Guarantor shall have set aside on its books adequate
reserves in accordance with GAAP. Each of the Borrower, TAFSI and the Guarantors
has filed or made adequate provision in accordance with GAAP on its books for
any material taxes payable by it in connection with the Transactions.
SECTION 4.15. NO MATERIAL MISSTATEMENTS. The information provided by
or on behalf of the Borrower and contained in the Confidential Offering
Memorandum (including all attachments and exhibits thereto), as supplemented,
and as supplemented further by information heretofore provided in writing by or
on behalf of the Borrower to the Lenders (including the Offering Memorandum),
when taken as a whole, was, as of the date of the Confidential Offering
Memorandum, the dates otherwise specified therein or the dates upon which such
information was provided in writing, accurate in all material respects and does
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading, PROVIDED
that (a) the statements therein describing documents and agreements are
summaries only and as such are qualified in their entirety by reference to such
documents and agreements, (b) to the extent any such information therein was
based upon or constitutes a forecast or projection, the Borrower represents only
that it acted in good faith and utilized reasonable assumptions, due and careful
consideration and the best information known to it at the time in the
preparation of such information and (c) as to the information that is specified
as having been supplied by third parties other than Affiliates of the Borrower,
the Borrower represents only that it is not aware of any material misstatement
therein or omission therefrom.
SECTION 4.16. EMPLOYEE BENEFIT PLANS. Each of the Borrower, the
Guarantors, TAFSI and their ERISA Affiliates is in compliance in all material
respects with the applicable provisions of ERISA and the regulations and
published interpretations thereunder. No Reportable Event has occurred, been
waived or exists as to which the Borrower, either Guarantor, TAFSI or any ERISA
Affiliate was or is required to file a report with the PBGC, and the present
value of all benefit liabilities under each Plan (based on those assumptions
used to fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed by more than $2,000,000 the value of the assets of such Plan.
None of the Borrower, the Guarantors, TAFSI or any ERISA Affiliate has incurred
any Withdrawal Liability that could result in a Material Adverse Effect. None of
the Borrower, the Guarantors, TAFSI or any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated where such
reorganization or termination has resulted or could
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52
reasonably be expected to result, through increases in the contributions
required to be made to such Plan or otherwise, in a Material Adverse Effect.
SECTION 4.17. ENVIRONMENTAL AND SAFETY MATTERS. (a) After giving
effect to the Transactions, each of the Borrower, the Guarantors and TAFSI is in
compliance with all Environmental and Safety Laws, with the exception of
instances that will not in the aggregate result in any material liability on the
part of the Borrower, TAFSI or the applicable Guarantor, individually or
collectively.
(b) (i) None of the Borrower, the Guarantors, or TAFSI has received
notice of any failure to comply with, nor has any such notice been issued that
has not been fully satisfied so as to bring any property of the Borrower, TAFSI
or either Guarantor into full compliance with, all Environmental and Safety
Laws, except where such noncompliance could not reasonably be expected to have a
Material Adverse Effect; (ii) after giving effect to the Transactions, the
plants and facilities of the Borrower and its subsidiaries do not use, manage,
treat, store or dispose of any Hazardous Substances in violation of any
Environmental and Safety Laws, except where such violations could not reasonably
be expected to have a Material Adverse Effect; (iii) after giving effect to the
Transactions, all licenses, permits or registrations (or any extensions thereof)
required under any Environmental and Safety Law for the business of the Borrower
and its subsidiaries as proposed to be conducted have been obtained and each of
the Borrower and its subsidiaries is in compliance therewith, except for the
failure to obtain such licenses, permits or registrations or to comply therewith
which could not reasonably be expected to have a Material Adverse Effect; and
(iv) neither the Borrower nor any of its subsidiaries is in noncompliance with,
breach of or default under any applicable writ, order, judgment, injunction or
decree where such noncompliance, breach or default will materially and adversely
affect the ability of the Borrower or any of its subsidiaries, as applicable, to
operate any real property owned or leased by it, and no event has occurred and
is continuing that, with the passage of time or the giving of notice or both,
will constitute such noncompliance, breach or default thereunder.
(c) (i) No Hazardous Substance has been Released (and no oral or
written notification of such Release has been filed) or is present whether or
not in a reportable or threshold planning quantity, at, on or under any property
owned or leased by the Borrower or any of its subsidiaries during the period of
the Borrower's or such subsidiary's ownership or lease of such property, or to
the knowledge of the Borrower or such subsidiary at any time previous to such
ownership or lease, under conditions that require remedial action under
applicable Environmental and Safety Laws, except where such remedial action
could not reasonably be expected to have a Material Adverse Effect, (ii) no
property now or previously owned or leased by the Borrower or any of its
subsidiaries has, directly or indirectly, transported or arranged for the
transportation of any Hazardous Substances to any site listed, or proposed for
listing, on the National Priorities List promulgated pursuant to CERCLA, on
CERCLIS (as defined in CERCLA) or on any similar Federal, state or foreign list
of sites requiring investigation or cleanup, except where any liability for such
transportation or arrangement for transportation could not reasonably be
expected to result in a Material Adverse Effect. Neither the Borrower nor any of
its subsidiaries is aware of any event, condition or circumstance involving
environmental pollution or contamination, or employee safety or health relating
to the use or handling of, or exposure to, Hazardous Substances, that could
reasonably be expected to result in a Material Adverse Effect.
(d) The Borrower and its Subsidiaries are conducting and will
continue to conduct their respective businesses and operations in an
environmentally responsible manner, and the Borrower and its Subsidiaries, taken
as a whole, are not and have no reason to believe that they will be subject to
any requirement of Environmental and Safety Laws that will result in cash
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53
expenditures related to environmental, health or safety matters that could have
a Material Adverse Effect.
SECTION 4.18. SOLVENCY. After giving effect to the Transactions to
occur on the Closing Date, (a) the fair salable value of the assets of (i) the
Borrower and its subsidiaries, on a consolidated basis, and (ii) each Guarantor
will exceed the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of the
Borrower and its subsidiaries, on a consolidated basis, and such Guarantor,
respectively, as they mature, (b) the assets of (i) the Borrower and its
subsidiaries, on a consolidated basis, and (ii) each Guarantor will not
constitute unreasonably small capital to carry out their businesses as conducted
or as proposed to be conducted, including the capital needs of the Borrower and
its subsidiaries, on a consolidated basis, or such Guarantor, respectively
(taking into account, in each case, the particular capital requirements of the
businesses conducted by such entities and the projected capital requirements and
capital availability of such businesses), and (c) neither the Borrower nor the
Guarantors intend to, nor do they believe that they will, incur debts beyond
their ability to pay such debts as they mature (taking into account the timing
and amounts of cash to be received by them and the amounts to be payable on or
in respect of their obligations).
SECTION 4.19. EMPLOYMENT AND MANAGEMENT AGREEMENTS. Except as
disclosed on Schedule 4.19, as of the Closing Date there are no (a) employment
agreements covering management employees of the Borrower, TAFSI or either
Guarantor or other material agreements relating to the compensation of
management employees (including the issuance of securities of the Borrower to
management employees), (b) agreements for management or consulting services to
which the Borrower, TAFSI or any Guarantor is a party or by which any of them is
bound or (c) collective bargaining agreements or other labor agreements covering
any of the employees of the Borrower, either Guarantor or TAFSI.
SECTION 4.20. CAPITALIZATION. (a) As of the Closing Date and after
giving effect to the Transactions, the authorized capital stock of the Borrower
consists of (i) 30,000,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), of which 1,276,672 shares are issued and outstanding and (ii)
20,000,000 shares of Preferred Stock, par value $.01 per share, of which (A)
6,000,000 shares have been designated shares of Convertible Preferred Stock,
Series I, par value $.01 per share (the "Series I Preferred Stock"), (B)
2,500,000 shares have been designated shares of Convertible Preferred Stock,
Series II, par value $.01 per share (the "Series II Preferred Stock," and
together with the Series I Preferred Stock, the "Junior Preferred Stock"), (C)
3,000,000 have been designated Senior Convertible Participating Preferred Stock,
Series I, par value $.01 per share, ("Series I Senior Preferred Stock") and (D)
1,000,000 shares have been designated shares of Senior Convertible Participating
Preferred Stock, Series II, par value $.01 per share ("Series II Senior
Preferred Stock" and, together with the Series I Senior Preferred Stock, the
"Senior Preferred Stock") . All outstanding shares of capital stock of the
Borrower are fully paid and nonassessable. 1,086,250 shares of the Common Stock
are owned of record by the Voting Trust in accordance with the terms of the
Voting Trust Agreement. Set forth on Schedule 4.20(a)(i) is a list of every
Person that, as of the Closing Date, will own beneficially (as defined in Rule
13d-3 promulgated under the Securities Exchange Act of 1934 or any successor
thereto) and of record shares of any class of capital stock of the Borrower,
together with the number of shares of such class so owned. Set forth on Schedule
4.20(a)(ii) is a list of every Person that, to the Borrower's knowledge based on
information provided to it by the Voting Trustee under the Voting Trust
Agreement, as of the Closing Date, will own beneficially and of record Voting
Trust Certificates, together with the number of shares represented by such
certificates so owned.
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(b) At all times following the Closing Date, the authorized capital
stock of TA will consist of 1,000 shares of Common Stock, par value $.01 per
share, of which 100 shares will be issued and outstanding at all times. All
outstanding shares of capital stock of TA are fully paid and nonassessable and,
after giving effect to the Recapitalization, are owned beneficially and of
record by the Borrower.
(c) At all times following the Closing Date, the authorized capital
stock of National will consist of 1,000 shares of Common Stock, par value $.01
per share, of which 10 shares will be issued and outstanding at all times. All
outstanding shares of capital stock of National are fully paid and nonassessable
and are owned beneficially and of record by the Borrower.
(d) At all times following the Closing Date, the authorized capital
stock of TAFSI will consist of 1,000 shares of Common Stock, par value $1 per
share, of which 100 shares will be issued and outstanding at all times. All
outstanding shares of capital stock of TAFSI are fully paid and nonassessable
and, after giving effect to the Recapitalization, are owned beneficially and of
record by the Borrower.
(e) Except as set forth on Schedule 4.20(e), there will be no
outstanding subscriptions, options, warrants, calls, rights (including
preemptive rights) or other agreements or commitments (including pursuant to
management or employee stock plan or similar plan) of any nature relating to any
capital stock of the Borrower, TA, National or TAFSI.
SECTION 4.21. SECURITY DOCUMENTS. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and proceeds thereof and, when
the Collateral is delivered to the Collateral Agent, the Pledge Agreement shall
constitute a fully perfected first priority Lien on, and security interest in,
all right, title and interest of the Borrower, each Guarantor or TAFSI, as
applicable, in such Collateral and the proceeds thereof, in each case prior and
superior in right to any other Person.
(b) The Security Agreement and the Collateral Account Agreement are
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined, respectively, in the Security Agreement and the
Collateral Account Agreement) and proceeds thereof, and when financing
statements in appropriate form are filed in the offices specified on Schedule
4.21 (or, in the case of TAFSI, in the offices of the Secretary of State of the
State of Ohio) and, in the case of cash included in the Collateral under the
Collateral Account Agreement, when such cash is deposited in the Collateral
Account, each of the Security Agreement and the Collateral Account Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Borrower, TAFSI and each Guarantor, as applicable, in
such Collateral and the proceeds thereof, in each case prior and superior in
right to any other Person, other than with respect to Liens expressly permitted
by Section 7.02.
(c) The Mortgages are effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of each Guarantor's right, title and interest in and to
the Mortgaged Properties thereunder and the proceeds thereof, and, when the
Mortgages are filed in the offices specified on Schedule 1.01(c), the Mortgages
shall constitute fully perfected Liens on, and security interests in, all right,
title and interest of such Guarantor in such Mortgaged Properties and the
proceeds thereof, in each case prior and superior in right to any other Person,
other than with respect to rights of Persons pursuant to Liens expressly
permitted by Section 7.02.
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(d) The Trademark Security Agreement is effective to create in favor
of the Collateral Agent, for ratable benefit of the Secured Parties, a legal,
valid and enforceable security interest in the Collateral (as defined in the
Trademark Security Agreement) and the proceeds thereof, and upon the filing of
assignment statements with the United States Patent and Trademark Office,
together with financing statements in appropriate form filed in the offices
specified on Schedule 4.21, the Trademark Security Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Borrower, TAFSI and each Guarantor in such Collateral and the proceeds
thereof, in each case prior and superior in right to any other Person, other
than with respect to Liens expressly permitted by Section 7.02.
(e) The Collateral Assignment is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable assignment of, transfer of all right, title and interest of the
Borrower, TAFSI or each Guarantor, as applicable, in, and security interest in,
the Assigned Contracts (as defined in the Collateral Agreement) and proceeds
thereof, and when financing statements in appropriate form are filed in the
offices specified on Schedule 4.21, the Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Borrower, TAFSI or such Guarantor, as applicable, in such Assigned
Contracts and the proceeds thereof, in each case prior and superior in right to
any other Person, other than with respect to Liens expressly permitted by
Section 7.02.
SECTION 4.22. LABOR MATTERS. There are no strikes, lockouts or
slowdowns against the Borrower or any of its subsidiaries pending or, to the
Borrower's knowledge, threatened. The hours worked by and payment made to
employees of the Borrower and its subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters, where such violations could reasonably be
expected to result in a Material Adverse Effect. The consummation of the
Transactions will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any of its subsidiaries is a party or by which the
Borrower or any of its subsidiaries is bound on the Closing Date.
SECTION 4.23. LOCATION OF REAL PROPERTY AND LEASED PREMISES.
(a) Schedule 4.23(a) lists completely and correctly as of the Closing Date all
real property owned by the Guarantors and the addresses thereof. Each Guarantor
will own in fee all the real property set forth on Schedule 4.23(a) with respect
to such Guarantor.
(b) Schedule 4.23(b) lists completely and correctly as of the
Closing Date all real property leased or subleased by the Guarantors and the
addresses thereof. Each Guarantor has a valid lease or sublease in all the real
property set forth on Schedule 4.23(b) with respect to such Guarantor.
(c) Neither the Borrower nor TAFSI owns or leases any real property.
SECTION 4.24. INSURANCE. The Borrower and each Guarantor maintains
(after giving effect to insurance it has caused each Network Operator, if any,
to maintain) with financially sound insurance companies insurance on all its
properties in at least such amounts and against at least such risks (but,
including in any event, all-risk casualty, public liability and product
liability) as are usually insured against in the same general geographic area by
companies engaged in the same or similar business. The Borrower has been named
as an additional insured party on each insurance policy that it has caused each
Guarantor and each Network Operator, if any, to maintain.
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SECTION 4.25. DELIVERY OF DOCUMENTS. (a) The Borrower has previously
made available, and has caused each Guarantor to make available, to the Agent
true, correct and complete copies of all real property leases or subleases,
easement agreements, option agreements and other agreements, instruments and
documents (whether or not recorded) that encumber or otherwise affect the real
property listed on Schedules 4.23(a) and 4.23(b).
(b) On or prior to the Closing Date, each Lender has received
complete certified copies (as certified to by, as applicable, the Secretary of
the Borrower, the applicable Guarantor or TAFSI) of the Environmental
Agreements, the Stockholders Agreement, the TA Stockholders Agreement, the
Tranche A Exchange Note Purchase Agreements and the Subordinated Note Indenture,
including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto (if any), and all amendments thereto, waivers
relating thereto and other side letters or agreements affecting the terms
thereof. None of such documents and agreements has been amended, supplemented or
otherwise modified, nor have any of the provisions thereof been waived, in each
case in any manner that, in the reasonable judgment of the Agent, is adverse in
any material respect to the Lenders, except pursuant to a written agreement or
instrument that has heretofore been consented to by the Required Lenders.
(c) Each of the Stockholders Agreement, the TA Stockholders
Agreement, the Environmental Agreements, the Tranche A Exchange Note Purchase
Agreements and the Subordinated Note Indenture has been duly executed and
delivered by the Borrower, TAFSI and the applicable Guarantor and, to the
Borrower's knowledge, by each party thereto and each of the material terms and
provisions thereof is in full force and effect.
(d) Each of the Franchise Agreements has been duly executed and
delivered by the Borrower, TAFSI and the applicable Guarantor and, to the
Borrower's knowledge, by each party thereto and each is in full force and
effect, there having been no default thereunder by the Borrower, TAFSI or the
applicable Guarantor. There has been no amendment, change or modification to any
Franchise Agreement that is adverse in any respect to the interests of the
Secured Parties without the written consent of the Collateral Agent.
SECTION 4.26. FEES AND EXPENSES. The aggregate amount of fees and
expenses incurred in connection with the Transactions by the Borrower, TAFSI and
the Guarantors will not exceed $16,500,000.
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ARTICLE V
CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligations of the Lenders to make Loans hereunder, the
obligation of the Swingline Lender to make Swingline Loans hereunder and the
obligation of the Fronting Bank to issue any Letter of Credit (each, a "Credit
Event") hereunder are subject to the satisfaction of the following conditions:
SECTION 5.01. ALL CREDIT EVENTS. On the date of each Credit Event
other than a Borrowing in which Revolving Credit Loans are refinanced with new
Revolving Credit Loans (without any increase in the aggregate principal amount
of Revolving Credit Loans outstanding) as contemplated by Section 2.02(e) and
other than any Revolving Credit Loan made pursuant to Section 2.02(f):
(a) The Agent and, where applicable, the Fronting Bank or the
Swingline Lender shall have received a notice of such Credit Event as
required by Section 2.03, Section 3.01(c) and Section 2.21(b),
respectively.
(b) The representations and warranties set forth in Article IV
hereof shall be true and correct in all material respects on and as of the
date of such Credit Event with the same effect as though made on and as of
such date, except to the extent such representations and warranties
expressly relate to an earlier date or that there are changes to the
factual information contained in such representations and warranties that
do not reflect any violation of or failure to comply with any provision of
this Agreement or any other Loan Document.
(c) The Borrower shall be in compliance with all the material terms
and provisions set forth herein and in each other Loan Document on its
part to be observed or performed, and at the time of and immediately after
such Credit Event no Event of Default or Default shall have occurred and
be continuing.
Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrower on the date of such Credit Event as to the
matters specified in paragraphs (b) and (c) of this Section 5.01.
Continuations and conversions of outstanding Term Borrowings pursuant to
Section 2.10 shall not be deemed to be new Borrowings for the purpose of
this Section 5.01.
SECTION 5.02. FIRST BORROWING. On the Closing Date:
(a) The Agent shall have received a favorable written opinion of (i)
Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the Borrower, the
Guarantors and TAFSI, to the effect set forth in Exhibit M-1 and (ii) each local
counsel listed on Schedule 5.02(a) to the effect set forth in Exhibit M-2, in
each case (A) dated the Closing Date, (B) addressed to the Agent, the Fronting
Bank, the Lenders, the Swingline Lender and the Collateral Agent and (C)
covering such other matters incidental to the Loan Documents and the
Transactions as the Agent shall request. The Borrower hereby instructs each such
counsel to deliver its opinion to the Agent.
(b) All legal matters incident to this Agreement and the Borrowings
hereunder shall be satisfactory to the Lenders and their counsel and to Cravath,
Swaine & Moore, counsel for the Agent.
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58
(c) The Agent shall have received (i) a copy of the certificate of
incorporation, including all amendments thereto, of each of the Borrower, TAFSI
and the Guarantors, certified as of recent date by the Secretary of State of the
State of Delaware, and a certificate as to the good standings of each of the
Borrower, TAFSI and the Guarantors as of a recent date, from such Secretary of
State; (ii) a certificate of the Secretary or Assistant Secretary of each of the
Borrower, TAFSI and the Guarantors dated the Closing Date and certifying (A)
that attached thereto is a true and complete copy of the By-laws of the
Borrower, TAFSI or such Guarantor, as the case may be, as in effect on the
Closing Date and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of the Borrower,
TAFSI or such Guarantor, as the case may be, authorizing the execution,
delivery, and performance of the Transaction Documents and the borrowings
hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that the certificate of
incorporation of the Borrower, TAFSI or such Guarantor, as the case may be, has
not been amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i) above and (D) as
to the incumbency and specimen signature of each officer executing any
Transaction Document or any other document delivered in connection herewith on
behalf of the Borrower, such Guarantor or TAFSI, as the case may be; (iii) a
certificate of another officer as to the incumbency and specimen signature of
the Secretary or Assistant Secretary executing the certificate pursuant to (ii)
above; and (iv) such other documents as the Lenders or their counsel or Cravath,
Swaine & Moore, counsel for the Agent, may reasonably request.
(d) The Agent shall have received a certificate, dated the Closing
Date and signed by a Financial Officer of the Borrower, confirming compliance
with the conditions precedent set forth in paragraphs (b) and (c) of Section
5.01.
(e) The Agent shall have received all Fees and other amounts due and
payable on or prior to the Closing Date.
(f) The Intercreditor Agreement shall have been duly executed by the
Borrower, the Tranche A Exchange Note Purchasers and the Collateral Agent, and
shall be in full force and effect.
(g) The Guarantee Agreement shall have been duly executed by each
Guarantor and the Collateral Agent, and shall be in full force and effect. The
Indemnity and Subrogation Agreement shall have been duly executed by the
Borrower, each Guarantor and the Collateral Agent and shall be in full force and
effect.
(h) The Pledge Agreement shall have been duly executed by the
parties thereto and delivered to the Collateral Agent and shall be in full force
and effect, and all the outstanding capital stock of each Guarantor and TAFSI
shall have been duly and validly pledged thereunder to the Collateral Agent for
the ratable benefit of the Secured Parties and certificates representing such
shares, accompanied by instruments of transfer and stock powers endorsed in
blank, shall be in the actual possession of the Collateral Agent.
(i) Each of the Security Agreement, the Trademark Security
Agreement, the Collateral Assignment and the Collateral Account Agreement shall
have been duly executed by the Borrower and all other parties thereto and shall
have on delivered to the Collateral Agent and shall be in full force and effect
on such date and each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the Agent to be filed,
registered or recorded in order to create in favor of the Collateral Agent for
the benefit of the Secured Parties a valid, legal and perfected first-priority
security interest in or lien on the
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59
Collateral (subject to any Lien expressly permitted by Section 7.02) described
in each of such agreements shall have been delivered to the Collateral Agent.
(j) The Collateral Agent shall have received the results of a search
of the Uniform Commercial Code filings (or equivalent filings) made with respect
to the Borrower, each Guarantor and TAFSI in the States (or other jurisdictions)
in which are located the chief executive offices of such Persons, any offices of
such Persons in which records have been kept relating to Accounts and the other
jurisdiction in which Uniform Commercial Code filings (or equivalent filings)
are to be made pursuant to the preceding paragraph, together with copies of the
financing statements (or similar documents) disclosed by such search, and
accompanied by evidence satisfactory to the Agent that the Liens indicated in
any such financing statement (or similar document) would be permitted under
Section 7.02 or have been released.
(k) The Collateral Agent shall have received a Perfection
Certificate with respect to each of the Guarantors, TAFSI and the Borrower dated
the Closing Date and duly executed by a Responsible Officer of each such entity.
(l) (i) Each of the Security Documents, in form and substance
satisfactory to the Lenders, relating to each of the Mortgaged Properties
(including each Mortgage and each Assignment of Leases and Rents) shall have
been duly executed by the parties thereto and delivered to the Collateral Agent
and shall be in full force and effect, (ii) each of such Mortgaged Properties
shall not be subject to any Lien other than those permitted under Section 7.02,
(iii) each of such Security Documents shall have been filed and recorded in the
recording office as specified on Schedule 1.01(c) (or a lender's title insurance
policy, in form and substance acceptable to Agent, insuring such Security
Document as a first lien on such Mortgaged Property (subject to any Lien
expressly permitted by Section 7.02) shall have been received by Agent) and, in
connection therewith, the Agent shall have received evidence satisfactory to it
of each such filing and recordation and (iv) the Collateral Agent shall have
received such other documents, including a policy or policies of title insurance
issued by a nationally, recognized title insurance company, together with such
endorsements, coinsurance and reinsurance as may be requested by the Agent, the
Fronting Bank, the Swingline Lender and the Lenders, insuring the Mortgages as
valid first liens on the Mortgaged Properties, free of Liens other than those
permitted under Section 7.02, together with such surveys, abstracts, appraisals
and legal opinions required to be furnished pursuant to the terms of the
Mortgages or as reasonably requested by the Agent, the Fronting Bank, the
Swingline Lender or the Lenders.
(m) The Borrower and each Guarantor shall have obtained insurance in
compliance with Section 6.02 and the applicable provisions of the Security
Documents, and the Agent shall have received a report or reports (in form and
substance satisfactory to it (including, among other things, a description of
coverage and a summary of terms of the insurance maintained by the Borrower and
each Guarantor) from Willis Corroon Corporation and/or an insurance firm of
comparable stature as to the adequacy of such insurance based on the nature and
requirements of the truckstop industry and based on Willis Corroon Corporation's
or such other firm's knowledge and experience with respect thereto.
(n) All policies of insurance maintained pursuant to Section 6.02
shall have been endorsed or otherwise amended to include a "standard" or "New
York" lender's loss payable endorsement, in form and substance reasonably
satisfactory to the Agent and the Collateral Agent, which endorsement shall
provide that, from and after the Closing Date, the insurance carrier shall pay
all proceeds otherwise payable to the insured party under such policies directly
to the Collateral Agent unless (i) the amounts so payable shall not exceed
$50,000 and (ii) the insurance
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carrier shall not have received written notice from the Agent or the Collateral
Agent that an Event of Default has occurred.
(o) The Recapitalization and the other Transactions shall have been
consummated or shall be consummated simultaneously with the closing of the
Facilities in accordance with documentation reasonably satisfactory to the
Lenders and applicable law, and the Lenders shall (i) be satisfied with the
capitalization, structure and equity ownership of the Borrower and its
subsidiaries after giving effect to the Recapitalization and the other
Transactions, (ii) be satisfied with all voting and other governance
arrangements under the certificate of incorporation, by-laws, voting trust
agreement, stockholders agreement and all related documents and (iii) be
satisfied that, in connection with the Recapitalization and the other
Transactions, the aggregate amount of fees and expenses shall not exceed
$16,500,000.
(p) The Borrower shall have received not less than $125,000,000 in
gross cash proceeds from the issuance of the Subordinated Notes in a public
offering or Rule 144A or other private placement to purchasers reasonably
satisfactory to the Agent, which Subordinated Notes shall (i) bear interest at a
rate not greater than the then-current market rate of interest as determined in
good faith by the Borrower at the time of issuance of the Subordinated Notes,
(ii) mature not earlier than the tenth anniversary of the Closing Date, and not
be subject to any sinking fund requirements or other amortization, (iii) be
subordinated to the Facilities on terms reasonably satisfactory to the Lenders
and (iv) otherwise have terms and conditions reasonably satisfactory in all
respects to the Lenders (including but not limited to terms relating to fees,
covenants, events of default and remedies).
(q) The Borrower shall have repaid, or shall have caused TA to
repay, $4,500,000 aggregate principal amount of the TA Senior Notes and the
Borrower shall have received all the outstanding National Senior Notes and all
the remaining outstanding TA Senior Notes in exchange for (i) the Series I
Tranche A Exchange Notes, which (A) shall bear interest at a rate (other than
during the continuance of a default or an event of default under the Tranche A
Exchange Note Purchase Agreements) not greater than 8.94% per annum and (B)
shall have terms and conditions reasonably satisfactory in all respects to the
Lenders (including covenants, events of default and remedies substantially
identical to the corresponding provisions contained in this Agreement) and (ii)
the Series II Tranche A Exchange Notes, which (A) shall bear interest at a rate
per annum not to exceed the LIBOR Rate (as defined in the Tranche A Exchange
Note Purchase Agreements) plus 3.00% (other than during the continuance of a
default or an event of default under the Tranche A Exchange Note Purchase
Agreements) and (B) shall have terms and conditions reasonably satisfactory in
all respects to the Lenders (including covenants, events of default and remedies
substantially identical to the corresponding provisions contained in this
Agreement).
(r) The Existing Indebtedness shall have been repaid in full, all
commitments to lend thereunder shall have been permanently terminated and all
obligations thereunder and security interests relating thereto shall have been
discharged, and the Agent shall have received reasonably satisfactory evidence
of such repayment, termination and discharge.
(s) After giving effect to the Recapitalization and the other
Transactions, the Guarantors, TAFSI and the Borrower shall have no liabilities
other than (i) the Loans under the Facilities, (ii) the Tranche A Exchange
Notes, (iii) the Subordinated Notes, (iv) the Guarantee Agreement, (v) the
Subordinated Note Guarantees and (vi) other liabilities satisfactory to the
Lenders and Indebtedness permitted under Section 7.01.
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(t) The Lenders shall have received a satisfactory pro forma
consolidated balance sheet of the Borrower as of December 31, 1996, after giving
effect to the Recapitalization and the other Transactions and the Lenders shall
be satisfied that such balance sheet is not materially inconsistent with the
projections previously furnished to the Lenders.
(u) The Lenders shall be reasonably satisfied in all material
respects with all arrangements among the Borrower, the Operators that are
stockholders of the Borrower and the Resellers that are stockholders of the
Borrower, including all franchise, lease and fuel supply agreements.
(v) The Agent shall have received appraisals, reasonably
satisfactory in form and substance to the Agent, from an appraiser reasonably
satisfactory to the Agent, of the real property, personal property and other
assets of the Borrower and its subsidiaries after giving effect to the
Transactions and the other transactions contemplated hereby.
(w) The Lenders shall be satisfied with all legal, tax and
accounting matters relating to the Transactions, the financing therefor and all
other transactions contemplated hereby.
(x) The Lenders shall be satisfied in all respects with the tax and
ERISA positions and the contingent tax and other liabilities of each Guarantor,
TAFSI and the Borrower and the plans of such Guarantor and the Borrower with
respect thereto.
(y) The Lenders shall be satisfied with the sufficiency of amounts
available under the Revolving Facility to meet the ongoing working capital
requirements of the Borrower following the consummation of the Transactions.
(z) The Lenders shall have received a solvency letter, in form and
substance satisfactory to the Agent, from Valuation Research Corp. together with
such other evidence reasonable requested by the Lenders of the solvency of (i)
the Guarantors, TAFSI and the Borrower, on a consolidated basis, and (ii) the
Guarantors, in each case after giving effect to the Recapitalization and the
other Transactions.
(aa) All requisite Governmental Authorities and third parties shall
have approved or consented to the Recapitalization and the other Transactions to
the extent required, all applicable appeal periods shall have expired and there
shall be no governmental or judicial action, actual or threatened, that has or
would have a reasonable likelihood of restraining, preventing or imposing
burdensome conditions on the transactions contemplated hereby.
(bb) There shall be no litigation or administrative proceedings or
other legal or regulatory developments, actual or threatened, that, in the
judgment of the Lenders, involve a reasonable possibility of a material adverse
effect on the business, assets, operations, properties, financial condition,
contingent liabilities, prospects or material agreements of the Guarantors,
TAFSI and the Borrower, taken as a whole, or the ability of the Guarantors,
TAFSI and the Borrower, taken as a whole, to perform its obligations under Loan
Documents, or the ability of the parties to consummate the Recapitalization or
the other Transactions or the validity or enforceability of any of the Loan
Documents or the rights, remedies and benefits available to the Agent, the
Fronting Bank, the Swingline Lender, the Collateral Agent and the Lenders under
the Loan Documents, or which would be materially inconsistent with the
assumptions underlying the projections set forth in the Confidential Information
Memorandum.
(cc) The Mortgaged Properties shall each be in compliance with all
applicable material laws, rules, regulations, statutes (including any zoning,
building, Environmental and
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62
Safety Law, ordinance, code or approval or any building permits) and all
restrictions of record and all material agreements affecting the Mortgaged
Property and all decrees or orders of any Governmental Authority with
jurisdiction with respect thereto, except to the extent such non-compliance or
failure to obtain any necessary permits are not reasonably likely to result in a
Material Adverse Effect.
(dd) The Agent shall have received the certified documents required
to be delivered to it pursuant to Section 4.25(b).
(ee) The Agent shall have received (i) satisfactory title insurance
policies for each Mortgaged Property and (ii) either (A) a satisfactory
certificate from a Responsible Officer of the applicable Guarantor certifying
that the surveys relating to the Mortgaged Properties of such Guarantor
delivered to the Agent in connection with the TA Credit Agreement and the
National Credit Agreement are true and correct in all material respects as of
the date hereof and as of the Closing Date or (B) a current survey, in form and
substance reasonably acceptable to the Agent, of such Mortgaged Property.
(ff) The Agent shall have received a satisfactory certificate from a
Responsible Officer of the applicable Guarantor certifying that, to the best of
his knowledge, all New Improvements (as defined in Section 6.14) located upon
each Mortgaged Property set forth on Schedule 6.14 have been completed in
accordance with applicable laws, rules, regulations and statutes.
(gg) The Borrower shall have deposited directly into the Collateral
Account proceeds from the Term Loans in an amount not less than $45,000,000.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender, the Agent, the
Fronting Bank and the Swingline Lender under that, so long as this Agreement
shall remain in effect or the principal of or interest on any Loan or Swingline
Loan or LC Disbursement, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing, the Borrower will and will cause each of its subsidiaries
to:
SECTION 6.01. EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business, maintain and operate such business in
substantially the manner in which it is currently conducted and operated; comply
in all material respects with all material applicable laws, rules, regulations
and statutes (including any zoning, building, Environmental and Safety Law,
ordinance, code or approval or any building permits or any restrictions of
record or agreements affecting the Mortgaged Property) and decrees and orders of
any Governmental Authority, whether now in effect or hereafter enacted; and at
all times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions,
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63
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
(c) Maintain all financial records in accordance with GAAP.
SECTION 6.02. INSURANCE. (a) Keep (and/or cause the related Network
Operator, if any, to keep) its properties (including Improvements and Personal
Property (each as defined in the Mortgages)) insured at all times by financially
sound and reputable insurers against loss by fire, casualty and such other
hazards as may be afforded by an "all risk" policy or a fire policy covering
"special" causes of loss, including building ordinance law endorsements; cause
all such policies to be endorsed or otherwise amended to include a "standard" or
"New York" lender's loss payable endorsement, in form and substance reasonably
satisfactory to the Agent and the Collateral Agent, which endorsement shall
provide that, from and after the Closing Date, the insurance carrier shall pay
all proceeds otherwise payable to the Borrower, the applicable Guarantor or the
applicable Network Operator, if any, under such policies directly to the
Collateral Agent unless (i) the amounts so payable shall not exceed $50,000 and
(ii) the insurance carrier shall not have received written notice from the Agent
or the Collateral Agent that an Event of Default has occurred and, if received,
such notice shall not have been withdrawn (with the Agent agreeing to withdraw
such notice if the related Event of Default shall have been cured and no other
Event of Default shall then exist), cause all such policies to provide that
neither the Borrower, the Guarantors, the Agent, the Collateral Agent nor any
other party shall be a coinsurer thereunder and to contain a "Replacement Cost
Endorsement", without any deduction for depreciation, and such other provisions
as the Agent or the Collateral Agent may reasonably require from time to time to
protect its interest; deliver (and/or cause the related Network Operator, if
any, to deliver) original or certified copies of all such policies to the
Collateral Agent; cause each such policy to provide that it shall not be
canceled, modified or not renewed (i) by reason of nonpayment of premium upon
not less than 10 days' prior written notice thereof by insurer to the Agent and
the Collateral Agent or (ii) for any other reason upon not less than 30 days'
prior written notice thereof by insurer to the Agent and the Collateral Agent;
deliver to the Agent and the Collateral Agent, prior to the cancellation,
modification or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Agent and the Collateral Agent) together with evidence
satisfactory to the Agent and the Collateral Agent of payment of the premium
therefor; and cause each all-risk policy maintained by the Borrower or either
Guarantor to be endorsed to provide for a waiver by the related insurer of all
its rights to recovery against any Network Operator for damage covered by such
policy.
(b) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency, obtain
(and/or cause the related Network Operator, if any, to obtain) flood insurance
in such total amount as the Collateral Agent or the Agent may from time to time
require, and otherwise comply with the National Flood Insurance Program as set
forth in said Flood Disaster Protection Act of 1973, as it may be amended from
time to time or (ii) "Zone I" area, obtain (and/or cause the related Network
Operator, if any, to obtain) earthquake insurance in such total amount as the
Agent, the Collateral Agent or the Required Lenders may from time to time
require.
(c) With respect to any Mortgaged Property, carry and maintain
(and/or cause the related Network Operator, if any, to maintain) comprehensive
general liability insurance including the "broad form CGL endorsement" and
coverage on an occurrence basis against claims made for personal injury
(including bodily injury, death and property damage) and umbrella liability
insurance against any and all claims, in no event for a combined single limit of
less than
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64
$5,000,000, naming the Collateral Agent as an additional insured, on forms
satisfactory to the Collateral Agent.
(d) Notify (and/or cause each Network Operator, if any, to notify)
the Agent and the Collateral Agent immediately whenever any separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.02 is taken out by the Borrower, any Guarantor
or any Network Operator and promptly deliver to the Agent and the Collateral
Agent a duplicate original copy of such policy or policies.
(e) Use reasonable efforts to cause the Phase II Consultant (as
defined in the Environmental Agreement) to maintain, and name the Borrower as an
additional insured wherever permissible under, the contracts of insurance
coverage at levels at least as high as set forth in Schedule 6.02(e).
(f) In connection with the covenants set forth in this Section 6.02,
it is understood and agreed that:
(i) neither the Agent, the Lenders, the Swingline Lender, the
Fronting Bank, the Tranche A Exchange Note Purchasers, nor their agents or
employees shall be liable for any loss or damage insured by the insurance
policies required to be maintained under this Section 6.02, it being
understood that (A) the Borrower shall look, and shall cause each
Guarantor to look, solely to its insurance company or any other parties
other than the aforesaid parties for the recovery of such loss or damage
and (B) such insurance company shall have no rights of subrogation against
the Agent, the Collateral Agent, the Lenders, the Swingline Lender, the
Fronting Bank, the Tranche A Exchange Note Purchasers or their agents or
employees. If, however, the insurance policies do not provide waiver of
subrogation rights against such parties as requested above, then the
Borrower hereby agrees, to the extent permitted by law, to waive its right
of recovery, if any, against the Agent, the Collateral Agent, the Lenders,
the Swingline Lender, the Fronting Bank, the Tranche A Exchange Note
Purchasers and their agents and employees; and
(ii) the designation of any form, type or amount of insurance
coverage by the Agent or the Collateral Agent under this Section 6.02,
shall in no event be deemed a representation, warranty, or advice by the
Agent or the Collateral Agent that such insurance is adequate for the
purposes of the Borrower's and each Guarantor's business or the protection
of the Borrower's and each Guarantor's properties and the Agent and the
Collateral Agent shall have the right from time to time to require the
Borrower to keep (and/or cause any Guarantor or the related Network
Operator, if any, to keep) other insurance in such form and amount as the
Agent or the Collateral Agent may reasonably request, provided that such
insurance shall be obtainable on commercially reasonable terms.
SECTION 6.03. OBLIGATIONS AND TAXES. Pay its Indebtedness and other
obligations promptly, and in accordance with their terms and pay and discharge
promptly when due all material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, its well as all
lawful claims for labor, materials and supplies or otherwise that, if unpaid,
might give rise to a Lien upon such properties or any part thereof; PROVIDED,
HOWEVER, that such payment and discharge shall not be required with respect to
any such obligation, tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and the Borrower, TAFSI or such Guarantor, as applicable, shall have
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and such
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65
contest operates to suspend collection of the contested obligation, tax,
assessment or charge and enforcement of a Lien and, in the case of a Mortgaged
Property, there is no risk of forfeiture of such property.
SECTION 6.04. FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the
Agent and each Lender:
(a) as soon as available, and in no event later than 105 days after
the end of each fiscal year (or 90 days during any time that the Borrower
is subject to the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended), the consolidated and consolidating
balance sheets and related statements of income and cash flow, showing the
consolidated financial condition of the Borrower and its consolidated
subsidiaries as of the close of such fiscal year and the results of their
operations during such year, all audited by Price Waterhouse or other
independent public accountants of recognized national standing reasonably
acceptable to the Required Lenders and accompanied by an opinion of such
accountants (which shall not be qualified in any material respect) to the
effect that such consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Borrower
and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) as soon as available, and in no event later than 60 days (or 45
days during any time that the Borrower is subject to the periodic
reporting requirements of the Securities Exchange Act of 1934, as amended)
after the end of each of the first three fiscal quarters of each fiscal
year, the unaudited consolidated and consolidating balance sheets and
related statements of income and changes in financial position, showing
the consolidated financial condition of the Borrower and its consolidated
subsidiaries as of the close of such fiscal quarter and the results of
their operations during such fiscal quarter and the then elapsed portion
of the fiscal year, all certified by a Financial Officer of the Borrower
as fairly presenting the consolidated financial condition and results of
operations of the Borrower and its consolidated subsidiaries in accordance
with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes required by GAAP;
(c) concurrently with any delivery of financial statements under (a)
or (b) above, a certificate of the accounting firm or a Financial Officer
of the Borrower opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal interpretations)
(i) certifying that no Event of Default or Default has occurred or, if
such an Event of Default or Default has occurred, specifying the nature
and extent thereof and any corrective action taken or proposed to be taken
with respect thereto and (ii) setting forth computations in reasonable
detail satisfactory to the Agent demonstrating compliance with the
covenants contained in Sections 7.13. 7.14, 7.15, 7.16 and 7.17;
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any of its subsidiaries with the Securities and Exchange
Commission, or any governmental authority succeeding to any of or all the
functions of said Commission, or with any national securities exchange, or
distributed to any of their shareholders, as the case may be;
(e) promptly following the preparation thereof, copies of each
management letter prepared by the Borrower's, either Guarantor's or
TAFSI's auditors (together with any response thereto prepared by the
Borrower, such Guarantor or TAFSI);
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(f) as soon as available, and in any event no later than 105 days
after the end of each fiscal year historical summary data for the
immediately preceding year and forecasted financial projections and
summary data through the end of the then current fiscal year, in
substantially the same form and format as set forth in Section 10 of the
Confidential Information Memorandum (including a specification of the
underlying assumptions and a management discussion of historical results),
all certified by a Financial Officer of the Borrower to be a fair summary
of its results and its good faith estimate of the forecasted financial
projections and results of operations for the period through the
then-current fiscal year;
(g) upon the earlier of (i) 105 days after the end of each fiscal
year of the Borrower (commencing with the fiscal year ending December 31,
1997) and (ii) the date on which the financial statements with respect to
such period are delivered pursuant to paragraph (a) above, a certificate
of a Financial Officer of the Borrower setting forth, in detail
satisfactory to the Agent, the amount of Excess Cash Flow, if any, for
such period;
(h) promptly, from time to time, such other information regarding
the operations, business affairs and financial condition of either
Guarantor, TAFSI or the Borrower, or compliance with the terms of any Loan
Document, as the Agent, the Fronting Bank, the Swingline Lender or any
Lender may reasonably request;
(i) promptly, a copy of any amendment or waiver of any provisions of
any agreement referenced in Section 7.10, any amendment or waiver of any
provision of the Tranche A Exchange Note Documents not requiring the
consent or approval of the Lenders or any other amendment or waiver of any
provisions of any agreement to the extent that such amendment or waiver is
required hereunder to be furnished to the Agent, the Fronting Bank or any
Lender;
(j) promptly, a copy of any notice of a default received by the
Borrower, TAFSI or either Guarantor under any other Loan Document;
(k) promptly a copy of any notice of default received by the
Borrower, TAFSI or either Guarantor (i) from any Tranche A Exchange Note
Purchaser under the Tranche A Exchange Note Purchase Agreements or (ii)
under the Subordinated Note Indenture;
(l) a copy of all notices (other than regarding any scheduled or
mandatory repayments), certificates, financial statements and reports, as
and when delivered by or on behalf of the Borrower, TAFSI or either
Guarantor (i) to the Tranche A Exchange Note Purchasers under the Tranche
A Exchange Note Purchase Agreements or (ii) under the Subordinated Note
Indenture (except to the extent any such notice, certificate, financial
statement or report is otherwise required to be delivered pursuant to this
Agreement); and
(m) a copy of all solicitations or requests for any proposed waiver
or amendment of any of the provisions of the Tranche A Exchange Note
Documents or Subordinated Note Indenture (but only if the consent or
approval of the Lenders is required in connection therewith).
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SECTION 6.05. LITIGATION AND OTHER NOTICES. Furnish to the Agent,
the Fronting Banks, the Swingline Lender, the Collateral Agent and each Lender
prompt written notice of the occurrence of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect; and
(c) any development that has resulted in, or could reasonably be
anticipated to result in, a Material Adverse Effect.
SECTION 6.06. ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA and (b) furnish to the Agent, the Fronting Bank,
the Swingline Lender and each Lender (i) as soon as possible, and in any event
within 30 days after any Responsible Officer of the Borrower or either Guarantor
or any ERISA Affiliate either knows or has reason to know that any Reportable
Event has occurred, as to which the Borrower, either Guarantor, TAFSI or any
ERISA Affiliate was or is required to file a report with the PBGC, that alone or
together with any other Reportable Event could reasonably be expected to result
in liability of the Borrower, TAFSI, either Guarantor or any ERISA Affiliate to
the PBGC in an aggregate amount exceeding $2,000,000, a statement of a Financial
Officer of the Borrower setting forth details as to such Reportable Event and
the action proposed to be taken with respect thereto, together with a copy of
the notice, if any, of such Reportable Event given to the PBGC, (ii) promptly
after receipt thereof, a copy of any notice the Borrower, TAFSI or either
Guarantor or any ERISA Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans, (other than a Plan
maintained by an ERISA Affiliate that is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint a
trustee to administer any Plan or Plans, (iii) within 10 days after the due date
for filing with the PBGC pursuant to Section 412(n) of the Code of a notice of
failure to make a required installment or other payment with respect to a Plan,
a statement of a Financial Officer of the Borrower, TAFSI or such Guarantor, as
applicable, setting forth details as to such failure and the action proposed to
be taken with respect thereto, together with a copy of such notice given to the
PBGC and (iv) promptly and in any event within 30 days after receipt thereof by
the Borrower, TAFSI or either Guarantor or any ERISA Affiliate from the sponsor
of a Multiemployer Plan, a copy of each notice received by the Borrower or any
ERISA Affiliate concerning (A) the imposition of Withdrawal Liability or (B) a
determination that a Multiemployer Plan is, or is expected to be, terminated or
in reorganization, in each case within the meaning of Title IV of ERISA.
SECTION 6.07. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. Maintain all financial records in accordance with GAAP and permit
any representatives designated by the Agent, the Fronting Bank, the Swingline
Lender, the Collateral Agent or any Lender to visit and inspect the financial
records, and the properties of the Borrower, TAFSI and each Guarantor at
reasonable times and upon reasonable notice and as often as reasonably requested
and to make extracts from and copies of such financial records, and permit any
representatives designated by the Agent, the Fronting Bank, the Swingline
Lender, the Collateral Agent or any Lender to discuss the affairs, finances and
condition of the Borrower, TAFSI or either Guarantor or any properties of
Borrower or either Guarantor with the officers thereof.
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SECTION 6.08. USE OF PROCEEDS. Use the Letters of Credit and the
proceeds of the Loans only for the purposes set forth in the preamble to this
Agreement.
SECTION 6.09. FISCAL YEAR. Cause its fiscal year to end on December
31 of each year.
SECTION 6.10. FURTHER ASSURANCES. (a) Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or which the Required Lenders, the Agent or the Collateral Agent may
reasonably request, in order to effectuate the transactions contemplated by the
Transaction Documents and in order to grant, preserve, protect and perfect the
validity and first priority of the security interests created or intended to be
created by the Security Documents. In addition, from time to time, each of the
Borrower, TAFSI and the Guarantors will, at its cost and expense, promptly
secure the Obligations by pledging or creating, or causing to be pledged or
created, perfected security interests with respect to such of its assets and
properties as the Agent or the Required Lenders shall designate (it being
understood that it is the intent of the parties that the Obligations shall be
secured by, among other things, substantially all the assets of the Borrower,
each Guarantor and TAFSI (including real and other properties acquired
subsequent to the Closing Date)). Such security interests and Liens, will be
created under the Security Documents and other security agreements, mortgages,
deeds of trust and other instruments and documents, in form and substance
satisfactory to the Required Lenders, and each of the Borrower, TAFSI and the
Guarantors shall deliver or cause to be delivered to the Lenders all such
instruments and documents, (including legal opinions, title insurance policies
and lien searches) as the Required Lenders shall reasonably request to evidence
compliance with this Section 6.10. Each of the Borrower and the Guarantors
agrees to provide such evidence as the Required Lenders shall reasonably request
as to the perfection and priority status of each such security interest and
Lien.
(b) Within 90 days following the Closing Date, enter into Lockbox
Agreements with financial institutions reasonably acceptable to the Agent.
SECTION 6.11. RATE PROTECTION AGREEMENTS. In the case of the
Borrower, enter into within 90 days following the Closing Date, and maintain at
any time prior to the date that is four years following the Closing Date, Rate
Protection Agreements satisfactory to the Agent, with respect to the Loans or
the Series II Tranche A Exchange Notes, to the extent necessary to cause not
less than 50% of the Funded Debt of the Borrower and its subsidiaries on a
consolidated basis at such date to be either (a) Indebtedness that accrues
interest at a fixed rate or (b) Indebtedness with respect to which such a Rate
Protection Agreement is in effect.
SECTION 6.12. ENVIRONMENTAL AND SAFETY LAWS. (a) Comply with, and
use its best efforts to ensure compliance by all tenants and subtenants
(including each Network Operator, if any) with, all Environmental and Safety
Laws and obtain and comply with and maintain, and use its best efforts to ensure
that all tenants and subtenants (including each Network Operator, if any) obtain
and comply with and maintain, any and all licenses, approvals, registrations or
permits required by Environmental and Safety Laws, except to the extent that
failure to so comply or to obtain and comply with and maintain such licenses,
approvals, registrations and permits does not have, and could not reasonably be
expected to result in, a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions, required under
Environmental and Safety Laws and promptly comply with all lawful orders and
directives of all Governmental Authorities respecting Environmental and Safety
Laws, except to the extent that the same are being contested in good
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faith by appropriate proceedings and the pendency of such proceedings would not
have a Material Adverse Effect.
(c) Notify the Agent of any of the following that is likely to have
a Material Adverse Effect:
(i) any Environmental Claim that the Borrower, TAFSI or either
Guarantor receives, including one to take or pay for any remedial,
removal, response or cleanup or other action with respect to any Hazardous
Substance contained on any property owned or leased by the Borrower such
Guarantor or TAFSI;
(ii) any notice of any alleged violation of or knowledge by the
Borrower, Holdings, TAFSI or any Guarantor of a condition that might
reasonably result in a violation of any Environmental and Safety Law;
(iii) any commencement or threatened commencement of any judicial or
administrative proceeding or investigation alleging a violation or
potential violation of any requirement of any Environmental and Safety Law
by the Borrower, TAFSI or either Guarantor; and
(iv) any Release or threat of Release that could reasonably be
expected to result in a Material Adverse Effect.
(d) Without limiting the generality of Section 10.05(b), indemnify
the Agent, the Fronting Bank, the Swingline Lender, the Collateral Agent and
each Lender and each of their respective directors, officers, employees, agents
and Affiliates (each such Person being called an "Indemnitee") against, and to
hold each Indemnitee harmless from, any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses (including reasonable
counsel fees, expert and consultant fees, charges and disbursements) of whatever
kind or nature arising out of, or in any way relating to, the violation of,
noncompliance with or liability under any Environmental and Safety Laws
applicable to the operations of the Borrower or either Guarantor or to the
Mortgaged Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including reasonable attorneys' and consultants'
fees, investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or wilful misconduct of the Indemnitee
seeking indemnification therefor. This indemnity shall continue in full force
and effect regardless of the termination of this Agreement and the other Loan
Documents.
SECTION 6.13. MATERIAL CONTRACTS. Maintain in full force and effect
(including exercising any available renewal option and without amendment or
modification) all its material contracts (including each operating lease
permitted by Section 7.08) unless the failure so to maintain such contracts (or
the amendments or modifications thereto) individually or in the aggregate, would
not have a Material Adverse Effect, and promptly notify each Lender of each
failure to comply with this Section 6.13.
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SECTION 6.14. CERTIFICATES OF OCCUPANCY, PERMITS AND ZONING. (a)
Within 270 days following the Closing Date, the Borrower shall deliver the
following documents to the Collateral Agent for Mortgaged Properties set forth
on Schedule 6.14 having 80% of the aggregate value of all Mortgaged Properties
set forth on such Schedule:
(i)(A) a copy of the original permanent certificate or certificates
of occupancy or completion, as the same may have been amended or issued
from time to time, covering any Improvement located upon the Mortgaged
Property that was constructed after the date of the TA Credit Agreement or
the National Credit Agreement, as applicable (a "New Improvement"), that
were required to have been issued by the appropriate Governmental
Authority for such New Improvement or (ii) a letter from an appropriate
Governmental Authority stating that at the time of construction
certificates of occupancy were not required for each such New Improvement
for which a certificate as described above has not been delivered and, if
reasonably requested by the Agent or Collateral Agent, suitable evidence
of the date of construction of each New Improvement on such Mortgaged
Property;
(ii) without limiting the Borrower's obligations under Section 6.12,
(A) a copy of all material licenses, permits and authorizations (other
than certificates of occupancy or completion, all applications, plans and
filings necessary for the issuance of any such certificate and all
licenses, permits and authorizations that were no longer required once any
such certificate was issued) that were necessary for the construction of
each New Improvement located upon the Mortgaged Property or that are
necessary for the current operation of such New Improvement and (B) a copy
of all applications (including plans) that were necessary for the issuance
of any certificate of occupancy or completion with respect to any New
Improvement, but only to the extent now or hereafter in the Borrower's
possession;
(iii) a copy of all applications (and documents filed in connection
therewith (including plans)) that the Borrower makes to any Governmental
Authority in order to comply with the provisions of this Section 6.14; and
(iv) one of the following: (A) written confirmation from the
applicable zoning commission or other appropriate Governmental Authority
stating that, with respect to each Mortgaged Property as built, it
complies with existing land use and zoning ordinances, regulations and
restrictions applicable to such property, (B) an opinion from local
counsel acceptable to the Agent to the same effect as covered by clause
(A) above or (C) a zoning endorsement satisfactory to the Agent in
connection with the Collateral Agent's mortgagee title insurance policy of
such Mortgaged Property.
(b) After the Closing Date, the Borrower shall use commercially
reasonable efforts to obtain (and promptly upon obtaining the same deliver to
the Collateral Agent):
(i) estoppel certificates from ground lessors of any Mortgaged
Property;
(ii) estoppel certificates from each Operator of each Mortgaged
Property; and
(iii) subordination and attornment agreements from each Operator of
each Mortgaged Property, unless the related operating lease by its terms,
is subject and subordinate to the Lien of the applicable Mortgage or
Leasehold Mortgage.
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(c) After the Closing Date, the Borrower shall (i) use commercially
reasonable efforts (A) to cause the lease relating to its leasehold interest in
property located in Willington, Connecticut, to be amended to provide
commercially reasonable leaseholding financability provisions and to provide for
the lessor of such property to consent to the granting of a Mortgage on such
leasehold interest and (B) to obtain the consent of the landlord of its property
(1) on site 1058 in Nashville, Tennessee, and (2) on site 1084 in Amarillo,
Texas, to the granting of a Mortgage on such leasehold interests, and (ii) upon
obtaining any such consent, promptly cause the applicable Guarantor to enter
into a Mortgage with respect to such Mortgaged Property.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender, the Agent, the
Fronting Bank and the Swingline Lender that, so long as this Agreement shall
remain in effect or the principal of or interest on any Loan or Swingline Loan
or LC Disbursement, any Fees or any other expenses or amounts payable under any
Loan Document shall be unpaid, unless the Required Lenders shall otherwise
consent in writing, the Borrower will not, and will not cause or permit any of
its subsidiaries to:
SECTION 7.01. INDEBTEDNESS. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness existing on the date hereof and set forth on
Schedule 7.01 (but not any extensions, renewals or replacements of such
Indebtedness);
(b) Indebtedness created under the Loan Documents;
(c) in the case of the Guarantors, Indebtedness consisting of
purchase money Indebtedness incurred in the ordinary course of business
after the Closing Date to finance Capital Expenditures or Transition
Capital Expenditures permitted under Section 7.13; PROVIDED, HOWEVER, that
(i) for purposes of Section 7.13, the aggregate principal amount of any
such Indebtedness shall be deemed to be a Capital Expenditure or a
Transition Capital Expenditure, as the case may be, at the time incurred
or assumed, (ii) the aggregate of (A) the aggregate principal amount of
Indebtedness permitted pursuant to this Section 7.01(c) and (B) any
Capital Lease Obligations permitted pursuant to Sections 7.01(d) and
7.11(c) shall not exceed $25,000,000 at any time outstanding and (iii)
such Indebtedness is incurred within 90 days after the making of the
Capital Expenditures or Transition Capital Expenditures financed thereby;
(d) in the case of the Guarantors, Indebtedness in respect of
Capital Lease Obligations permitted under Section 7.11(c);
(e) in the case of the Borrower or either Guarantor, Indebtedness in
respect of fuel-supply, hedging agreements and arrangements, PROVIDED that
any such agreements or arrangements shall have been entered into for bona
fide hedging purposes and pursuant to a written fuel-supply hedging policy
approved by the board of directors of the Borrower;
(f)(i) in the case of the Borrower, Indebtedness in respect of the
Tranche A Exchange Notes and the Subordinated Notes and (ii) in the case
of the Guarantors,
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Indebtedness in respect of the Tranche A Exchange Note Guarantees and the
Subordinated Note Guarantees;
(g) Indebtedness that arises from the refinancing from time to time
by the Borrower of (i) the Series I Tranche A Exchange Notes, (ii) the
Series II Tranche A Exchange Notes or (iii) the Series I Tranche A
Exchange Notes and the Series II Tranche A Exchange Notes (and, in each
case, the related Tranche A Exchange Note Guarantees) and ranks PARI PASSU
with or subordinate to the Loans, the Swingline Loans, any unreimbursed LC
Disbursements and the guarantees of each Guarantor supporting the Loans,
the Swingline Loans and any unreimbursed LC Disbursements; PROVIDED,
HOWEVER, that (A) such refinancing must be in whole and not in part with
respect to all the Series I Tranche A Exchange Notes, all the Series II
Tranche A Exchange Notes or all the Tranche A Exchange Notes, as
applicable, (B) the weighted average interest rate applicable to such
Indebtedness must be less than or equal to the interest rate applicable to
the Tranche A Exchange Notes being refinanced, (C) no material terms
applicable to such Indebtedness or the related guarantees shall be more
favorable to the refinancing lenders than the terms that are applicable to
the Tranche A Exchange Note Purchasers, (D) the weighted average life to
maturity of such Indebtedness shall be greater than or equal to the
weighted average life to maturity of the Tranche A Exchange Notes being
refinanced and the first scheduled principal payment in respect of such
Indebtedness shall not be earlier than the first scheduled principal
payment in respect of such Tranche A Exchange Notes, (E) such Indebtedness
shall be Indebtedness of the Borrower, (F) the priority of the security
interest in the collateral securing the repayment of such Indebtedness (if
such Indebtedness is to be secured) and the total amount or share of the
collateral to be made available to secure such Indebtedness shall be no
more senior or favorable than that which secured the repayment of the
Tranche A Exchange Notes being refinanced at the time of such refinancing
and the refinancing lenders shall enter into an intercreditor agreement
with the Lenders in substantially the form of the Intercreditor Agreement
(or in such other form as may be reasonably acceptable to the Required
Lenders) providing for the sharing of collateral on such basis, (G) the
principal amount of such Indebtedness shall be less than or equal to the
principal amount then outstanding of the Tranche A Exchange Notes being
refinanced and (H) such Indebtedness may not be incurred if at the time of
such refinancing a Default or Event of Default has occurred and is
continuing or would result therefrom;
(h) Indebtedness that arises from the refinancing from time to time
by the Borrower of the Subordinated Notes and is subordinate to the
Obligations (which, if required by the terms of any Indebtedness incurred
pursuant to Section 7.01(g) above in connection with any refinancing of
the Tranche A Exchange Notes, shall include such refinancing
Indebtedness); PROVIDED, HOWEVER, that (i) such refinancing must be in
whole and not in part, (ii) the weighted average interest rate applicable
to such Indebtedness must be less than or equal to the interest rate
applicable to the Subordinated Notes, (iii) no material terms applicable
to such Indebtedness (including the subordination provisions thereof)
shall be more favorable to the refinancing lenders than the terms that are
applicable under the Subordinated Note Indenture prior to such
refinancing, (iv) the weighted average life to maturity of such
Indebtedness shall be greater than or equal to the weighted average life
to maturity of the Subordinated Notes and the first scheduled principal
payment in respect of such Indebtedness shall not be earlier than the
first scheduled principal payment in respect of the Subordinated Notes,
(v) such Indebtedness shall be Indebtedness of the Borrower, (vi) such
Indebtedness shall be unsecured, (vii) the guarantees by the Guarantors of
such Indebtedness shall be no more favorable to the refinancing lenders
than the Subordinated Note Guarantees, (viii) the principal amount of
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such Indebtedness shall be less than or equal to the principal amount then
outstanding of the Subordinated Notes and (ix) such Indebtedness may not
be incurred if at the time of such refinancing a Default or Event of
Default has occurred and is continuing or would result therefrom;
(i) in the case of TAFSI, Indebtedness to the Borrower or either
Guarantor, PROVIDED that the amount of all such Indebtedness does not
exceed $3,000,000 in the aggregate at any time outstanding;
(j) in the case of either Guarantor, Indebtedness to the Borrower,
the other Guarantor or TAFSI;
(k) in the case of the Borrower, Rate Protection Agreements;
(l) in the case of the Guarantors, other unsecured Indebtedness in
an aggregate principal amount at any time outstanding not in excess of
$5,000,000; and
(m) in the case of the Borrower, Indebtedness to any of its
subsidiaries.
SECTION 7.02. LIENS. Create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
Person) now owned or hereafter acquired by it or on any income or revenues or
rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower or any subsidiary
thereof existing on the date hereof and set forth on Schedule 7.02
(including, to the extent any such Lien is the result of a lease, any
extensions, renewals or replacements of such lease, PROVIDED that the
annual lease payment under any such extension, renewal or replacement
shall be no less than the fair market rental value of the leased property
as of the date of such extension, renewal or replacement), PROVIDED that
such Liens shall secure only those obligations that they secure on the
date hereof;
(b) in the case of either Guarantor, any Lien existing on any
property or asset prior to the acquisition thereof by such Guarantor or
TAFSI, PROVIDED that (i) such Lien is not created in contemplation of or
in connection with such acquisition, (ii) such Lien does not apply to any
other property or assets of such Guarantor and (iii) such Lien does not
(A) materially interfere with the use, occupancy and operation of any
property, (B) materially reduce the fair market value of such property but
for such Lien or (C) result in any material increase in the cost of
operating, occupying or owning (or leasing) such property;
(c) Liens for taxes, assessments or governmental charges not yet due
and payable (or due and payable but not yet delinquent) or which are being
contested in compliance with Section 6.03 or Section 6.12;
(d) in the case of the Guarantors, carriers', warehousemen's,
mechanics', materialmen's, repairmen's, landlord's or other like Liens
arising in the ordinary course of business and securing obligations that
are not due and payable or which are being contested in compliance with
Section 6.03;
(e) in the case of the Guarantors, pledges and deposits made in the
ordinary course of business in compliance with workmen's compensation,
unemployment insurance and other social security laws or regulations;
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(f) in the case of the Guarantors, pledges and deposits to secure
the performance of bids, trade contracts (other than for Indebtedness)
leases, statutory obligations surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(g) in the case of the Guarantors, zoning restrictions, easements,
rights-of-way, restrictions on use of real property and other similar
encumbrances that do not materially impair the current use or the value of
the property subject thereto;
(h) in the case of the Guarantors, purchase money security interests
in real property, improvements thereto or equipment hereafter acquired
(or, in the case of improvements, constructed), PROVIDED that (i) such
security interests secure Indebtedness permitted by Section 7.01(c), (ii)
such security interests are incurred, and the Indebtedness secured thereby
is created, within 90 days after such acquisition (or construction), (iii)
the Indebtedness secured thereby does not exceed 75% of the lesser of the
cost or the fair market value of such real property, improvements or
equipment at the time of such acquisition (or construction) and (iv) such
security interests do not apply to any other property or assets;
(i) Liens incurred in connection with Capital Lease Obligations
permitted by Section 7.01(d), PROVIDED that such Liens do not extend to
any other property or assets of such Person;
(j) any Lien created under the Loan Documents;
(k) the lease or sublease of retail space and office space at any
Truckstop so long as either (i) the term of the lease or sublease does not
exceed three years or (ii) such lease or sublease does not result in the
lease or sublease of real property of the Borrower or any of its
subsidiaries in excess of 3,000 square feet at any one location to any one
lessee; and
(l) the lease or sublease of retail space and office space at any
Truckstop other than as described in clause (k) above, PROVIDED that (i)
the lease with respect thereto shall (A) contain provisions consistent
with and not in conflict with any term, condition, covenant or agreement
contained in any Loan Document, (B) require the lessee to deliver estoppel
certificates to the Collateral Agent in compliance with clause (iii)
below, (C) provide that such lease is subject and subordinate in all
respects to the applicable Mortgage and (D) constitute an "operating
lease" (and not a financing lease) for all purposes, (ii) in each case,
the Borrower shall have delivered to the Collateral Agent, reasonably in
advance of the execution and delivery thereof, copies of such lease and
all other agreements to be entered into by the Borrower or any of its
subsidiaries in connection therewith, (iii) the Borrower shall have
delivered to the Agent within 30 days of a request therefor by the
Collateral Agent, an estoppel certificate of any lessee in form and
substance satisfactory to the Agent, (iv) in each case, the Borrower
shall, at its expense, take such action as shall be necessary or as shall
be reasonably requested by the Collateral Agent to assign to the
Collateral Agent, for the benefit of the Secured Parties, a perfected
security interest in its rights under such lease and other agreements,
including the execution, delivery and recording of an Assignment of Leases
and Rents substantially in the form of Exhibit C, (v) after giving effect
to the entering into of such lease, no Default or Event of Default shall
have occurred and be continuing, (vi) promptly after execution of such
lease, an executed copy of such lease and a certificate of an officer of
the Borrower certifying that such lease complies with the provisions of
this Section 7.02(l) shall be delivered to the Agent and (vii) the lease
or sublease of such space: (A) shall not
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result in the representations and warranties contained in the related
Mortgage or in this Agreement to be untrue, (B) shall not result in any
material adverse effect on the value or operations of the related
Mortgaged Property as a Truckstop, (C) shall have no effect on the
Collateral Agent's Lien on the remaining Land under the related Mortgage,
(D) shall not restrict ingress and egress to, the operation of or in any
way interfere with the business currently conducted on the Mortgaged
Property and (E) shall be done and conducted, as applicable, in accordance
with all material laws, rules, regulations or statutes (including any
zoning, building, Environmental and Safety Laws, ordinances, codes or
approvals or any building permits) or any restrictions of record or
agreements affecting the Mortgaged Property.
SECTION 7.03. SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any property, real or personal, used or useful in the business of the
Borrower or its subsidiaries, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property that it intends to use
for substantially the same purpose or purposes as the property being sold or
transferred (any such transaction, a "Sale and Lease-Back Transaction"), other
than (a) any Sale and Lease-Back Transactions involving the properties described
on Schedule 7.03 or (b) any Sale and Lease-Back Transaction with respect to
property acquired by the Borrower or any subsidiary thereof following the
Closing Date, if such Sale and Lease-Back Transaction (i) involves a sale by the
Borrower or any subsidiary thereof for consideration equal to at least the
then-current fair market value of such property and (ii) results in a Capital
Lease Obligation or an operating lease permitted by Section 7.11, in either case
entered into to finance a Capital Expenditure permitted by Section 7.13
consisting of (A) the initial acquisition by the Borrower or such subsidiary of
the property sold or transferred in such Sale and Lease-Back Transaction or (B)
the development of a Truckstop on such property.
SECTION 7.04. INVESTMENTS, LOANS AND ADVANCES. Purchase, hold or
acquire any capital stock, evidences of Indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other Person, except:
(a) in the case of the Borrower, investments by the Borrower in the
capital stock of, and loans to, the Guarantors and in promissory notes
described in Section 7.04(e);
(b) Permitted Investments;
(c) in the case of the Guarantors, pledges and deposits permitted
under subsection (f) of Section 7.02;
(d) in the case of the Guarantors, loans or advances to employees in
the ordinary course of business in an aggregate amount outstanding to any
single employee at any time not in excess of $10,000 (or, if and to the
extent such loans or advances shall be used by such employees solely for
relocation expenses, $100,000) and in an aggregate amount outstanding for
all employees at any time not in excess of $1,000,000 (which loans and
advances shall not be forgiven);
(e) in the case of either Guarantor, promissory notes evidencing
loans made by the Borrower to members of such Guarantor's management or
the Institutional Investors to enable them to purchase shares of the
Borrower's Common Stock, PROVIDED that (i) the amount loaned to any single
member of management or any single Institutional Investor shall not exceed
50% of the aggregate purchase price of the shares purchased by such
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member or Institutional Investor with the proceeds of any such loan, (ii)
all the shares purchased by such member or Institutional Investor with the
proceeds of any such loan shall be retained by such Guarantor for the
benefit of the Secured Parties until such time as such loan shall have
been repaid, (iii) the aggregate amount of all such loans outstanding at
any time shall not exceed $1,500,000, (iv) such loans shall not be
forgiven by the Borrower, (v) any shares purchased by any Institutional
Investor with the proceeds of any such loan shall be resold to members of
the Borrower's management as soon as such a resale may be consummated in
accordance with applicable state and federal securities laws and (vi) any
member of the Borrower's management who purchases shares pursuant to the
preceding clause (v) shall assume all obligations under the loans the
proceeds of which were used by such Institutional Investor to purchase
such shares;
(f) in the case of the Borrower, investments by the Borrower in the
capital stock of, and loans to, TAFSI that are consistent with the
limitations on the business of TAFSI set forth in Section 7.08;
(g) investments in connection with Permitted Business Acquisitions,
it being understood that the aggregate purchase consideration paid in any
such investment shall (i) constitute a Capital Expenditure during the
period in which such investment occurs or (ii) if and to the extent the
Borrower and its subsidiaries are not permitted to incur additional
Capital Expenditures under Section 7.13(a) at the time of such investment,
constitute a Transition Capital Expenditure during the period in which
such investment occurs;
(h) in the case of the Guarantors and TAFSI, investments in any
joint venture so long as the amount of all such investments does not
exceed $5,000,000 in the aggregate at any time outstanding (any such joint
venture, a "Permitted Joint Venture");
(i) in the case of the Borrower, Rate Protection Agreements;
(j) investments not otherwise permitted above so long as the amount
of all such investments does not exceed $1,000,000 in the aggregate at any
time outstanding; and
(k) in the case of the Guarantors and TAFSI, intercompany loans and
advances permitted under subsections (i), (j) and (m) of Section 7.01.
SECTION 7.05. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND
ACQUISITIONS. Merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or sell, transfer, assign,
lease, sublease or otherwise dispose of (in one transaction or in a series of
transactions) all or any substantial part of the assets (whether now owned or
hereafter acquired) or any capital stock of either Guarantor or TAFSI, or
purchase, lease or otherwise acquire (in one transaction or a series of
transactions) all or any substantial part of the assets of any other Person;
PROVIDED, HOWEVER, that the foregoing shall not prohibit:
(a) sales of Permitted Investments for cash;
(b) sales, transfers and other dispositions of used or surplus
equipment, vehicles and other assets in the ordinary course of business
(to the extent that the Borrower shall have complied with the provisions
of Section 2.13(b));
(c) sales of inventory in the ordinary course of business;
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(d) sales, transfers and other dispositions of Truckstops and the
related assets for at least the then-current fair market value of such
assets (other than any such sales, transfers and other dispositions
permitted under Section 7.05(g)), with the related Net Cash Proceeds being
applied in accordance with the provisions of Section 2.13(b) and the
definition of the term "Prepayment Event", if (i) the aggregate number of
Truckstops so sold, transferred or disposed of pursuant to this subsection
(d) shall not exceed 10 since the Closing Date, (ii) the aggregate amount
of Net Cash Proceeds received by the Borrower in respect of such sales,
transfers and dispositions shall not exceed $30,000,000 since the Closing
Date, (iii) the consideration received in any such transaction shall
consist of immediately available funds in an amount equal to at least 75%
of the then-current fair market value of the applicable asset(s) (with any
instrument evidencing consideration other than immediately available funds
being pledged to the Collateral Agent as Collateral pursuant to the Pledge
Agreement), (iv) no Default or Event of Default shall have occurred and be
continuing and no such event shall occur as the result of such proposed
transaction and (v) prior to any such proposed transaction, the Agent and
the Collateral Agent shall have received a certificate of a Financial
Officer of the Borrower describing the proposed transaction (including the
consideration to be received) and certifying as to the compliance with the
foregoing provisions on a prospective basis;
(e) sublicenses by the Borrower, either Guarantor or TAFSI to
Franchisees and Network Operators, if any, of the trademarks and
servicemarks owned by the Borrower, such Guarantor or TAFSI;
(f) sales, transfers and other dispositions of any portion of a
Mortgaged Property in connection with the development of such property as
permitted in, and in accordance with, the provisions of Section 10 of the
Guarantee Agreement;
(g) sales, transfers and other dispositions of the parcels of real
estate listed on Schedule 7.05(g) (which Schedule may be amended by the
Borrower from time to time to substitute another parcel of real estate for
any parcel of real estate that is then listed on such Schedule and has not
been sold, transferred or otherwise disposed of on or prior to the date of
such substitution) and the related Truckstop assets, with the related Net
Cash Proceeds being applied in accordance with the provisions of Section
2.13(b) and the definition of the term "Prepayment Event";
(h) in the case of the Guarantors and TAFSI, (i) the acquisition of
assets from, or shares or other equity interests in, any Person in
connection with a Permitted Business Acquisition or a Permitted Joint
Venture and (ii) the merger of any Person with and into one of the
Guarantors as required by the definition of the term "Permitted Business
Acquisition";
(i) leases permitted by Section 7.08;
(j) sales of assets in connection with Sale and Lease-Back
Transactions permitted by Section 7.03; or
(k) in the case of either Guarantor or TAFSI, any sale, transfer or
other disposition of any asset to TAFSI or the other Guarantor, as the
case may be, PROVIDED that the aggregate fair market value of all assets
transferred to TAFSI by the Guarantors does not exceed $3,000,000.
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SECTION 7.06. DIVIDENDS AND DISTRIBUTIONS. (a) Declare or pay
directly or indirectly, any dividend or make any other distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its capital stock or directly
or indirectly redeem, purchase, retire or otherwise acquire for value any shares
of any class of its capital stock or set aside any amount for any such purpose;
PROVIDED, HOWEVER, that (i) each of the Guarantors and TAFSI may declare and pay
dividends or make other distributions to the Borrower and (ii) so long as no
Default or Event of Default shall have occurred and be continuing or shall be
caused thereby, the Borrower may declare and pay dividends or make other
distributions to repurchase or redeem Common Stock of the Borrower (A) from
officers, directors or employees of the Borrower who are no longer employed by
the Borrower, so long as the aggregate amount of such dividends or other
distributions paid (1) during any fiscal year or (2) since the Closing Date
shall not exceed the sum of $1,000,000 or $3,000,000, respectively, plus, in
each case, the proceeds of any resale of such Common Stock or common stock, as
the case may be, to other or new employees, directors or officers of the
Borrower made prior to or within 180 days after such repurchases or redemptions
and (B) from Operators, so long as the aggregate amount of such repurchases
since the Closing Date shall not exceed $15,000,000.
(b) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to the Borrower other than any (A)
consensual encumbrances or restrictions incurred as a result of the Tranche A
Exchange Note Purchase Agreements or the Subordinated Note Indenture and (B)
consensual encumbrances or restrictions that are incurred in connection with any
Tranche A Exchange Notes Refinancing Indebtedness or any Subordinated Note
Refinancing Indebtedness, PROVIDED that such encumbrances or restrictions are no
more onerous than the encumbrances and restrictions described in clause (A)
above.
SECTION 7.07. TRANSACTIONS WITH AFFILIATES. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that the Borrower, TAFSI and each Guarantor may engage in any of the foregoing
transactions in the ordinary course of business at prices and on terms and
conditions no less favorable to the Borrower, TAFSI or such Guarantor, as the
case may be, than could be obtained on an arm's-length basis from unrelated
third parties, PROVIDED that the foregoing provisions shall not restrict (a) any
transaction listed on Schedule 7.07 or (b) any transaction with an Affiliate
expressly permitted by this Agreement (including transactions expressly
permitted by Section 7.02, 7.04, 7.05 or 7.06).
SECTION 7.08. BUSINESS OF BORROWER, THE GUARANTORS AND TAFSI. (a) In
the case of the Borrower, (i) engage at any time in any business or business
activity other than (A) the ownership of all the outstanding capital stock of
each Guarantor and TAFSI, together with the activities directly related thereto,
(B) the exercise of its rights and the performance of its obligations under or
contemplated by the Transaction Documents and (C) actions required by law to
maintain its status as a corporation.
(b) In the case of each Guarantor, (i) engage in any activities
other than the business currently conducted by it and business activities
reasonably incidental thereto (including the operation of restaurants) or (ii)
lease any Truckstop to a third-party operator, or engage any third-party
operator to operate any Truckstop, or otherwise cease to conduct directly the
operation of any Truckstop (other than in connection with any sale of such
Truckstop in accordance with Section 7.05); PROVIDED, HOWEVER, that such
Guarantor may lease Truckstops to creditworthy third-party operators with
experience in the operation of similar facilities who shall at the time become
Franchisees if (A) in each case, the lease shall (1) provide for payment of rent
and all
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other material amounts payable thereunder at rates at least equal to the fair
market rental value as a full-service truckstop facility (using for such purpose
the highest number resulting at the time from at least three standard methods of
determining fair market rental value), as of the date such lease is executed by
such Guarantor, of the entire premises covered by such lease for the term
thereof, including any renewal options, (2) require the lessee to use and
operate the Truckstop in a manner consistent with industry standards from time
to time for the operation of similar facilities and in any event in compliance
with the applicable Franchise Agreement as of the date such lease is executed by
such Guarantor, (3) have a term not longer than 10 years, PROVIDED that such
lease may be renewed for a period of up to 10 years, or successive periods of up
to 10 years each, if such lease shall provide for payment of rent and all other
material amounts payable thereunder at rates reasonably believed by such
Guarantor, as of the date such lease is entered into, to be the fair market
rental value (determined as aforesaid) of the entire premises covered by such
lease for each such period, (4) contain provisions consistent with and not in
conflict with any term, condition, covenant or agreement contained in any Loan
Document, (5) require the lessee to deliver estoppel certificates to the
Collateral Agent in compliance with clause (D) below, (6) provide that such
lease is subject and subordinate in all respects to the applicable Mortgage and
may be terminated by such Guarantor in case of default under or termination of
the applicable Franchise Agreement and (7) constitute an "operating lease" (not
a financing lease) for all purposes, (B) in each case, such Guarantor shall have
delivered to the Agent, reasonably in advance of the execution and delivery
thereof, copies of such lease and all other agreements to be entered into by
such Guarantor in connection therewith, (C) such Guarantor shall have delivered
to the Agent within 30 days of a request therefor by the Agent, an estoppel
certificate of any lessee in form and substance satisfactory to the Agent, (D)
in each case, such Guarantor shall, at its expense, take such action as shall be
necessary or as shall be reasonably requested by the Collateral Agent to assign
to the Collateral Agent, for the benefit of the Secured Parties, a perfected
security interest in its rights under such lease and other agreements, including
the execution, delivery and recording of an Assignment of Leases and Rents
substantially in the form of Exhibit C, (E) the Interest Expense Coverage Ratio
on the date of such lease for the period of four fiscal quarters ending with the
last full fiscal quarter immediately preceding such date (giving effect to the
entering into of such lease as if it had been entered into on the first day of
such period but without giving effect to any transfer to the lessee of the
obligation to make capital expenditures that were made by such Guarantor) shall
be equal to or greater than the Interest Expense Coverage Ratio for such period
(without giving effect to the entering into of such lease), (F) after giving
effect to the entering into of such lease, no Default or Event of Default shall
have occurred and be continuing and there shall have no decrease in Consolidated
Net Worth, (G) the consideration received by such Guarantor from the lessee in
connection with such lease (including any franchise fee and consideration from
the sale of inventory or other assets relating to such Truckstop) shall be paid
in cash and, in the case of assets, shall equal the greater of (1) the
then-current fair market value of such assets and (2) the book value of such
assets as reflected on such Guarantor's financial statements at such time, (H)
the lessee shall be an Accredited Lessee, (I) the lessee shall not be a lessee
or operator of more than three other Truckstops leased by the Guarantors
pursuant to this Section 7.08 (provided that no more than 10 persons may be
lessee of more than one Truckstop leased pursuant to this Section 7.08 and no
more than five persons may be lessee of more than two Truckstops leased pursuant
to this Section 7.08), (J) such lease shall prohibit the lessee from mortgaging
such lessee's leasehold interest in the Truckstop or such lease, (K) the rent
payable at a fixed or contractual rate under such lease shall equal or exceed
70% of the total rent payable under such lease assuming such lease had been
entered into on the first day of the period of four consecutive fiscal quarters
ending with the last full fiscal quarter immediately preceding the date of such
lease and (L) promptly after execution of such lease, an executed copy of such
lease and a certificate of an officer of the Borrower certifying that such lease
complies with the provisions of this Section 7.08 shall be delivered to the
Agent; PROVIDED, FURTHER, that such Guarantor may (i) enter into extensions,
renewals and replacements of leases permitted pursuant to
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Section 7.02(a) and (ii) lease or sublease retail space and office space at any
Truckstop to the extent permitted pursuant to Section 7.02(k) and Section
7.02(l).
(c) In the case of TAFSI, (i) engage in any activities other than
the franchising of auto/truckstops and activities incidental thereto in
accordance with its past practice, (ii) own or acquire any material assets
(other than assets under the Franchise Agreements) or (iii) incur any material
liabilities (other than liabilities under the Transaction Documents and
Franchise Agreements).
SECTION 7.09. LIMITATIONS ON DEBT PREPAYMENTS. (a) Optionally
prepay, repurchase or redeem or otherwise defease or segregate funds with
respect to any Indebtedness for borrowed money (including, in the case of the
Borrower, the Subordinated Notes and the Tranche A Exchange Notes); PROVIDED,
HOWEVER, that the foregoing shall not prevent the Borrower from (i) making any
payment pursuant to Section 2.12 or 2.13, (ii) refinancing of Tranche A Exchange
Notes (or Tranche A Exchange Note Refinancing Indebtedness) or the Subordinated
Notes (or the Subordinated Note Refinancing Indebtedness) pursuant to, and in
accordance with, the provisions of Section 7.01(g) or 7.01(h), respectively
(PROVIDED that, from and after any such refinancing, this Section 7.09 shall
apply to the Indebtedness incurred in connection with such refinancing) or (iii)
prepaying or otherwise refinancing any Indebtedness permitted pursuant to
clauses (i), (j), (l) or (m) of Section 7.01.
(b) Permit any amendment or modification to the terms of any
Subordinated Note, any Subordinated Note Guarantee or the Subordinated Note
Indenture if the effect of such amendment or modification is to impose
additional or increased scheduled or mandatory repayment, retirement, repurchase
or redemption obligations in respect of such Indebtedness or to require any
scheduled or mandatory payment to be made in respect of the Subordinated Notes
prior to the date that such payment would otherwise be due; or permit any
amendment or modification to the terms of the Tranche A Exchange Notes or the
Tranche A Exchange Note Purchase Agreements unless made in compliance with
Section 7.04 of the Intercreditor Agreement (or the analogous provision, if any,
of any successor agreement).
SECTION 7.10. AMENDMENT OF CERTAIN DOCUMENTS AND SUBORDINATED NOTES.
Permit any termination of, or any amendment or modification that in the
reasonable judgment of the Agent is adverse in any material respect to the
Lenders to, (a) the Certificate of Incorporation of the Borrower, TAFSI or
either Guarantor, (b) the By-laws of the Borrower, TAFSI or any Guarantor, (c)
the Subordinated Notes, the Subordinated Guarantees and the Subordinated Note
Indenture, (d) either Environmental Agreement, (e) the Ancillary Agreements and
(f) either Asset Purchase Agreement without the prior written consent of the
Required Lenders. Without limiting the generality of the foregoing, with respect
to the Subordinated Notes, the Subordinated Guarantees and the Subordinated Note
Indenture, it is understood that (a) any increase in the interest, fees or other
amounts payable in connection therewith, (b) any amendment that imposes
additional covenants or events of default or makes more restrictive the
covenants or events of default contained therein and (c) any amendment that
renders the subordination provisions contained therein less favorable to the
Lenders shall in each case require the consent of the Required Lenders.
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SECTION 7.11. LIMITATION ON LEASES. Create or suffer to exist any
obligations on the part of the Borrower or any of its subsidiaries for the
payment of rents for any property under leases or agreements to lease, except,
in the case of either Guarantor:
(a) (i) leases (other than leases of real property) of such
Guarantor entered into in the ordinary course of business and in existence
on the date hereof having annual lease payments of less than $250,000 and
(ii) leases of such Guarantor in existence on the date hereof and listed
on Schedule 7.11(a) (and, in each case, any extensions, renewals or
replacements of such leases, provided that the annual lease payment under
any such extension, renewal or replacement shall be no greater than the
fair market rental value of the leased property, as of the date of such
extension, renewal or replacement for the term of such extension, renewal
or replacement);
(b) operating leases entered into after the date hereof by such
Guarantor as lessee (i) in the ordinary course of business in a manner and
to an extent consistent with historical practices of the networks of
Truckstops operated by the Borrower's subsidiaries as of the date hereof
and (ii) in connection with Sale and Lease-Back Transactions permitted by
Section 7.03, PROVIDED that the aggregate annual lease payments under all
such leases shall not exceed $10,000,000;
(c) Capital Lease Obligations incurred by such Guarantor to finance
the acquisition of equipment and other property, PROVIDED that (i) the
aggregate of (A) the aggregate annual rental payments in respect of all
such Capital Lease Obligations and (B) any purchase money Indebtedness
permitted pursuant to Section 7.01(c) shall not exceed $15,000,000 at any
time outstanding, (ii) each Capital Lease Obligation at the time of its
incurrence shall have an average life to maturity greater than the average
life to maturity of the outstanding Term Loans, (iii) none of the related
leases shall contain financial covenants and (iv) for purposes of Section
7.13, the amount of such aggregate annual rental payments shall be deemed
to be Capital Expenditures in the year in which they are incurred; and
(d) any fair market value leases entered into by such Guarantor in
connection with the relocation of its offices.
SECTION 7.12. SUBSIDIARIES. After giving effect to the
Recapitalization and the Transactions, in the case of the Borrower, have any
direct or indirect subsidiaries other than the Guarantors, TAFSI and any
Permitted Joint Venture that is a direct or indirect subsidiary of the Borrower.
Each of the Guarantors and TAFSI shall remain a wholly owned subsidiary of the
Borrower.
SECTION 7.13. CAPITAL EXPENDITURES. (a) In the case of the Borrower
and its consolidated subsidiaries, permit Capital Expenditures during any fiscal
year, commencing with the fiscal year ending December 31, 1997, to exceed
$25,000,000; PROVIDED, HOWEVER, that the amount of permitted Capital
Expenditures in any fiscal year shall be increased by (a) an amount equal to 50%
of the excess of (i) consolidated EBITDA for the immediately preceding fiscal
year over (ii) $64,000,000 and (b) the lesser of (i) 25% of the total amount of
permitted Capital Expenditures for the immediately preceding fiscal year
(including amounts permitted as a result of the application of clause (a) but
excluding any unused Capital Expenditures carried forward to such preceding
year) and (ii) the total amount of unused permitted Capital Expenditures for the
immediately preceding fiscal year (excluding any unused Capital Expenditures
carried forward to such preceding year). Notwithstanding the foregoing, the
aggregate amount of Capital Expenditures permitted in any fiscal year shall not
exceed $35,000,000.
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(b) In the case of the Borrower and its consolidated subsidiaries,
(i) permit Transition Capital Expenditures to exceed (A) during any fiscal year,
commencing with the fiscal year ending December 31, 1997, $50,000,000 or (B)
during the term of this Agreement, $140,000,000 or (ii) permit the aggregate
purchase consideration in connection with Permitted Business Acquisitions that,
pursuant to Section 7.04(g), constitutes a Transition Capital Expenditure to
exceed $25,000,000 during the term of this Agreement.
SECTION 7.14. CONSOLIDATED NET WORTH. Permit Consolidated Net Worth
at any time to be less than $90,000,000 PLUS, without duplication, (a) 50% of
Net Income for each fiscal quarter (beginning with the fiscal quarter ending
June 30, 1997) for which Net Income is positive, PLUS (b) 100% of the Net Cash
Proceeds of any primary offering of equity securities consummated by the
Borrower or either Guarantor after the Closing Date, PLUS (c) 100% of any
capital contribution made to the Borrower or either Guarantor after the Closing
Date by any holder of their respective capital stock, MINUS (d) amounts paid to
repurchase or redeem Common Stock of the Borrowers from Operators as permitted
by Section 7.06(a)(ii).
SECTION 7.15. CURRENT RATIO. Permit on the last day of any fiscal
quarter the ratio of Current Assets to Current Liabilities to be less than 1.50
to 1.00.
SECTION 7.16. INTEREST EXPENSE COVERAGE RATIOS. (a) Permit the
Interest Expense Coverage Ratio for any fiscal year ending on a date set forth
below to be less than the ratio set forth opposite such date:
FISCAL YEAR: RATIO:
- ----------- -----
December 31, 1997 1.50
December 31, 1998 1.75
December 31, 1999 2.00
December 31, 2000 2.25
December 31, 2001 2.50
December 31, 2002 2.75
December 31, 2003 3.00
December 31, 2004, and thereafter 3.25
(b) Incur Indebtedness if, after giving effect to the incurrence of
such Indebtedness, the ratio of EBITDA to Cash Interest Expense determined on
the last day of the most recently completed period of four consecutive fiscal
quarters for such period (or in the case of any fiscal quarter ending prior to
March 31, 1998, for the period commencing April 1, 1997, and ending on the last
day of such fiscal quarter), as if such Indebtedness had been incurred at the
beginning of such period, would be less than 1.00 to 1.00.
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SECTION 7.17. LEVERAGE RATIO. Permit the Leverage Ratio on any date
during any fiscal quarter ending on the last day of or during any period
indicated below to be in excess of the ratio set forth opposite such period:
FROM AND INCLUDING: TO AND INCLUDING: RATIO:
- ------------------ ---------------- -----
July 1, 1997 June 30, 1998 5.50 to 1.00
July 1, 1998 December 31, 1998 5.25 to 1.00
January 1, 1999 December 31, 1999 4.75 to 1.00
January 1, 2000 December 31, 2000 4.50 to 1.00
January 1, 2001 December 31, 2001 3.75 to 1.00
January 1, 2002 December 31, 2002 3.25 to 1.00
January 1, 2003 December 31, 2003, and thereafter 3.00 to 1.00
ARTICLE VIII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in any Loan
Document, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished pursuant any Loan Document, shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made in the payment of any principal of any
Loan or Swingline Loan or LC Disbursement when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan
or Swingline Loan or any Fee or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as the
same shall become due and payable, and such default shall continue
unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance by
the Borrower of any covenant, condition or agreement contained in Section
2.12(d), 2.13(b), 6.01, 6.05, 6.08, 6.11, 6.12, 6.13, Section 9 or 10 of
the Guarantee Agreement or in Article VII (other than Section 7.02);
(e) default shall be made in the due observance or performance by
the Borrower, either Guarantor or TAFSI of any covenant, condition or
agreement contained in any Loan Document (other than those defaults
specified in (b), (c) or (d) above) and such default shall continue
unremedied for a period of the earlier of (i) 30 days after an executive
officer of TAFSI, such Guarantor or the Borrower first becomes aware or
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should have become aware thereof and (ii) 15 days after notice thereof
from the Agent or any Lender to the Borrower, such Guarantor or TAFSI, as
applicable;
(f) the Borrower or any of its subsidiaries shall (i) fail to pay
any principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $2,000,000, when and as
the same shall become due and payable (after giving effect to any
applicable grace period) or (ii) fail to observe or perform any other
term, covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness (after giving
effect to any applicable grace period) if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or
holders of such Indebtedness or a trustee on its or their behalf (with or
without the giving of notice, the lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Borrower or any of its subsidiaries, or of a
substantial part of the property or assets of the Borrower or any of its
subsidiaries, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or any of its subsidiaries or for a substantial
part of the property or assets of the Borrower or any of its subsidiaries
or (iii) the winding-up or liquidation of the Borrower or any of its
subsidiaries and such proceeding or petition shall continue undismissed
for 30 days or an order or decree approving or ordering any of the
foregoing shall be entered;
(h) the Borrower or any of its subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar
law, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner (but within 30 days in any event), any proceeding
or the filing of any petition described in paragraph (h) above, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any of
its subsidiaries or for a substantial part of the property or assets of
the Borrower or any of its subsidiaries, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for the purpose
of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $2,000,000 (to the extent not covered by insurance)
shall be rendered against the Borrower, TAFSI or either Guarantor or any
combination thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
levy upon assets or properties of the Borrower, TAFSI or either Guarantor
to enforce any such judgment;
(j) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(1) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Borrower, TAFSI, either Guarantor or any ERISA Affiliate to the
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PBGC or to a Plan in an aggregate amount exceeding $2,000,000 and, within
30 days after the reporting of any such Reportable Event to the Agent or
after the receipt by the Agent of the statement required pursuant to
Section 6.06(b)(iii), the Agent shall have notified the Borrower in
writing that (i) the Required Lenders have reasonably determined that, on
the basis of such Reportable Event or Reportable Events or the failure to
make a required payment, there are reasonable grounds (A) for the
termination of such Plan or Plans by the PBGC, (B) for the appointment by
the appropriate United States District Court of a trustee to administer
such Plan or Plans or (C) for the imposition of a lien in favor of a Plan
and (ii) as a result thereof an Event of Default exists hereunder; or a
trustee shall be appointed by a United States District Court to administer
any such Plan or Plans; or the PBGC shall institute proceedings to
terminate any Plan or Plans;
(k) (i) the Borrower, either Guarantor, TAFSI or any ERISA Affiliate
shall have been notified by the sponsor of a Multiemployer Plan that it
has incurred Withdrawal Liability to such Multiemployer Plan, (ii) the
Borrower, such Guarantor, TAFSI or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal Liability or is not in
fact contesting such Withdrawal Liability in a timely and appropriate
manner and (iii) the amount of the Withdrawal Liability specified in such
notice, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liabilities (determined
as of the date or dates of such notification), either (A) is $2,000,000 or
more and the Required Lenders have reasonably determined that the
Borrower, such Guarantor, TAFSI or such ERISA Affiliate will not be able
to make the payments required in connection with such Withdrawal Liability
or (B) is less than $2,000,000 and any payment due as a result of such
liability remains unpaid 30 days after such payment is due;
(l) the Borrower, either Guarantor, TAFSI or any ERISA Affiliate
shall have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if solely as a result of such reorganization
or termination the aggregate annual contributions of the Borrower, each
Guarantor, TAFSI and each ERISA Affiliate to all Multiemployer Plans that
are then in reorganization or have been or are being terminated have been
or will be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an
amount exceeding $2,000,000 and the Required Lenders have reasonably
determined that the Borrower, such Guarantor, Holdings, TAFSI or such
ERISA Affiliate will not be able to make the payments required in
connection with such contribution;
(m) there shall have occurred a Change in Control;
(n) any material security interest purported to be created by any
Security Document shall cease to be, or shall be asserted by the Borrower,
either Guarantor or TAFSI not to be, a valid, perfected, first priority
(except as otherwise expressly provided in this Agreement or such Security
Document) security interest in the securities, assets or properties
covered thereby, except to the extent that any such loss of perfection or
priority results from the failure of the Collateral Agent to maintain
possession of certificates representing securities pledged under the
Pledge Agreement (except to the extent that such loss is covered by a
lender's title insurance policy and the related insurer promptly after
such loss shall have acknowledged in writing that such loss is covered by
such title insurance policy);
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(o) any Loan Document shall not be for any reason or shall be
asserted by the Borrower, either Guarantor or TAFSI not to be in full
force and effect and enforceable in all material respects in accordance
with its terms;
(p) the Obligations and the guarantees thereof pursuant to the
Guarantee Agreement shall cease to constitute, or shall be asserted by the
Borrower or either Guarantor not to constitute, senior indebtedness under
the subordination provisions of the Subordinated Notes, the Subordinated
Guarantees and the Subordinated Note Indenture (or the provisions of the
Subordinated Note Refinancing Indebtedness) or such subordination
provisions shall be invalidated or otherwise cease to be a legal, valid
and binding obligation of the parties thereto, enforceable in accordance
with its terms; or
(q) any material provision of the Guarantee Agreement or any Loan
Document shall cease to be in full force and effect and enforceable in
accordance with its terms for any reason whatsoever or either Guarantor or
TAFSI shall contest or deny in writing the validity or enforceability of
any of its obligations under the Guarantee Agreement or any other Loan
Document, as applicable, or the Obligations hereunder shall cease to be
entitled to the benefits of any Security Document, this Agreement or the
Intercreditor Agreement for any reason whatsoever;
then, and in every such event (other than an event with respect to the Borrower
or any of its subsidiaries described in paragraph (g) or (h) above), and at any
time thereafter during the continuance of such event, the Agent may and, at the
request of the Required Lenders, shall (subject to the terms of the
Intercreditor Agreement, as long as any Tranche A Exchange Notes are
outstanding), by notice to the Borrower, take any of or all the following
actions, at the same or different times: (i) terminate forthwith the Commitments
and the LC Commitment, (ii) declare the Loans and the Swingline Loans then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans and the Swingline Loans so declared to be due and
payable, together with accrued interest thereon and any unpaid accrued Fees and
all other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding, (iii) require cash collateral as contemplated
by Section 3.06 and (iv) exercise any remedies available under any Loan Document
or otherwise; and in any event with respect to the Borrower or any of its
subsidiaries described in paragraph (g) or (h) above, the Commitments and the LC
Commitment shall automatically terminate and the principal of the Loans and the
Swingline Loans then outstanding, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder
and under any other Loan Document, shall automatically become due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained herein or
in any other Loan Document to the contrary notwithstanding.
Notwithstanding the foregoing, in the event that a nonpayment
default under paragraph (a), (d), or (e) above is solely the result of any
Network Operator's failure to perform its obligations to either Guarantor
pursuant to any operating lease with such Guarantor permitted by Section 7.08,
then, so long as (i) there shall not be a similar failure by more than two other
Network Operators and (ii) such Guarantor has rights against such Network
Operator (including compelling such Network Operator to cure such default,
exercising its self-help remedies as landlord under such operating lease or
terminating such operating lease and taking possession of the premises within
the time for cure as provided herein) and the Agent, in its reasonable judgment,
is satisfied that such Guarantor is diligently and with best efforts prosecuting
such
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enforcement until cure of such default, no Event of Default shall be deemed to
have occurred hereunder with respect thereto.
ARTICLE IX
THE AGENT
In order to expedite the transactions contemplated by this
Agreement, The Chase Manhattan Bank is hereby appointed to act as Agent (which
term for purposes of this Article shall be deemed to refer to the Agent and the
Collateral Agent) on behalf of the Fronting Bank, the Swingline Lender and the
Lenders. Each of the Lenders, and each subsequent holder of any Loan by its
acceptance thereof, the Fronting Bank and the Swingline Lender hereby
irrevocably authorize the Agent to take such actions on their behalf and to
exercise such powers as are specifically delegated to the Agent by the terms and
provisions hereof and of the other Loan Documents, together with such actions
and powers as are reasonably incidental thereto. The Agent is hereby expressly
authorized by the Lenders, the Fronting Bank and the Swingline Lender, without
hereby limiting any implied authority, (a) to receive on behalf of the Lenders,
the Fronting Bank and the Swingline Lender all payments of principal of and
interest on the Loans, the Swingline Loans and LC Disbursements and all other
amounts due to the Lenders, the Fronting Bank and the Swingline Lender
hereunder, and promptly to distribute to each Lender, the Fronting Bank and the
Swingline Lender its proper share of each payment so received; (b) to give
notice on behalf of each of the Lenders to the Borrower of any Event of Default
specified in this Agreement of which the Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to promptly distribute to each
Lender and the Fronting Bank copies of all notices, financial statements and
other materials delivered by the Borrower and the Guarantor pursuant to this
Agreement as received by the Agent (including notices of an occurrence of any
Event of Default).
Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its, his or her own gross negligence or wilful misconduct, or be
responsible for any statement, warranty or representation herein or the contents
of any document delivered in connection herewith, or be required to ascertain or
to make any inquiry concerning the performance or observance by the Borrower,
TAFSI or either Guarantor of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agent shall not be responsible to
the Lenders or the Fronting Bank or the Swingline Lender for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement or any
other Loan Documents or other instruments or agreements. The Agent shall in all
cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders and the Fronting
Bank. The Agent shall, in the absence of knowledge to the contrary, be entitled
to rely on any instrument or document believed by it in good faith to be genuine
and correct and to have been signed or sent by the proper Person or Persons.
Neither the Agent nor any of its directors, officers, employees or agents shall
have any responsibility to the Borrower, either Guarantor or TAFSI on account of
the failure of or delay in performance or breach by any Lender, the Fronting
Bank or the Swingline Lender of any of its obligations hereunder or to any
Lender or to the Fronting Bank or to the Swingline Lender on account of the
failure of or delay in performance or breach by any other Lender or the Fronting
Bank or the Borrower, TAFSI or the Guarantor of any of their respective
obligations hereunder or under any other Loan Document or in connection herewith
or therewith. The Agent may execute any and all duties hereunder by or through
agents or employees and shall be entitled to rely upon the advice of legal
counsel selected
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by it with respect to all matters arising hereunder and shall not be liable for
any action taken or suffered in food faith by it in accordance with the advice
of such counsel.
The Lenders, the Fronting Bank and the Swingline Lender hereby
acknowledge that the Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
unless it shall be requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders, the
Fronting Bank, the Swingline Lender and the Borrower. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice
of its resignation, then the retiring Agent may, on behalf of the Lenders and
the Fronting Bank, appoint a successor Agent, which shall be a bank with an
office in New York, New York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall 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 the Agent's resignation hereunder, the provisions
of this Article and Sections 6.12(d) and 10.05 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.
With respect to the Loans made by it hereunder the Agent, in its
individual capacity and not as Agent, shall have the same rights and powers as
any other Lender and may exercise the same as though it were not the Agent, and
the Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower, either Guarantor,
TAFSI or any Affiliate thereof as if the Agent were not the Agent.
Each Lender, the Fronting Bank, and the Swingline Lender agree (a)
to reimburse the Agent, on demand, in the amount of its pro rata share (based on
its Commitment hereunder) of any expenses incurred for the benefit of the
Lenders, the Fronting Bank and the Swingline Lender by the Agent, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, the Fronting Bank and the Swingline Lender, that shall
not have been reimbursed by the Borrower and (b) to indemnify and hold harmless
the Agent and any of its directors, officers, employees or agents, on demand, in
the amount of such pro rata share, from and against any and all liabilities,
taxes, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against it in its capacity as the Agent or
any of them in any way relating to or arising out of this Agreement or any other
Loan Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have been
reimbursed by the Borrower, PROVIDED that no Lender shall be liable to the Agent
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or wilful misconduct of the Agent or any of its directors,
officers, employees or agents.
Each Lender, the Fronting Bank and the Swingline Lender acknowledge
that they have, independently and without reliance upon the Agent, any other
Lender, the Fronting Bank or the Swingline Lender and based on such documents
and information as they have deemed appropriate, made their own credit analysis
and decision to enter into this Agreement and the Intercreditor Agreement. Each
Lender, the Fronting Bank and the Swingline Lender also acknowledge that they
will, independently and without reliance upon the Agent or any other
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Lender and based on such documents and information as they shall from time to
time deem appropriate, continue to make their own decisions in taking or not
taking action under or based upon this Agreement or any other Loan Document, any
related agreement or any document furnished hereunder or thereunder.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. Notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed or sent by telex, graphic scanning or other telegraphic
communications equipment of the sending party, as follows:
(a) If to the Borrower, TAFSI or either Guarantor, at 24601 Center
Ridge Road, Suite 300, Westlake, Ohio 44145-5634; with a copy to The
Clipper Group, L.P., 11 Madison Avenue, 26th Floor, New York, New York
10010, Attention of Rowan G.P. Taylor (Telecopy No. (212) 448-5463); with
a copy to Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the
Americas, New York, New York 10019, Attention of Valerie E. Radwaner, Esq.
(Telecopy No. (212) 757-3990).
(b) If to the Agent, the Swingline Agent or the Fronting Bank, at
270 Park Avenue, 10th Floor, New York, New York 10017, Attention of Peter
Eckstein (Telecopy No. (212) 270-3090); with a copy to The Chase Manhattan
Bank Loan and Agency Services Group, One Chase Manhattan Plaza, New York,
NY 10081, Attention of Sandra Miklave (Telecopy No. (212) 552-5658).
(c) If to a Lender, at its address (or telecopy number) set forth on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telecopy or other telegraphic communications, equipment of the
sender, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 10.01. The Agent shall deliver a copy of each Administrative
Questionnaire received by it to the Borrower.
SECTION 10.02. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower, each Guarantor and TAFSI
herein and/or in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Lenders, the Fronting Bank and the
Swingline Lender and shall survive the making by the Lenders of the Loans, the
making by the Swingline Lender of the Swingline Loans and the issuance of
Letters of Credit by the Fronting Bank regardless of any investigation made by
the Lenders, the Fronting Bank and the Swingline Lender or on their behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or Swingline Loan or any Fee or any other amount
payable under this Agreement or any other Loan Document is
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outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments and the LC Commitment have not been terminated.
SECTION 10.03. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Borrower, the Agent, the Fronting Bank
and the Swingline Lender and when the Agent shall have received copies hereof
that, when taken together, bear the signatures of each Lender, and thereafter
shall be binding upon and inure to the benefit of the Borrower, the Agent, the
Fronting Bank, the Swingline Lender and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior consent of
all the Lenders.
SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the Agent, the Fronting
Bank, the Swingline Lender or the Lenders that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement and the
Intercreditor Agreement (including all or a portion of its Commitments and the
Loans at the time owing to it); PROVIDED, HOWEVER, that (i) except in the case
of (A) any assignment to a Lender or an Affiliate of such Lender or, in the case
of a non-bank Lender, a Person under common management with such Lender or (B)
any assignment to an assignee reasonably acceptable to the Borrower (it being
understood that any Lender shall be deemed to be acceptable to the Borrower for
purposes of this clause) if such assignment was requested by any Governmental
Authority having jurisdiction over the assigning Lender, the Borrower (the
consent of which shall not be unreasonably withheld, it being understood that it
would be reasonable for the Borrower to withhold such consent in the case of any
assignment that would have the result of increasing the number of Lenders) and,
if any such assignment includes all or a portion of any Lender's Revolving
Credit Commitment, each of the Agent and the Fronting Bank, must give their
prior written consent to such assignment, (ii) the amount of the Commitment of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Agent) shall not be less than $5,000,000 (or (i) if the amount of the
assigning Lender's Commitment is less than $5,000,000, an amount equal to the
amount of such Commitment or (ii) in the case of an assignment by a non-bank
Lender to a Person under common management with such non-bank Lender, in an
amount not less than $1,000,000), (iii) the parties to each such assignment
shall execute and deliver to the Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,500 and (iv) the assignee, if it
shall not be a Lender, shall deliver to the Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this
Section 10.04, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
the execution thereof (unless waived by the Agent), (i) the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement and the Intercreditor Agreement and (ii) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement and the
Intercreditor Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement and the Intercreditor Agreement, such Lender
shall cease to be a party hereto and to the Intercreditor Agreement but shall
continue to be entitled to the benefits of Sections 6.12(d) and 10.05 and, with
respect only to liabilities of the Borrower thereunder to such Lender that have
accrued or otherwise arise by reason of
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circumstances or events prior to the assignment of its rights and obligations
hereunder, Sections 2.14, 2.16 and 2.20, as well as to any Fees accrued for its
account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitments and LC Commitment, and the outstanding balances of its Term
Loans and Revolving Credit Loans, in each case without giving effect to
assignments thereof that have not become effective, are as set forth in such
Assignment and Acceptance; (ii) except as set forth in clause (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower, either Guarantor or TAFSI or
the performance or observance by the Borrower, either Guarantor or TAFSI of any
of its obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement and the Intercreditor Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 6.04 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; (v) such
assignee will independently and without reliance upon the Agent, such assigning
Lender or any other Lender 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 Agreement and the Intercreditor
Agreement; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Agent by the terms hereof, together with such powers as
are reasonable incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations that by the terms of
this Agreement and the Intercreditor Agreement are required to be performed by
it as a Lender.
(d) The Agent shall maintain at one of its offices in The City of
New York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitments and LC Commitment of, and principal amount of the Loans owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive in the absence of manifest error and
the Borrower, the Agent, the Fronting Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower, the Fronting Bank, and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and the written consent of the Agent to such assignment, the Agent
shall (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Lenders, the Fronting Bank and the Swingline Lender.
(f) Each Lender may without the consent of the Borrower or the Agent
sell participations to one or more banks or other entities in all or a portion
of its rights and obligations
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under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); PROVIDED, HOWEVER, that (i) such Lender's obligations under
this Agreement and the Intercreditor Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other entities
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders,
PROVIDED that the Borrower shall not be required to reimburse the participating
lenders or other entities pursuant to Section 2.14, 2.16 or 2.20 in an amount
that exceeds the amount that would have been payable thereunder to such Lender
had such Lender not sold such participation and (iv) the Borrower, the Agent,
the Fronting Bank, the Swingline Lender and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the Intercreditor Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrower relating to the Loans or LC Disbursements and to approve any amendment,
modification or waiver of any provision of this Agreement (PROVIDED that the
participating bank or other entity may be provided with the right to approve
amendments, modifications or waivers affecting it with respect to (A) any
decrease in the Fees payable hereunder with respect to Loans in which the
participating bank or other entity has purchased a participation, (B) any change
in the amount of principal of, or decrease in the rate at which interest is
payable, on the Loans in which the participating bank or other entity has
purchased a participation, (C) any extension of the dates fixed for scheduled
payments of principal of or interest on the Loans in which the participating
bank or other entity has purchased a participation or (D) any release of all or
substantially all the Collateral).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower, each Guarantor and TAFSI
furnished to such Lender by or on behalf of the Borrower, any Guarantor or
TAFSI, PROVIDED that, prior to any such disclosure of information designated by
the Borrower, any Guarantor or TAFSI as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 10.17.
(h) In the event that Standard & Poor's, Moody's, and Thompson's
BankWatch shall, after the date that any Lender becomes a Revolving Lender,
downgrade the long-term certificate of deposit ratings of such Lender, and the
resulting ratings shall be BBB+ or lower, Baa1 or lower and BBB+ or lower, then
the Fronting Bank shall have the right, but not the obligation, at its own
expense, upon notice to such Lender and the Agent, to replace (or to request the
Borrower to use its reasonable efforts to replace) such Lender with an assignee
(in accordance with and subject to the restrictions contained in paragraph (b)
above), and such Lender hereby agrees to transfer and assign without recourse
(in accordance with and subject to the restrictions contained in paragraph (b)
above) all its interests, rights and obligations in respect of its Revolving
Credit Commitment to such assignee; PROVIDED, HOWEVER, that (i) no such
assignment shall conflict with any law, rule and regulation or order of any
Governmental Authority and (ii) the Fronting Bank or such assignee, as the case
may be, shall pay to such Lender in immediately available funds on the date of
such assignment the principal of and interest accrued to the date of payment on
the Loans made by such Lender hereunder and all other amounts accrued for such
Lender's account or owed to it hereunder.
(i) Any Lender may at any time assign all or any portion of its
rights under this Agreement to a Federal Reserve Bank, PROVIDED that no such
assignment shall release a Lender from any of its obligations hereunder. In
order to facilitate such an assignment to a Federal
<PAGE>
93
Reserve Bank, the Borrower shall, at the request of the assigning Lender, duly
execute and deliver to the assigning Lender a promissory note or notes
evidencing the Loans made to the Borrower by the assigning Lender hereunder.
(j) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Agent, the Fronting
Bank, the Swingline Lender and each Lender. Except as provided in Section 3.09
and Section 2.21, respectively, neither the Fronting Bank nor the Swingline
Lender may assign or delegate any of its respective rights and duties hereunder
without the prior written consent of the Borrower and Agent.
SECTION 10.05. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay
all out-of-pocket expenses incurred by the Agent, the Fronting Bank, the
Swingline Lender and the Collateral Agent in connection with the preparation of
this Agreement and the other Loan Documents or in connection with any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Agent, the Fronting Bank, the Swingline Lender, the Collateral
Agent or any Lender in connection with the enforcement or protection of their
rights in connection with this Agreement and the other Loan Documents or in
connection with the Loans made or the Letters of Credit issued hereunder,
including the reasonable fees, other charges and disbursements of Cravath,
Swaine & Moore, counsel for the Agent, the Collateral Agent and the Fronting
Bank and of local counsel, and, in connection with any such enforcement or
protection, the reasonable fees, other charges and disbursements of any other
counsel for the Agent, the Fronting Bank, the Swingline Lender, the Collateral
Agent or any Lender. The Borrower further agrees that it shall indemnify the
Agent, the Fronting Bank, the Swingline Lender, the Collateral Agent, the
Lenders from and hold them harmless against any documentary taxes, assessments
or charges made by any Governmental Authority by reason of the execution and
delivery and/or recordation of this Agreement or any of the other Loan
Documents.
(b) The Borrower agrees to indemnify the Agent, the Fronting Bank,
the Swingline Lender, the Collateral Agent and each Lender and each of their
respective directors, officers, employees, agents and Affiliates (each such
Person being called an "Indemnitee") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and disbursements, incurred
by or asserted against any Indemnitee arising out of, in any way connected with,
or as a result of (i) the execution or delivery of this Agreement or any other
Loan Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereby or thereto of their respective obligations
hereunder or thereunder or the consummation of the Transactions and the other
transactions contemplated hereby or thereby, (ii) the use of the Letters of
Credit or the proceeds of the Loans and the Swingline Loans or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, PROVIDED that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claim, damages, liabilities or related expenses result from actions or events
taking place after any of such Indemnitees takes possession of the Mortgaged
Property at issue by foreclosure or transfer in lieu of foreclosure or are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) The provisions of this Section 10.05 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transaction, contemplated hereby, the
repayment of any of the Loans or the Swingline Loans, the invalidity or
unenforceabilty of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Agent, the Fronting
Bank, the
<PAGE>
94
Collateral Agent, the Swingline Lender or any Lender. All amounts due under this
Section 10.05 shall be payable on written demand therefor.
SECTION 10.06. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, and the Agent shall have declared, or the Required
Lenders shall have requested the Agent to declare, the Loans and the Swingline
Loans immediately due and payable pursuant to Article VIII, each Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower or either Guarantor against any of and all the
obligations of such entity now, or hereafter existing under this Agreement and
other Loan Documents held by such Lender, irrespective of whether such Lender
shall have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section 10.06 are (i) in addition to other rights and remedies (including other
rights of setoff) that such Lender may have and (ii) subject to the terms of the
Intercreditor Agreement.
SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS (OTHER THAN THE MORTGAGES) SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 10.08. WAIVERS; AMENDMENT. (a) No failure or delay on the
part of the Agent, the Fronting Bank, the Swingline Lender, the Collateral Agent
or any Lender in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent, the Fronting Bank,
the Swingline Lender, the Collateral Agent and the Lenders hereunder and under
the other Loan Document are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement, the Guarantee Agreement or any of the
Security Documents nor any provision hereof or thereof may be waived, amended or
modified except, in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders, or,
in the case of the Guarantee Agreement, or any of the Security Documents,
pursuant to an agreement or agreements in writing entered into by the Borrower,
any Guarantor and the Collateral Agent (and TAFSI, if it is a party thereto) and
consented to by the Required Lenders; PROVIDED, HOWEVER, that no such agreement
shall (i) reduce the principal amount of, or extend the scheduled maturity of,
any principal of or interest on, any Loan, or forgive any such payment or any
part thereof, or reduce the rate of interest on any Loan, without the prior
written consent of each Lender adversely affected thereby, (ii) increase the
Commitment or reduce or extend the date for payment of the fees payable to any
Lender without the prior written consent of such Lender, (iii) amend or modify
the provisions of Section 2.17, the provisions of this Section or the definition
of the term "Required Lenders" without the prior written consent of each Lender,
(iv) release all or substantially all of the Collateral under any Security
Document or any guarantor under the Guarantee Agreement other than as expressly
<PAGE>
95
permitted hereunder or under such Security Document or such Guarantee without
the prior written consent of each Lender, (v) change any provisions of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of prepayments to be made to Lenders holding Loans of any Class differently than
those holding Loans of any other Class, without the written consent of Lenders
holding a majority in interest of the outstanding Loans and unused Commitments
of each affected Class, (vi) waive, in whole or in part, any payment, including
any mandatory prepayment, without the written consent of Lenders holding a
majority in interest of the outstanding Loans and unused Commitments of each
affected Class or (vii) change the rights of the Term Lenders to decline
mandatory prepayments as provided in Section 2.13(h), without the written
consent of Lenders holding a majority in interest of the outstanding Term Loans,
and PROVIDED FURTHER that no such agreement shall amend, modify, or otherwise
affect the rights or duties of the Agent, the Fronting Bank, or the Swingline
Lender hereunder without the prior written consent of the Agent, the Fronting
Bank or the Swingline Lender, as the case may be
(c) Notwithstanding the provisions of paragraph (b) above, as long
as any Tranche A Exchange Notes are outstanding the provisions of the
Intercreditor Agreement shall supersede any contrary provisions herein regarding
consents, amendments, modifications and waivers.
SECTION 10.09. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the applicable interest rate, together
with all fees and charges that are treated as interest under applicable law
(collectively, the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender or the Swingline Lender, shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by such Lender or the Swingline Lender in accordance
with applicable laws, the rate of interest payable to such Lender or the
Swingline Lender, together with all Charges payable to such Lender or the
Swingline Lender, shall be limited to the Maximum Rate.
SECTION 10.10. ENTIRE AGREEMENT. This Agreement and the other Loan
Documents and the fee letter referred to in Section 2.05(c) constitute the
entire contract between the parties relative to the subject matter hereof. Any
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement and the other Loan Documents. Nothing in this
Agreement or in the other Loan Documents, expressed or implied, is intended to
confer upon any party other than the parties hereto and thereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
SECTION 10.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10.11.
SECTION 10.12. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions
<PAGE>
96
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 10.13. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 10.03.
SECTION 10.14. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.15. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against the Borrower or its properties in
the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 10.16. INVESTMENT OF CERTAIN ESCROWED AMOUNTS. (a) In the
event that the Borrower or any Guarantor deposits money with the Collateral
Agent, or such money is received directly by the Collateral Agent, pursuant to
or in connection with (i) the definition of the term "Prepayment Event" (in
connection with any deposit of Net Cash Proceeds pending any permitted
application of such money contemplated by such definition (other than with
respect to any Mortgaged Property Casualty or Condemnation governed by Section 9
of the Guarantee Agreement)) or (ii) Section 9 of the Guarantee Agreement (in
connection with any Mortgaged Property Casualty or Condemnation), the Borrower
and each Guarantor understands and agrees that (A) such amounts shall be held as
collateral for the payment of the Obligations in separate escrow accounts (or
sub-accounts of a single escrow account) with the Collateral Agent for the
benefit of the Secured Parties, (B) the Collateral Agent shall have exclusive
dominion and control over such accounts (or subaccount), (C) other than any
interest earned on the investment of such deposits in Permitted Investments,
which investments shall be made at the option and sole discretion of the
Collateral Agent, such deposits shall not bear interest, (D) interest or
profits, if
<PAGE>
97
any, on such investments shall accumulate in such accounts (or sub-accounts) and
(E) amounts held in such accounts (or sub-accounts) shall be released or applied
(1) in the case of Section 9 of the Guarantee Agreement, as provided in (and
subject to the provisions of) such Section and (2) in all other cases, upon the
demand by the Borrower or the applicable Guarantor in connection with the
Borrower's or such Guarantor's application of such amounts within the specified
period of time in accordance with the definition of the term "Prepayment Event".
(b) Nothing in this Section 10.16 shall prevent the Collateral Agent
from applying at any time all or any part of the amounts on deposit in the
above-contemplated accounts (or subaccounts) to the curing of any Event of
Default under this Credit Agreement. The provisions of this Section 10.16 are
subject to the provisions of the Intercreditor Agreement so long as any Tranche
A Exchange Notes are outstanding.
SECTION 10.17. CONFIDENTIALITY. Except as otherwise provided in
Section 10.04(g), each of the Agent, the Fronting Bank, the Swingline Lender and
each of the Lenders agrees to keep confidential (and (i) to cause its respective
officers, directors and employees to keep confidential and (ii) to use its best
efforts to cause its respective agents and representatives to keep confidential)
the Information and all copies thereof, extracts therefrom and analyses or other
materials based thereon, except that the Agent, the Fronting Bank, the Swingline
Lender or any Lender shall be permitted to disclose Information (a) to such of
its respective officers, directors, employees, professional advisors, agents and
representatives as need to know such Information, (b) to the extent requested by
any regulatory authority, (c) to direct contractual counterparties in swap
agreements, PROVIDED that any such contractual counterparty agrees to be bound
by the provisions of this Section 10.17, (d) to the extent otherwise required by
applicable laws and regulations or by any subpoena or similar legal process or
(e) to the extent such Information (i) becomes publicly available other than as
a result of a breach of this Agreement or (ii) becomes available to the Agent,
the Fronting Bank, the Swingline Lender or any Lender on a non confidential
basis from a source other than the Borrower. For the purposes of this Section,
the term "Information" shall mean all financial statements, certificates,
reports, agreements and information (including all analyses, compilations and
studies prepared by the Agent, the Fronting Bank, the Swingline Lender or any
Lender based on any of the foregoing) that are received from the Borrower and
relate to the Borrower, either Guarantor or TAFSI, any shareholder of the
Borrower or any employee, customer or supplier of the Borrower, either Guarantor
or TAFSI, other than any of the foregoing that were available to the Agent, the
Fronting Bank, the Swingline Lender or any Lender on a nonconfidential basis
prior to its disclosure thereto by the Borrower, and which are, in the case of
Information provided after the date hereof, clearly identified at the time of
delivery as confidential. The provisions of this Section 10.17 shall remain
operative and in full force and effect regardless of the expiration and term of
this Agreement. Notwithstanding the foregoing, the parties hereto agree that the
filing of any of the Loan Documents or the Note Documents (to the extent
necessary in the reasonable judgment of the Collateral Agent after consulting
with the Borrower) to properly assure the validity or priority of the Collateral
Agent's
<PAGE>
98
Lien under any Security Document or to the extent required by local counsel in
order to render an opinion in form and substance reasonably satisfactory to the
Collateral Agent in connection with such Lien will not result in a violation of
the foregoing confidentiality provisions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
TRAVELCENTERS OF AMERICA, INC.,
by
/s/ Michael H. Hinderliter
----------------------------------
Name: Michael H. Hinderliter
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
by
/s/ Peter C. Eckstein
----------------------------------
Name: Peter C. Eckstein
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE,
by
/s/ David Bouhl
----------------------------------
Name: David Bouhl
Title: Head of Corporate Banking
CRESCENT/MACH I PARTNERS, L.P.,
by TCW ASSET MANAGEMENT
COMPANY, its Investment Manager,
by
/s/ Mark L. Gold
----------------------------------
Name: Mark L. Gold
Title: Managing Director
KEYPORT LIFE INSURANCE COMPANY,
by
/s/ Stewart R. Morrison
----------------------------------
Name: Stewart R. Morrison
Title: V.P. and Chief Investment Officer
KZH HOLDING CORPORATION,
by
/s/ Robert Goodwin
----------------------------------
Name: Robert Goodwin
Title: Authorized Agent
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
by
/s/ Shuichi Tajima
----------------------------------
Name: Shuichi Tajima
Title: Deputy General Manager
MANUFACTURERS AND TRADERS TRUST
COMPANY,
by
/s/ C. Gregory Vogelsang
----------------------------------
Name: C. Gregory Vogelsang
Title: Banking Officer
NATIONAL CITY BANK,
by
/s/ Stanley J. Gregorin, Jr.
----------------------------------
Name: Stanley J. Gregorin, Jr.
Title: Vice President
OAK HILL SECURITIES FUND, L.P.,
by OAK HILL SECURITIES GenPar, L.P.,
its General Partner
by OAK HILL SECURITIES MGP, Inc.,
its General Partner
by
/s/ Scott D. Krase
-----------------------------
Name: Scott D. Krase
Title: Vice President
PILGRIM AMERICA PRIME RATE TRUST,
by
/s/ Thomas C. Hunt
----------------------------------
Name: Thomas C. Hunt
Title: Portfolio Analyst
PROTECTIVE LIFE ISURANCE COMPANY,
by
/s/ James Dondero
----------------------------------
Name: James Dondero
Title: Authorized Signator
<PAGE>
SENIOR FLOATING RATE FUND, INC.,
by
/s/ Anne McCarthy
----------------------------------
Name: Anne McCarthy
Title: Authorized Signatory
SOCIETE GENERALE,
by
/s/ Joseph A. Philbin
----------------------------------
Name: Joseph A. Philbin
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
by
/s/ Jeffrey W. Maillet
----------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President and Director
<PAGE>
EXHIBIT A
ADMINISTRATIVE QUESTIONNAIRE
TravelCenters of America, Inc.
$120,000,000 Senior Secured Credit Facilities
Please accurately complete the following information and return via fax to The
Chase Manhattan Bank, Attention of Sandra Miklave as soon as possible.
FAX Number: 212-552-5658
LEGAL NAME TO APPEAR IN DOCUMENT:
- --------------------------------------------------------------------------------
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:
---------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, Zip Code:
----------------------------------------------------------
GENERAL INFORMATION - LIBOR LENDING OFFICE:
Institution Name:
---------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, Zip Code:
----------------------------------------------------------
CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact:
----------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, Zip Code:
----------------------------------------------------------
Phone Number:
-------------------------------------------------------------------
FAX Number:
---------------------------------------------------------------------
Backup Contact:
-----------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, Zip Code:
----------------------------------------------------------
Phone Number:
-------------------------------------------------------------------
FAX Number:
---------------------------------------------------------------------
TAX WITHHOLDING:
Non Resident Alien Y* N
----- -----
* Form 4224 Enclosed
Tax ID Number
<PAGE>
2
CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.
Contact:
------------------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, Zip Code:
----------------------------------------------------------
Phone Number:
-------------------------------------------------------------------
FAX Number:
---------------------------------------------------------------------
PAYMENT INSTRUCTIONS:
Name of Bank where funds are to be transferred:
- --------------------------------------------------------------------------------
Routing Transit/ABA number of Bank where funds are to be transferred:
- --------------------------------------------------------------------------------
Name of Account, if applicable:
- --------------------------------------------------------------------------------
Account Number:
-----------------------------------------------------------------
Additional Information:
---------------------------------------------------------
- --------------------------------------------------------------------------------
MAILINGS:
Please specify who should receive financial information:
Name:
---------------------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
City, State, Zip Code:
----------------------------------------------------------
It is very important that all of the above information is accurately filled in
and returned promptly. If there is someone other than yourself who should
receive this questionnaire, please notify us of their name and fax number and we
will fax them a copy of the questionnaire. If you have any questions, please
call Sandra Miklave of The Chase Manhattan Bank at 212-552-5658.
<PAGE>
EXHIBIT B
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of March 21, 1997 ("the
Credit Agreement"), among TravelCenters of America, Inc., a Delaware corporation
(the "Borrower"), the financial institutions from time to time party thereto
(the "Lenders") and The Chase Manhattan Bank, as agent for the Lenders (in such
capacity, the "Agent"), as fronting bank (in such capacity, the "Fronting Bank")
and as swingline lender (in such capacity, the "Swingline Lender"). Capitalized
terms used herein but not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth on the reverse
hereof, the interests set forth on the reverse hereof (the "Assigned Interest")
in the Assignor's rights and obligations under the Credit Agreement, including,
without limitation, the percentages and amounts set forth on the reverse hereof
of (i) the Commitments of the Assignor on the Effective Date, (ii) the loans
owing to the Assignor which are outstanding on the Effective Date, together with
unpaid interest accrued on such assigned Loans to the Effective Date, (iii)
participations in Letters of Credit acquired from the Fronting Bank which are
outstanding on the Effective Date, (iv) participations in Swingline Loans
acquired from the Swingline Lender which are outstanding on the Effective Date
and (v) the Fees accrued to the Effective Date for the account of the Assignor.
Each of the Assignor and the Assignee hereby makes and agrees to be bound by all
the representations, warranties and agreements set forth in Section 10.04(c) of
the Credit Agreement, a copy of which has been received by each such party. From
and after the Effective Date (x) the Assignee shall be a party to and be bound
by the provisions of the Credit Agreement and, to the extent of the interests
assigned by this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the Loan Documents and (y) the Assignor shall, to
the extent of the interests assigned by this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
2. This Assignment and Acceptance is being delivered to the Agent together
with (i) if the Assignee is organized under the laws of a jurisdiction outside
the United States, the forms specified in Section 2.20(f) of the Credit
Agreement, duly completed and executed by such Assignee, (ii) if the Assignee is
not already a Lender under the Credit Agreement, an Administrative Questionnaire
in the form of Exhibit C to the Credit Agreement and (iii) a processing and
recordation fee of $3,500.
3. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Date of Assignment: . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Name of Assignor: . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Name of Assignee: . . . . . . . . . . . . . . . . . . . . . . . . .
Assignee's Address for Notices: . . . . . . . . . . . . . . . . . . . . .
Effective Date of Assignment: . . . . . . . . . . . . . . . . . . . . . .
(may not be fewer than 5 Business
Days after the Date of Assignment): . . . . . . . . . . . . . . . . . . .
<PAGE>
2
Percentage assigned of
Facility and Commitment
thereunder (set forth, to
at least 8 decimals, as a
percentage of the Facility
and the aggregate
Principal Commitments of all
Commitment Amount Assigned Lenders thereunder)
- ---------- --------------- -------------------
Term Loan: $ %
Revolving Credit: $ %
Fees Assigned (if any): $
The terms set forth above are hereby agreed to:
........................as Assignor,
By:.................................
Name:...............................
Title:..............................
........................as Assignee,
By:.................................
Name:...............................
Title:..............................
Consented to by:
TRAVELCENTERS OF AMERICA, INC., if
required,
By:.................................
Name:...............................
Title:..............................
THE CHASE MANHATTAN BANK, if required, as
Agent, Fronting Bank and Swingline Lender,
By:.................................
Name:...............................
Title:..............................
<PAGE>
EXHIBIT C
Property No.
---
------------, --
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (this "ASSIGNMENT"), made as of the
27th day of March, 1997, by NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware
corporation and a wholly owned subsidiary of TRAVELCENTERS OF AMERICA, INC., a
Delaware corporation (the "BORROWER"), having an address at 3100 West End
Avenue, Suite 300, Nashville, TN 37203 ("ASSIGNOR") to THE CHASE MANHATTAN BANK,
as Collateral Agent for the Lenders, the Swingline Lender, the Fronting Bank and
the Tranche A Exchange Note Purchasers, having an office at 270 Park Avenue, New
York, New York 10017 ("ASSIGNEE") (each of the foregoing capitalized terms, and
all other capitalized terms used but not otherwise defined herein shall have the
respective meanings given to them in the Mortgage (as hereinafter defined)).
THIS ASSIGNMENT CONSTITUTES ADDITIONAL COLLATERAL FOR THE OBLIGATIONS SECURED BY
THE MORTGAGE (AS HEREINAFTER DEFINED) AND FOUR OTHER MORTGAGES ON PROPERTY IN
FLORIDA WHICH OTHER MORTGAGES ARE BEING RECORDED CONTEMPORANEOUSLY. THE MAXIMUM
AMOUNT SECURED HEREBY, BY FOUR OTHER ASSIGNMENTS OF LEASES AND RENTS RELATING TO
SUCH FOUR OTHER MORTGAGES AND BY SUCH FOUR OTHER MORTGAGES IN THE STATE OF
FLORIDA IS LIMITED TO $20,494,598.00, IN THE AGGREGATE, AS SET FORTH IN THE
MORTGAGES.
WITNESSETH THAT:
Assignor is the owner of certain real property, with the improvements,
certain fixtures and personal property located thereon, the location of which
real property is more particularly described in Exhibit A annexed hereto and
made a part hereof (all of such property is collectively the "PROPERTY").
Pursuant to the Credit Agreement and pursuant to the Tranche A Exchange
Note Purchase Agreements, (a) Assignee, the Lenders and the Fronting Bank have
loaned or agreed to loan or issue to the Borrower on a term basis by the
Lenders, Term Loans in an aggregate principal amount not to exceed $80,000,000,
and (b) the Tranche A Exchange Note Purchasers have agreed to accept $85,500,000
in aggregate principal amount of the Borrower's Tranche A Exchange Notes in
exchange for (i) $65,000,000 aggregate principal amount of the outstanding
National Senior Notes and (ii) $20,500,000 aggregate principal amount of the
outstanding TA Senior Notes.
Assignor is a wholly owned Subsidiary of the Borrower and will derive
substantial benefit from the making of the Loans by the Lenders, the making of
Swingline Loans by the Swingline Lender, the issuance of Letters of Credit by
the Fronting Bank and the purchase of the Tranche A Exchange Notes by the
Tranche A Exchange Note Purchasers. In order to induce the Lenders to make
Loans, the Swingline Lender to make Swingline Loans, the Fronting Bank to issue
Letters of Credit and the Tranche A Exchange Note Purchasers to accept the
Tranche A Exchange Notes, the Assignor has agreed to guarantee
<PAGE>
2
pursuant to the Guarantee Agreement the Obligations (as defined in the Credit
Agreement) (the due and punctual payment and performance of the covenants,
agreements, obligations and liabilities of the Assignor under the Guarantee
Agreement, this Assignment, the Mortgage (as hereinafter defined) and the other
Loan Documents are herein referred to as the "GUARANTEE OBLIGATIONS").
The obligations of the Lenders to make Loans and of the Fronting Bank to
issue Letters of Credit under the Credit Agreement and the obligations of the
original Tranche A Exchange Note Purchasers to purchase the Tranche A Exchange
Notes under the Tranche A Exchange Note Purchase Agreements are conditioned
upon, among other things, the execution and delivery by the Assignor of this
Assignment, in the form hereof, to secure (a) the due and punctual payment of
(i) the principal of, premium, if any, and interest on the Loans, the Swingline
Loans and the Tranche A Exchange Notes, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrower under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations of the Assignor
(including the Guarantee Obligations) and the Borrower to the Lenders, the
Swingline Lender, the Fronting Bank, the Agent, the Tranche A Exchange Note
Purchasers or the Collateral Agent under the Credit Agreement, the Tranche A
Exchange Note Purchase Agreements, this Assignment and the other Loan Documents
and Tranche A Exchange Note Documents to which the Assignor is or is to be a
party, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Borrower and the Assignor under or pursuant
to the Credit Agreement, the Tranche A Exchange Note Purchase Agreements, this
Assignment and the other Loan Documents and Tranche A Exchange Note Documents to
which the Borrower or the Assignor is or is to be a party and (c) the due and
punctual payment and performance of all obligations of the Borrower, monetary or
otherwise, under each Rate Protection Agreement entered into with a counterparty
that was a Lender (or an Affiliate of a Lender) at the time such Rate Protection
Agreement was entered into (all the obligations referred to in the preceding
clauses (a) through (c) being referred to collectively as the "SECURED
OBLIGATIONS"), provided that for purposes of this Mortgage, Secured Obligations
shall not include any obligations of the Mortgagor or the Borrower in respect of
any Revolving Loans or any Letters of Credit.
In connection with the above-described transaction, Assignor has executed
and delivered to Assignee either (i) a Mortgage, Security Agreement and
Assignment of Leases and Rents, (ii) a Deed of Trust, Security Agreement and
Assignment of Leases and Rents or (iii) a Deed to Secure Debt, dated the date
hereof, encumbering the Property and securing the Secured Obligations, which has
been recorded in the land records of the county where the Property is located
prior to this Assignment (the "MORTGAGE").
Assignee, in connection with the leasing of the Truckstop to a third-party
operator, has required that Assignor make, execute and deliver this Assignment.
NOW, THEREFORE, in consideration of the foregoing and in consideration of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, to further secure the Secured Obligations, Assignor hereby
agrees as follows:
<PAGE>
3
1. Assignor, hereby presently and irrevocably grants, transfers, bargains,
sells, assigns, conveys, and sets over unto Assignee, its successors and
assigns, from and after the date hereof, all right, title and interest of
Assignor in and to (i) a certain operating lease which is more particularly
described in Exhibit B annexed hereto and made part hereof (the "OPERATING
LEASE") and all other Leases which now or may hereafter affect the Property, or
any part of parts thereof and all guarantees, modifications, renewals and
extensions thereof, and (ii) all documents and instruments made or hereafter
made in respect of, together with all of the Rents, to become due or to which
Assignor is now or may hereafter become entitled, arising out of the Operating
Lease and all other Leases, or the Property or any part or parts thereof.
2. Upon the occurrence and during the continuance of an Event of Default,
without regard to the adequacy of the security for the Secured Obligations,
Assignee shall have the exclusive power and authority to:
(i) enter upon and take possession of the Property and manage the
same;
(ii) (A) demand, collect, sue for, attach, levy, recover, receive,
compromise, and (B) adjust and make, execute, and deliver receipts and
releases for, Rents which may be or hereafter become due, owing or payable
from each present or future operator, lessee, sublessee, licensee,
concessionaire or other occupant of the Property or any part thereof
(collectively, the "TENANTS");
(iii) receive, endorse and deposit for collection in the name of
Assignor or Assignee any checks, promissory notes or other evidences of
indebtedness, whether made payable to Assignor or Assignee, which are
given in payment or on account of Rent or by way of compromise or
settlement of any indebtedness for such Rents;
(iv) institute, prosecute, settle or compromise any summary or other
proceedings for the recovery of the Rents or for removing any and all
Tenants in accordance with the applicable Operating Lease, any other
applicable Lease or with applicable law;
(v) institute, prosecute, settle or compromise any proceedings for
the protection of the Property, for the recovery of any damage done to the
Property or for the abatement of any nuisance thereon or thereabouts;
(vi) defend, settle or compromise any legal proceedings brought, or
claims made against, Assignee or its agents, employees or servants which
may affect the Property, and, at the option of Assignee, defend, settle or
compromise any claims made or legal proceedings brought against Assignor
which may affect the Property or any part thereof;
(vii) lease or rent the Property or any part thereof for such time
and at such rentals as Assignee, in its sole discretion, may deem
advisable;
(viii) make any changes or improvements, structural or otherwise,
on, in or to the Property or any part thereof which Assignee, in its
reasonable discretion, may deem necessary or expedient for the leasing,
renting or preservation thereof;
<PAGE>
4
(ix) keep and maintain the Property in tenantable and rentable
condition and in a good state of repair;
(x) purchase such equipment and supplies as may be necessary or
desirable in the opinion of Assignee for use in connection with the
operation of the Property;
(xi) pay, from and out of the Rents collected by Assignee hereunder,
all taxes, assessments, or any and all other charges, costs and expenses
which Assignee may deem necessary or advisable to pay in connection with
the management and operation of the Property (including, without
limitation, any interest, principal or other payments due on any and all
loans secured by mortgages on the Property, if any, including the Secured
Obligations secured by the Mortgage);
(xii) contract for and purchase such insurance as Assignee may deem
advisable or necessary for the protection of Assignee and the Property,
including, without limitation, insurance of the types required under the
Mortgage;
(xiii) execute and comply with all requirements of applicable
Governmental Authorities relating to the Property and remove any and all
violations of the requirements of applicable Governmental Authorities
relating to the Property;
(xiv) enforce, enjoin or restrain the violation of any of the terms,
provisions and conditions of the Operating Lease and any other Leases; and
(xv) do anything and everything which Assignor could or would do
which might increase the Rents or which might diminish the expense of
operating the Property, whether herein expressly authorized or not, and in
all respects act in the place and stead of Assignor and have all of the
powers as owner as possessed by Assignor for the purposes aforesaid.
All the foregoing power and rights may be executed by Assignee or by its agents,
servants or attorneys, in the name of Assignee or in the name of Assignor, and
in such manner as Assignee, its agents, servants or attorneys consider to be
necessary, desirable, expedient, or appropriate; PROVIDED, HOWEVER, that under
no circumstances shall Assignee be under any obligation to exercise any of the
foregoing powers or rights or be in any manner, liable to Assignor or any other
party for failure to exercise such powers and rights.
3. Upon the occurrence and during the continuance of an Event of
Default, Assignee shall have the right to use and apply the Rents collected and
received by it under this Assignment (a) for the payment of any and all costs
and expenses incurred in connection with (i) enforcing the terms of this
Assignment, the Mortgage, the Loan Documents, or Tranche A Exchange Note
Documents, (ii) upholding and defending the rights of Assignee hereunder, under
the Mortgage, the Loan Documents, or Tranche A Exchange Note Documents, and
(iii) collecting Rents due under the Operating Lease or any other Leases; (b)
for the payment of operating expenses that are due and payable and for all other
expenses relating to the operation and maintenance of the Property and the
payment of all costs and expenses in connection therewith; (c) for the payment
of all costs and expenses including, without limitation, reasonable attorneys'
fees and disbursements paid or incurred by or on behalf of Assignee in the
protection and maintenance of the lien
<PAGE>
5
of the Mortgage or granted hereby in connection with any litigation or
proceeding affecting this Assignment, the Mortgage, or the Property and (d) for
distribution to the Assignee for the payment in full of Indebtedness and
satisfaction of the Secured Obligations.
4. Assignor hereby irrevocably constitutes and appoints Assignee its true
and lawful attorney, upon the occurrence and during the continuance of an Event
of Default, to undertake and execute any or all of the powers described herein
with the same force and effect as if undertaken or executed by Assignor.
5. Assignee shall not in any way be liable to Assignor for any act done or
anything omitted to be done by it in good faith in connection with the
management of the Property, except for the consequences of its own gross
negligence or willful misconduct, nor shall Assignee be liable for any act or
omission of its agents, servants or employees provided that due care is used by
Assignee in the selection of such agents, servants and employees, except for the
consequences of the gross negligence or willful misconduct of such agents,
servants or employees. Except as aforesaid, Assignee shall be accountable to
Assignor only for monies actually received by it pursuant to this Assignment.
6. It is understood and agreed that nothing contained in this Assignment
shall prejudice or be construed to prejudice the right of Assignee under any of
the Loan Documents or Tranche A Exchange Note Documents, without notice except
where required by the terms of the applicable document, to institute, persecute
and compromise any action which it would deem advisable to protect its interest
in the Property, including an action to foreclose the Mortgage, and in such
action, to move for the appointment of a receiver of the Rents, or prejudice any
rights which Assignee shall have upon the occurrence of an Event of Default.
This Assignment shall survive, however, the commencement of any such action and
shall continue in full force and effect in the event of any foreclosure action
until a sale of the Property shall be had thereunder.
7. Upon request of Assignee, Assignor shall execute and deliver to
Assignee such further instruments as Assignee may deem reasonably necessary to
effect this Assignment. Assignor, at its sole cost and expense, shall cause such
further instruments to be recorded in such manner and in such places as may be
reasonably required by Assignee.
8. Assignor shall pay all recording and filing fees in respect of this
Assignment as well as any and all taxes which may be due and payable on the
recording of this Assignment and any taxes hereafter imposed on this Assignment.
Should Assignor fail to pay the same, all such recording and filing fees and
taxes may be paid by Assignee on behalf of Assignor and the amount thereof,
together with interest at the Default Rate, shall be payable by Assignor to
Assignee immediately upon demand, or at the option of Assignee, Assignee may
reimburse itself therefor out of the Rents which may in such circumstance be
collected by Assignee.
9. Failure of Assignee to avail itself of any of the terms, covenants and
conditions of this Assignment shall not be construed or deemed to be a waiver of
any of its rights hereunder. The rights and remedies of the Assignee under this
Assignment are cumulative and are not in lieu of but are in addition to, and
shall not be affected by the exercise of, any other rights and remedies which
Assignee shall have under or by virtue of law or equity, the Loan Documents or
the Tranche A Exchange Note Documents (collectively, the "OTHER RIGHTS"). The
rights and remedies of Assignee hereunder may be exercised
<PAGE>
6
independently of or concurrently with any of the Other Rights at any time or
from time to time.
10. Assignee hereby gives Assignor a license to exercise all of its rights
as landlord or otherwise with respect to the Operating Lease or any other
Leases, to collect all the Rents, and to retain, use and enjoy the same in
accordance with the Loan Documents and the Tranche A Exchange Note Documents.
This Assignment shall continue in full force and effect until the satisfaction
and cancellation of the Mortgage as provided in Section 3.05(a) of the Mortgage,
and upon such occurrence, this Assignment and the authority and powers herein
granted by Assignor to Assignee shall cease and terminate, and, in that event,
Assignee shall (i) execute and deliver to Assignor such instrument or
instruments effective to evidence the termination of this Assignment and the
reassignment to Assignor of the rights, powers and authorities granted herein as
may be reasonably requested by Assignor, and (ii) deliver to Assignor any monies
held by Assignee for the benefit of Assignor. Assignor agrees that upon
termination of this Assignment it shall assume payment of all unmatured or
unpaid charges, expenses or obligations incurred or undertaken by Assignee in
connection with the management of the Property in accordance with the terms
hereof. This Assignment shall be amended so as to release and reassign to
Assignor the Operating Lease or other Leases, and that portion of the Rents
which relate to the Operating Lease or other Leases, which encumber a Property
which is to be released pursuant to Section 3.05(b) of the Mortgage, and
Assignee shall deliver to Assignor any monies with respect to any Property so
released held by Assignee for the benefit of Assignor. Assignor agrees that,
upon any release and reassignment contemplated by the preceding sentence, it
shall assume payment of all unmatured or unpaid charges, expenses or obligations
incurred or undertaken by Assignee in connection with the management of any
Property which is being so released. Assignor will pay all costs and expenses,
including attorneys' fees and disbursements, incurred by Assignee in connection
with any such amendment.
11. All of the covenants, agreements and provisions in this Assignment
binding upon or for the benefit of Assignor or Assignee shall bind and inure to
the benefit of their respective successors and assigns.
12. All notices, demands or requests made pursuant to this Assignment
shall be given in the manner set forth in Section 3.02 of the Mortgage.
13. This Assignment may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
14. This Assignment shall be governed by, construed and enforced in
accordance with the laws of the State where the Property is located.
<PAGE>
7
15. Upon payment and discharge in full of all outstanding Credit Agreement
Obligations or all outstanding Tranche A Exchange Note Obligations (each such
term as defined in the Intercreditor Agreement), all references herein to the
Credit Agreement or the Tranche A Exchange Note Purchase Agreements, as the case
may be, shall become null and void (other than references for purposes of
incorporating herein definitions of terms used therein, which terms will
continue to have the meanings assigned thereto immediately prior to such payment
and discharge, subject to subsequent amendment or modification in accordance
with the terms hereof).
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the day
and year first above written.
WITNESSES: ASSIGNOR:
NATIONAL AUTO/TRUCKSTOPS, INC.,
by
- -------------------------------- --------------------------------
Name:
Title:
- --------------------------------
ATTEST:
--------------------------------
Name:
Title:
[CORPORATE SEAL]
<PAGE>
EXHIBIT D
[FORM OF]
COLLATERAL ACCOUNT AGREEMENT
COLLATERAL ACCOUNT AGREEMENT, dated as of March
27, 1997, made by TRAVELCENTERS OF AMERICA, INC., a
Delaware corporation (the "BORROWER"), in favor of THE
CHASE MANHATTAN BANK, a New York banking corporation
("CHASE"), as collateral agent (in such capacity, the
"COLLATERAL AGENT") for the Secured Parties (as defined
herein). All capitalized terms used but not defined herein
shall have the meanings set forth in the other Transaction
Documents.
Reference is made to (a) the Master Collateral and Intercreditor
Agreement dated as of March 27, 1997 (as amended or modified from time to time,
the "INTERCREDITOR AGREEMENT"), among the Participating Creditors (as defined in
the Intercreditor Agreement) and the Collateral Agent and countersigned by the
Borrower and its subsidiaries; (b) the Credit Agreement dated as of March 21,
1997 (as amended or modified from time to time, the "CREDIT AGREEMENT"), among
the Borrower, the financial institutions party thereto, as lenders (the
"LENDERS"), and Chase, as agent (in such capacity, the "AGENT"), as fronting
bank (in such capacity, the "FRONTING BANK") and as swingline lender (in such
capacity, the "SWINGLINE LENDER"); and (c) the Senior Secured Note Exchange
Agreements, each dated as of March 21, 1997 (as amended or modified from time to
time, the "TRANCHE A EXCHANGE NOTE PURCHASE AGREEMENTS"), among the Borrower and
the Tranche A Exchange Note Purchasers named therein.
The Lenders, the Fronting Bank and the Swingline Lender,
respectively, have agreed to make Loans to the Borrower, to issue Letters of
Credit for the account of the Borrower and to make Swingline Loans to the
Borrower pursuant to, and upon the terms and subject to the conditions specified
in, the Credit Agreement. The Tranche A Exchange Note Purchasers have agreed to
accept the Tranche A Exchange Notes in exchange for the Existing Senior Notes
held by them pursuant to, and upon the terms and conditions specified in, the
Tranche A Exchange Note Purchase Agreements.
The obligations of the Lenders to make Loans, of the Fronting Bank to
issue Letters of Credit and of the Swingline Lender to make Swingline Loans
under the Credit Agreement and the obligations of the Tranche A Exchange Note
Purchasers to accept the Tranche A Exchange Notes in exchange for the Existing
Senior Notes held by them pursuant to the Tranche A Exchange Note Purchase
Agreements are conditioned upon, among other things, the execution and delivery
by the Pledgor of a pledge agreement in the form hereof to secure (a) the due
and punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, the Swingline Loans and the Tranche
A Exchange Notes, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (ii) each payment required to
be made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise,
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) of the Borrower to the Secured Parties
under the Credit Agreement, the Tranche A Exchange Note Purchase Agreements,
this Agreement and the other Transaction Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrower
<PAGE>
2
under or pursuant to the Agreement, the Tranche A Exchange Note Purchase
Agreements and the other Transaction Documents, (c) the due and punctual payment
and performance of all the covenants, agreements, obligations and liabilities of
each Grantor under or pursuant to the Credit Transaction Documents to which such
Grantor is a party and (d) the due and punctual payment and performance of all
obligations of the Borrower, monetary or otherwise, under each Rate Protection
Agreement entered into with a counterparty that was a Lender (or an Affiliate of
a Lender) at the time such Rate Protection Agreement was entered into (all the
obligations referred to in the preceding clauses (a) through (d) being referred
to collectively as the "OBLIGATIONS"). All capitalized terms used but not
defined herein shall have the meanings set forth in the other Transaction
Documents.
On the Closing Date, $45,000,000 of the proceeds of the Term
Loans shall be deposited in the Collateral Account (as defined herein) to fund
certain anticipated Capital Expenditures, Transition Capital Expenditures and
other ordinary course payments to be made by the Borrower and the Guarantors
from time to time.
It is a further condition precedent to the obligations of the
Lenders to make the Loans, the Fronting Bank to issue Letters of Credit and the
Swingline Lender to make the Swingline Loans under the Credit Agreement and to
the obligations of the Tranche A Exchange Note Purchasers to accept the Tranche
A Exchange Notes under the Tranche A Exchange Note Purchase Agreements that the
Borrower deposit $45,000,000 of the Term Loans made under the Credit Agreement
on the Closing Date in the Collateral Account simultaneously with the initial
Credit Event thereunder.
Accordingly, the Borrower and the Collateral Agent, on behalf of
itself and each other Secured Party (and each of their successors and assigns),
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. The following terms shall have the
following meanings:
"ACCOUNT COLLATERAL" shall have the meaning assigned to such term
in Section 2.01 of this Agreement.
"AGREEMENT" shall mean this Collateral Account Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"CODE" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York.
"COLLATERAL ACCOUNT" shall have the meaning assigned to such term
in Section 3.01 of this Agreement.
"EVENT OF DEFAULT" shall mean any "Event of Default" as defined
in the Credit Agreement and any "Event of Default" as defined in the
Tranche A Exchange Note Purchase Agreements.
"INDEMNITEE" shall mean any "Indemnitee" as defined in the Credit
Agreement and any "Indemnitee" as defined in the Tranche A Exchange Note
Agreements.
"OBLIGATIONS" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
<PAGE>
3
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Fronting
Bank, (c) the Agent, (d) the Collateral Agent, (e) the Tranche A
Exchange Note Purchasers, (f) the Swingline Lender and (g) the
successors and assigns of each of the foregoing.
"SECURITY INTEREST" shall have the meaning assigned to such term
in Section 2.01.
SECTION 1.02. RULES OF INTERPRETATION. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.
ARTICLE II
SECURITY INTEREST
SECTION 2.01. SECURITY INTEREST. As collateral security for the
prompt and complete payment and performance when due, whether at the stated
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise of the Obligations, the Borrower hereby (a) deposits on the Closing
Date $45,000,000 of the Term Loans (the "COLLATERAL") in the Collateral Account,
and (b) bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, for the ratable benefit of
the Secured Parties, and hereby grants to the Collateral Agent, its successors
and assigns, for the benefit of the Secured Parties, a continuing first priority
lien and security interest in all of its right, title and interest in and to the
Collateral, together with (i) all Collateral Account Deposits (as defined below)
made from time to time in accordance with Section 3.02 hereof and (ii) all
interest accruing from time to time and held in the Collateral Account pursuant
to Section 3.03 (the "COLLATERAL ACCOUNT INTEREST" and together with the
Collateral and the Collateral Account Deposits, the "ACCOUNT COLLATERAL") (the
"SECURITY INTEREST").
SECTION 2.02. NO ASSUMPTION OF LIABILITY. The Security Interest
is granted as security only and shall not subject the Collateral Agent or any
other Secured Party to, or in anyway alter or modify, any obligation or
liability of the Borrower with respect to or arising out of the Account
Collateral.
ARTICLE III
ESTABLISHMENT OF COLLATERAL ACCOUNT
SECTION 3.01. ESTABLISHMENT. The Collateral Agent has established
in the name of the Collateral Agent for the ratable benefit of the Secured
Parties an account (the "COLLATERAL ACCOUNT") with Chase for purposes of this
Agreement. Only Account Collateral will be deposited in the Collateral Account.
Subject to the provisions of this Agreement, the Collateral Account shall be
under the sole dominion and control of the Collateral Agent, and the Collateral
Agent shall have the sole right to make withdrawals from the Collateral Account
and to exercise all rights with respect to the Account Collateral from time to
time therein as set forth in this Agreement and the other Security Documents;
PROVIDED, HOWEVER, that so long as no Event of Default under the Credit
Agreement or the Tranche A Exchange Note Purchase Agreements shall have occurred
and be continuing, the Collateral Agent, from time to time, shall disburse and
apply portions of the Account Collateral in accordance with the provisions of
Section 3.4 of this Agreement. All Account Collateral delivered to the
Collateral Agent pursuant hereto shall be held in the Collateral Account in
accordance with the provisions hereof.
SECTION 3.02. DEPOSIT OF FUNDS IN COLLATERAL ACCOUNT. The
Collateral Account shall be used by the Collateral Agent for the purpose of
receiving (a) pursuant to Section 5.02 (gg) of the Credit Agreement and Section
3.23 of the Tranche A Exchange Note Purchase Agreements, the deposit of
$45,000,000 of the proceeds of the Term Loans made on the Closing Date, (b) cash
deposits made from time to time by the Borrower after the date hereof
("COLLATERAL ACCOUNT
<PAGE>
4
DEPOSITS") and (c) Collateral Account Interest accruing from time to time after
the date hereof pursuant to Section 3.03.
SECTION 3.03. INTEREST ON FUNDS DEPOSITED. Until the Termination
Date (as defined in Section 6.13 below) and so long as no Event of Default under
the Credit Agreement or the Tranche A Exchange Note Purchase Agreements shall
have occurred and be continuing, the Account Collateral shall be invested in
Permitted Investments at the direction of the Borrower. All interest and other
income accruing on or to the Account Collateral shall be held in the Collateral
Account as part of the Account Collateral. All risk of loss in respect of such
investments shall be borne by the Borrower except as otherwise provided in this
Agreement.
SECTION 3.04. DISBURSEMENT OF ACCOUNT COLLATERAL IN COLLATERAL
ACCOUNT. Provided that no Event of Default under the Credit Agreement or the
Tranche A Exchange Notes Purchase Agreements shall have occurred and be
continuing, the Collateral Agent shall from time to time disburse funds from the
Collateral Account upon receipt of a certificate of a Responsible Officer of the
Borrower that (a) no Event of Default has occurred and is continuing and (b) the
disbursement of such funds to the Borrower in such amounts as shall be specified
in such certificate are to be used within the next 30 days exclusively for
ordinary course purposes or any other use of the Term Loans contemplated by the
Credit Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to and with the Collateral
Agent and each other Secured Party that:
SECTION 4.01 TITLE; NO OTHER LIENS. Except for the Security
Interest granted to the Collateral Agent for the ratable benefit of the Secured
Parties pursuant to this Agreement and the other Liens expressly permitted
pursuant to Section 7.02 of the Credit Agreement and Section 7.2 of the Tranche
A Exchange Note Purchase Agreements (the "PERMITTED LIENS"), the Borrower is the
legal, record and beneficial owner of, and has good title to the Account
Collateral with respect to which it has purported to grant a Security Interest
hereunder, free and clear of any and all Liens or claims of others. No security
agreement, financing statement or other public notice with respect to all or any
part of such Account Collateral is on file or of record in any public office,
except such as have been filed, pursuant to this Agreement, in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties or Permitted
Liens or Liens.
SECTION 4.02. AUTHORITY. The Borrower has full power and
authority to grant to the Collateral Agent the Security Interest in the Account
Collateral with respect to which it has purported to grant a Security Interest
hereunder, pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other person other than any consent or approval that has been obtained.
SECTION 4.03. ENFORCEABLE OBLIGATION; PERFECTED, FIRST PRIORITY
SECURITY INTERESTS. The Security Interest (a) constitutes a legal, valid and
binding security interest in all the Account Collateral securing the payment and
performance of the Obligations enforceable against the Borrower in accordance
with its terms, (b) upon completion of the filings and other actions specified
in Schedule I attached hereto shall constitute a perfected security interest in
the Account Collateral in favor of the Collateral Agent for the ratable benefit
of the Secured Parties, and (c) is prior to all other Liens (other than
Permitted Liens) on the Account Collateral in existence on the date hereof.
<PAGE>
5
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.01. REMEDIES UPON DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent may (i) upon
prior written notice to the Borrower, withdraw Account Collateral from the
Collateral Account and (ii) upon prior written notice to the Borrower, exercise
in respect of the Account Collateral, in addition to other rights and remedies
provided for herein or otherwise available to them, all of the rights and
remedies of a secured party under the Code as in effect at the time of such
exercise.
SECTION 5.02. APPLICATION OF PROCEEDS. All cash proceeds received
by the Collateral Agent in respect of any withdrawal pursuant to Section 5.01 of
all or any part of the Account Collateral shall be applied:
FIRST, to the payment of all costs and expenses incurred by the
Agent or the Collateral Agent (in its capacity as such hereunder or
under any other Credit Transaction Document) in connection with such
collection or sale or otherwise in connection with this Agreement or any
of the Obligations, including all court costs and the fees, other
charges and expenses of its agents and legal counsel, the repayment of
all advances made by the Collateral Agent hereunder or under any other
Credit Transaction Document on behalf of the Borrower or any Grantor and
any other costs or expenses incurred in connection with the exercise of
any right or remedy hereunder or under any other Credit Transaction
Document;
SECOND, subject to the provisions of the Intercreditor Agreement,
to the Collateral Agent for distribution to the Participating Creditors
(as defined in the Intercreditor Agreement) as provided in Article IV of
the Intercreditor Agreement for the payment in full of Indebtedness and
satisfaction of the Obligations owed to the Participating Creditors; and
THIRD, to the Borrower, its successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
Subject to the terms of the Intercreditor Agreement, the Collateral Agent shall
have absolute discretion as to the time of application of any such proceeds,
monies or balances in accordance with this Agreement
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. NOTICES. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 10.01 of the Credit Agreement and Section 16.6 of the
Tranche A Exchange Note Purchase Agreements. All communications and notices
hereunder to the Collateral Agent shall be given to it at the address set forth
in Schedule II hereto.
SECTION 6.02. SECURITY INTEREST ABSOLUTE. All rights of the
Collateral Agent hereunder, the Security Interest granted hereunder and all
obligations of the Borrower hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of any Credit
Transaction Document, any agreement with respect to any of the Obligations or
any other agreement or instrument relating to any of the foregoing, (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations, or any other amend ment or waiver of or any consent
to any departure from any Credit Transaction Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
<PAGE>
6
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations or (d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations or in respect of this Agreement (other than the indefeasible payment
in full of all the Obligations by any of the Grantors).
SECTION 6.03. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Credit Transaction Document shall be
considered to have been relied upon by the Secured Parties and shall survive the
making by the Lenders of the Loans, the making by the Swingline Lender of the
Swingline Loans and the acceptance by the Tranche A Exchange Note Purchasers of
the Tranche A Exchange Notes, and the execution and delivery to the Tranche A
Exchange Note Purchasers of the Tranche A Exchange Notes, and the issuance by
the Fronting Bank of any Letter of Credit, regardless of any investigation made
by the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on, or any other fee
or amount payable under or in respect of any Loan, Swingline Loan, Tranche A
Exchange Note or Letter of Credit, or this Agreement or, without duplication of
the foregoing, under any of the other Credit Transaction Documents is
outstanding and unpaid and so long as the Commitments and the LC Commitment have
not been terminated.
SECTION 6.04. BINDING EFFECT; ASSIGNMENTS. This Agreement shall
become effective as to the Borrower when a counterpart hereof executed on behalf
of the Borrower shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon the Borrower and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of the
parties hereto, and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein or in the Account Collateral, or any part thereof (and any such attempted
assignment shall be void), or otherwise pledge, encumber or grant any option
with respect to the Account Collateral, or any part thereof, or any cash or
property held by the Collateral Agent as Account Collateral under this Agreement
except as expressly contemplated by this Agreement or the other Credit
Transaction Documents.
SECTION 6.05. SUCCESSORS AND ASSIGNS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Grantor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 6.06. POWER OF ATTORNEY. The Collateral Agent is hereby
appointed by the Borrower, as its true and lawful agent and attorney-in-fact,
and in such capacity the Collateral Agent shall have the right, with power of
substitution for the Borrower and in each Grantor's name or otherwise, for the
use and benefit of the Collateral Agent and the other Secured Parties, upon the
occurrence and during the continuance of an Event of Default, (a) to commence
and prosecute any and all suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect or otherwise realize on all or
any of the Account Collateral or to enforce any rights in respect of any Account
Collateral; (b) to settle, compromise, compound, adjust or defend any actions,
suits or proceedings relating to all or any of the Account Collateral; (e) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Account Collateral, and to do all other
acts and things necessary to carry out the purposes of this Agreement, as fully
and completely as though the Collateral Agent were the absolute owner of the
Account Collateral for all purposes; PROVIDED, HOWEVER, that nothing herein
contained shall be construed as requiring or obligating the Collateral Agent or
any other Secured Party to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by the Collateral Agent or any
other Secured Party, or to present or file any claim or notice, or to take any
action with respect to the Account Collateral or any part thereof or the moneys
due or to
<PAGE>
7
become due in respect thereof or any property covered thereby, and no action
taken or omitted to be taken by the Collateral Agent or any other Secured Party
with respect to the Account Collateral or any part thereof shall give rise to
any defense, counterclaim or offset in favor of the Borrower or to any claim or
action against the Collateral Agent or any other Secured Party.
SECTION 6.07. COLLATERAL AGENT'S FEES AND EXPENSES;
INDEMNIFICATION. (a) The Borrower agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts or agents, that the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the collection from or other
realization upon any of the Account Collateral, (iii) the exercise, enforcement
or protection of any of the rights of the Collat eral Agent hereunder or (iv)
the failure of the Borrower to perform or observe any of the provisions hereof.
If the Borrower shall fail to do any act or thing that it has covenanted to do
hereunder or any of its representations or warranties hereunder shall be
breached, the Collateral Agent may (but shall not be obligated to) do the same
or cause it to be done or remedy any such breach and there shall be added to the
Obligations the cost or expense incurred by the Collateral Agent in so doing.
(b) Without limitation of their indemnification obligations under
the other Credit Transaction Documents, the Borrower agrees to indemnify the
Collateral Agent and the other Indemnities against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees and expenses, incurred by or
asserted against any of them arising out of, in any way connected with, or as a
result of, the execution, delivery or performance of this Agreement or any
claim, litigation, investigation or proceeding relating hereto or to the Account
Collateral, whether or not any Indemnitee is a party thereto, PROVIDED that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 6.07 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Credit Transaction Document or any investigation made by or on behalf of
the Collateral Agent or any other Secured Party. All amounts due under this
Section shall be payable on written demand therefor and shall bear interest at
the Alternate Base Rate (as defined in the Credit Agreement) plus 2%.
SECTION 6.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.09. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent or any other Secured Party in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Collateral Agent hereunder and of the other Secured Parties under the other
Credit Transaction Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Credit Transaction Document or consent to any departure
by the Borrower therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand
<PAGE>
8
on the Borrower in any case shall entitle it to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Borrower and the Collateral Agent, with the prior written consent of
the Required Lenders and the Required Holders; PROVIDED, HOWEVER, that except as
provided herein or in the other Credit Transaction Documents, no such agreement
shall amend, modify, waive or otherwise adversely affect a Secured Party's
rights and interests in any material amount of the Collateral without the prior
written consent of such Secured Party.
SECTION 6.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT
TRANSACTION DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT TRANSACTION
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 6.10.
SECTION 6.11. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Credit Transaction
Document should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions, the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 6.12. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
The Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Credit Transaction Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Credit
Transaction Documents against the Borrower or its properties in the courts of
any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Credit
Transaction Documents in any New York State or Federal court. Each of the
parties
<PAGE>
9
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 6.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 6.13. TERMINATION. This Agreement and the Security
Interest shall terminate when (a) all the Obligations having been indefeasibly
paid in full and the Lenders and the Swingline Lender having no further
commitment to lend under the Credit Agreement, no Letters of Credit are
outstanding and the Fronting Bank has no further obligation to issue Letters of
Credit under the Credit Agreement or (b) no funds remain in the Collateral
Account and the Borrower has given the Collateral Agent written notice that
there will not be any future Collateral Account Deposits (the "TERMINATION
DATE"), at which time the Collateral Agent shall (i) execute and deliver to the
Borrower a proper instrument or instruments acknowledging the satisfaction and
termination of this Agreement, prepared by the Borrower at its expense, that the
Borrower shall reasonably request to evidence such termination and (ii) deliver
any Account Collateral remaining in the Collateral Account to the Borrower. Any
execution and delivery of termination statements, documents or Account
Collateral pursuant to this Section 6.13 shall be without recourse to or
warranty by the Collateral Agent.
SECTION 6.14. HEADINGS. Article and Section headings used herein
are for convenience of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 6.15. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 6.04.
SECTION 6.16. INTERCREDITOR AGREEMENT. (a) The Collateral Agent
agrees, for itself and for each other Secured Party, that it and each other
Secured Party shall be bound by the terms of the Intercreditor Agreement in
connection with the administration of this Agreement.
(b) The Borrower hereby acknowledges receipt of a copy of and
agrees to be bound by the terms of the Intercreditor Agreement.
SECTION 6.17. REFERENCES TO CREDIT AGREEMENT. Upon the payment
and discharge in full of all outstanding Credit Agreement Obligations or all
outstanding Tranche A Exchange Note Obligations, all references herein to the
terms of the Credit Agreement or the Tranche A Exchange Note Documents, as the
case may be, shall become null and void (other than references for the purposes
of incorporating herein definitions of terms used therein, which terms will
continue to have the meanings assigned thereto immediately prior to such payment
and discharge, subject to subsequent amendment or modifications in accordance
with the terms hereof).
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TRAVELCENTERS OF AMERICA, INC.,
by
----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
----------------------------
Name:
Title:
<PAGE>
EXHIBIT E
COLLATERAL ASSIGNMENT (the "COLLATERAL ASSIGNMENT") dated as of
March 27, 1997, from TRAVELCENTERS OF AMERICA, INC., a Delaware
corporation (the "BORROWER"), TA OPERATING CORPORATION, a Delaware
corporation ("TA"), NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware corporation
("NATIONAL") and TA FRANCHISE SYSTEMS, INC., a Delaware corporation
("TAFSI" and, together with TA, National and the Borrower, the
"GRANTORS"), to THE CHASE MANHATTAN BANK, a New York banking corporation
("CHASE"), as collateral agent (in such capacity, the "COLLATERAL AGENT")
for the Secured Parties (as defined in the Security Agreement).
Reference is made to (a) the Master Collateral and Intercreditor Agreement
dated as of March 27, 1997 (as amended or modified from time to time, the
"Intercreditor Agreement"), among the Participating Creditors (as defined
therein) and the Collateral Agent and countersigned by the Grantors; (b) the
Credit Agreement dated as of March 21, 1997 (as amended or modified from time to
time, the "CREDIT AGREEMENT"), among the Borrower, the financial institutions
party thereto, as lenders (the "LENDERS"), and Chase, as agent (in such
capacity, the "AGENT"), as fronting bank (in such capacity, the "Fronting BANK")
and as swingline lender (in such capacity, the "SWINGLINE LENDER"; and (c) the
Senior Secured Note Exchange Agreements, each dated as of March 21, 1997 (as
amended or modified from time to time, the "SENIOR SECURED NOTE AGREEMENTS"),
among the Borrower and the Tranche A Exchange Note Purchasers named therein.
The Lenders, the Fronting Bank and the Swingline Lender, respectively,
have agreed to make Loans to the Borrower, to issue Letters of Credit for the
account of the Borrower and to make Swingline Loans to the Borrower pursuant to,
and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Tranche A Exchange Note Purchasers have agreed to accept
$35,500,000 aggregate principal amount of the Borrower's 8.94% Series I Senior
Secured Notes due 2002 (the "SERIES I TRANCHE A EXCHANGE NOTES") and $50,000,000
aggregate principal amount of the Borrower's Series II Senior Secured Notes due
2005 (the "SERIES II TRANCHE A EXCHANGE NOTES" and, together with the Series I
Tranche A Exchange Notes, the "TRANCHE A EXCHANGE NOTES") in exchange for (i)
$65,000,000 aggregate principal amount of the outstanding 8.76% Senior Secured
Notes due 2002 of National (the "NATIONAL SENIOR NOTES") and (ii) $20,500,000
aggregate principal amount of the outstanding 8.63% Senior Secured Notes due
2002 of TA (the "TA SENIOR NOTES" and, together with the National Senior Notes,
the "EXISTING SENIOR NOTES") held by them pursuant to, and upon the terms and
subject to the conditions specified in, the Tranche A Exchange Note Purchase
Agreements.
The obligations of the Lenders to make Loans, of the Fronting Bank to
issue Letters of Credit and of the Swingline Lender to make Swingline Loans
under the Credit Agreement and the obligations of the Tranche A Exchange Note
Purchasers to accept the Tranche A Exchange Notes in exchange for the Existing
Senior Notes held by them pursuant to the Tranche A Exchange Note Purchase
Agreements are conditioned upon, among other things, the execution and delivery
by the Grantors of a security agreement in the form hereof to secure (a) the due
and punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, the Swingline Loans and the Tranche
A Exchange Notes, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (ii) each payment required to
be made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise,
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) of the Borrower to the Secured Parties
under the Credit Agreement, the Tranche A Exchange Note Purchase Agreements,
this Agreement and the other Credit Transaction Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit
<PAGE>
Agreement, the Tranche A Exchange Note Purchase Agreements and the other Credit
Transaction Documents, (c) the due and punctual payment and performance of all
the covenants, agreements, obligations and liabilities of each Grantor under or
pursuant to the Credit Transaction Documents to which such Grantor is a party
and (d) the due and punctual payment and performance of all obligations of the
Borrower, monetary or otherwise, under each Rate Protection Agreement entered
into with a counterparty that was a Lender (or an Affiliate of a Lender) at the
time such Rate Protection Agreement was entered into (all the obligations
referred to in the preceding clauses (a) through (d) being referred to
collectively as the "OBLIGATIONS").
Accordingly, the Grantors and the Collateral Agent, on behalf of itself,
and each other Secured Party (and each of their successors and assigns), hereby
agree as follows:
SECTION 1. DEFINITION OF TERMS USED HEREIN. All capitalized terms used but
not defined herein shall have the meanings set forth in the other Credit
Transaction Documents.
SECTION 2. COLLATERAL ASSIGNMENT. As collateral security for the
Obligations, each Grantor hereby assigns to the Collateral Agent (for the
ratable benefit of the Secured Parties), and hereby grants to the Collateral
Agent (for the ratable benefit of the Secured Parties) a security interest in,
all of such Grantor's right, title and interest in, to and under the following
contracts and instruments, as the same may be modified, amended or supplemented
from time to time:
(a) the Asset Purchase Agreements;
(b) the Environmental Agreements;
(c) the Ancillary Agreements;
(d) the Franchise Agreements;
(e) the Rate Protection Agreements; and
(f) such other contracts and instruments of the Grantors as the
Collateral Agent shall designate from time to time to the Grantors in
writing.
The contracts and instruments listed in clauses (a) through (f), as amended and
in effect from time to time, are referred to collectively as the "Assigned
Contracts". The foregoing assignment shall include (a) any and all rights to
receive and demand payments under any and all Assigned Contracts, (b) any and
all rights to receive and compel performance under any and all Assigned
Contracts, (c) the right to make all waivers, amendments, determinations and
agreements of or under any and all Assigned Contracts, (d) the right to take
such action, including commencement, conduct and consummation of legal,
administrative or other proceedings, as shall be permitted by the Assigned
Contracts or by law and (e) any and all other rights, interests and claims now
existing or hereafter arising under or in connection with any and all Assigned
Contracts.
SECTION 3. GRANTORS TO REMAIN LIABLE. Notwithstanding any other provision
contained in this Collateral Assignment, (a) each Grantor shall at all times
remain liable under the Assigned Contracts to perform, at its own cost and
expense, all its duties and obligations thereunder to the same extent as if this
Collateral Assignment had not been executed; (b) the exercise by the Collateral
Agent of any of the rights assigned hereunder shall not release either Grantor
from any of its duties or obligations under any Assigned Contract; and (c)
neither the Collateral Agent nor any other Secured Party shall have any
obligation or liability under any Assigned Contract by reason of, or arising out
of, this Collateral Assignment, and neither the Collateral Agent nor any other
Secured Party shall be obligated to perform any of the obligations or duties of
the Grantors under any of the Assigned Contracts or to make any payment or to
present or file any claim or to take any other action to collect or enforce any
right or payment assigned under this Collateral Assignment. Subject to the
covenants
2
<PAGE>
and limitations of the Grantors contained in the Credit Transaction Documents
(including Section 7(b) hereof), so long as no Default or Event of Default (both
terms as defined in the Credit Agreement and the Tranche A Exchange Note
Purchase Agreements) shall have commenced and be continuing, the Grantors may
exercise all rights under or with respect to the Assigned Contracts, including
the right to require payment of all moneys due or to become due under, and
otherwise demand or compel performance under, the Assigned Contracts and the
right to enforce all rights and exercise all remedies under the Assigned
Contracts.
SECTION 4. DEFAULT AND EVENT OF DEFAULT. Upon the commencement and during
the continuance of a Default or Event of Default, the Collateral Agent may, at
its option, without notice to or demand upon either Grantor (both of which are
hereby waived for the purpose of this Section 4), in addition to all other
rights and remedies provided under any of other Credit Transaction Documents, in
its own name or the name of either Grantor, demand, sue upon or otherwise
enforce the Assigned Contracts to the same extent as if the Collateral Agent
were the party named in the Assigned Contracts, and exercise all other rights of
either Grantor under the Assigned Contracts in such manner as it may determine.
Any moneys actually received by the Collateral Agent pursuant to the exercise of
any of the rights and remedies granted in this Collateral Assignment shall be
applied as provided in the Intercreditor Agreement.
SECTION 5. NO LIABILITY. Neither the Collateral Agent nor any other
Secured Party shall be liable for any loss sustained by any Grantor resulting
from the Collateral Agent's failure to enforce the Assigned Contracts (whether
before or during a Default or an Event of Default) or from any other act or
omission of the Collateral Agent except to the extent that it is finally
determined by a court of competent jurisdiction that such loss resulted from the
Collateral Agent's gross negligence or wilful misconduct. Neither the Collateral
Agent nor any other Secured Party shall be obligated to perform or discharge any
obligation, duty or liability under the Assigned Contracts under or by reason of
this Collateral Assignment.
SECTION 6. IRREVOCABLE AUTHORIZATION. Except as otherwise expressly
provided herein, each Grantor hereby irrevocably authorizes and directs each
person who shall be a party to or liable for the performance of any of the
Assigned Contracts, upon receipt of written notice from the Collateral Agent to
the effect that a Default or Event of Default exists and is continuing, to
attorn to or otherwise recognize the Collateral Agent as owner under the
Assigned Contracts and to pay, observe and otherwise perform the obligations
under the Assigned Contracts to or for the Collateral Agent or the Collateral
Agent's designee as though the Collateral Agent or such designee were the
Grantors named in the Assigned Contracts, and to continue to do so until
otherwise notified by the Collateral Agent. The Collateral Agent shall provide
the Grantors with a copy of any such notification; PROVIDED, HOWEVER, that the
failure to do so shall not affect the Collateral Agent's rights under this
Collateral Assignment.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO THIS
COLLATERAL ASSIGNMENT. (a) The Grantors represent and warrant to and with the
Collateral Agent and each other Secured Party that no Grantor has assigned,
pledged, charged or otherwise encumbered the Assigned Contracts other than the
assignment made hereby and by the Security Agreement. Each Grantor hereby
covenants that so long as this Collateral Assignment shall remain in effect it
will not assign or pledge the whole or any part of the right, title and interest
hereby assigned to anyone other than the Collateral Agent. In addition, each
Grantor covenants that it shall use reasonable efforts to deliver to the
Collateral Agent all such written consents and acknowledgements, in form and
substance satisfactory to the Collateral Agent, as the Collateral Agent shall
reasonably request in connection with this Collateral Assignment (including the
consents of the Union Oil Company of California, a California Corporation, and
BP Exploration & Oil Inc., an Ohio corporation, respectively, of the assignment
of the Assigned Contracts to which each is a party, substantially in the form of
Annex 1 hereto).
(b) The Grantors jointly and severally agree, represent and warrant that
the Assigned Contracts (other than Franchise Agreements entered into after the
date hereof) have not been modified, amended, altered or changed in any manner
since December 9, 1993, that is adverse to the interests of the Secured Parties,
and are in full force and effect, there being no material default thereunder by
any Grantor. No Grantor will permit any
3
<PAGE>
waiver, amendment, change or modification that is adverse in any respect to the
interests of the Secured Parties to be made to the Assigned Contracts without
the written consent of the Collateral Agent.
SECTION 8. FURTHER ASSURANCES. Each Grantor agrees that at any time and
from time to time, upon the written request of the Collateral Agent, the
Grantors will promptly and duly execute and take such further actions as the
Collateral Agent may reasonably deem desirable in obtaining and protecting the
full benefits of this Collateral Assignment and of the rights and powers herein
granted and in order to carry out more effectively the intent and purpose of
this Collateral Assignment, including, without limitation, if reasonably
requested by the Collateral Agent, at the expense of the Grantors, the
recording, filing, re-recording or re-filing of any Uniform Commercial Code
financing statements or of such other documents with respect hereto, in
accordance with the laws of such jurisdictions, as the Collateral Agent may from
time to time reasonably request.
SECTION 9. NOTICES. All communications and notices hereunder shall (except
as otherwise expressly permitted herein) be in writing and given as provided in
Section 10.01 of the Credit Agreement and Section 16.6 of the Tranche A Exchange
Note Purchase Agreements. All communications and notices hereunder to the
Collateral Agent shall be given to it at its address set forth in Annex 2
hereto.
SECTION 10. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Grantors herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Collateral Assignment or any other Credit Transaction Document
shall be considered to have been relied upon by the Secured Parties and shall
survive the making by the Lenders of the Loans, the making by the Swingline
Lender of the Swingline Loans and the acceptance by the Tranche A Exchange Note
Purchasers of the Tranche A Exchange Notes, the execution and delivery to the
Tranche A Exchange Note Purchasers of the Tranche A Exchange Notes, and the
issuance by the Issuing Bank of any Letter of Credit, regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on,
or any other fee or amount payable under or in respect of, any Loan, Swingline
Loan, Tranche A Exchange Note or Letter of Credit, or this Collateral Assignment
or, without duplication of the foregoing, under any of the other Credit
Transaction Documents, is outstanding and unpaid and so long as the Commitments
and the LC Commitment have not been terminated.
SECTION 11. BINDING EFFECT; ASSIGNMENTS. This Collateral Assignment shall
become effective as to each Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign
its rights hereunder or any interest herein or in the Collateral (and any such
attempted assignment shall be void) except as expressly contemplated by this
Collateral Assignment or the other Credit Transaction Documents.
SECTION 12. SUCCESSORS AND ASSIGNS. Whenever in this Collateral Assignment
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party, and all covenants, promises
and agreements by or on behalf of the Grantors or the Collateral Agent that are
contained in this Collateral Assignment shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 13. POWER OF ATTORNEY. The Collateral Agent is hereby appointed by
the Grantors, as the true and lawful agent and attorney-in-fact of each Grantor,
and in such capacity the Collateral Agent shall have the right, with power of
substitution for the Grantors and in each Grantor's name or otherwise, for the
use and benefit of the Collateral Agent and the other Secured Parties, upon the
occurrence and during the continuance of a Default or an Event of Default, (a)
to receive, endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment relating to the
Assigned Contracts or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or
4
<PAGE>
any of the Assigned Contracts; (c) to sign the name of either Grantor on any
invoice or bill of lading relating to any of the Assigned Contracts; (d) to
commence and prosecute any and all suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect or otherwise realize on
all or any of the Assigned Contracts or to enforce any rights in respect of any
Assigned Contracts; (e) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to all or any of the Assigned Contracts;
and (f) to use, sell, assign, transfer, pledge, make any agreement with respect
to or otherwise deal with all or any of the Assigned Contracts, and to do all
other acts and things necessary to carry out the purposes of this Collateral
Assignment, as fully and completely as though the Collateral Agent were the
Grantors named in the Assigned Contracts; PROVIDED, HOWEVER, that nothing herein
contained shall be construed as requiring or obligating the Collateral Agent or
any other Secured Party to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by the Collateral Agent or any
other Secured Party, or to present or file any claim or notice, or to take any
action with respect to the Assigned Contracts or any part thereof or the moneys
due or to become due in respect thereof or any property covered thereby, and no
action taken or omitted to be taken by the Collateral Agent or any other Secured
Party with respect to the Assigned Contracts or any part thereof shall give rise
to any defense, counterclaim or offset in favor of any Grantor or to any claim
or action against the Collateral Agent or any other Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Grantors for the purposes set forth above is coupled
with an interest and is irrevocable. The provisions of this Section 13 shall in
no event relieve any Grantor of any of its obligations hereunder or under the
other Credit Transaction Documents with respect to the Assigned Contracts or any
part thereof or impose any obligation on the Collateral Agent or any other
Secured Party to proceed in any particular manner with respect to the Assigned
Contracts or any part thereof, or in any way limit the exercise by the
Collateral Agent or any other Secured Party of any other or further right that
it may have on the date of this Collateral Assignment or hereafter, whether
hereunder, under any other Credit Transaction Document, by law or otherwise. Any
sale pursuant to the provisions of this Section 13 shall be deemed to conform to
the commercially reasonable standards as provided in Section 9-504(3) of the
Uniform Commercial Code as in effect in the State of New York or its equivalent
in other jurisdictions.
SECTION 14. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION. (a)
Each Grantor jointly and severally agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts or agents, that the
Collateral Agent may incur in connection with (i) the administration of this
Collateral Assignment, (ii) the custody or preservation of, or the sale of,
collection from or other realization upon any of the Assigned Contracts, (iii)
the exercise, enforcement or protection of any of the rights of the Collateral
Agent hereunder or (iv) the failure of the Grantors to perform or observe any of
the provisions hereof. If any Grantor shall fail to do any act or thing that it
has covenanted to do hereunder or any representation or warranty of any Grantor
hereunder shall be breached, the Collateral Agent may (but shall not be
obligated to) do the same or cause it to be done or remedy any such breach and
there shall be added to the Obligations the cost or expense incurred by the
Collateral Agent in so doing.
(b) Without limitation of its indemnification obligations under the other
Credit Transaction Documents, each Grantor jointly and severally agrees to
indemnify the Collateral Agent and the other Indemnitees against, and hold each
of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses, incurred by or
asserted against any of them arising out of, in any way connected with, or as a
result of, the execution, delivery or performance of this Collateral Assignment
or any claim, litigation, investigation or proceeding relating hereto or to the
Assigned Contracts, whether or not any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 14 shall remain operative and in full force and
5
<PAGE>
effect regardless of the termination of this Collateral Assignment, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Collateral Assignment or any other Credit Transaction Document or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 14 shall be payable on written demand
therefor and shall bear interest at the Alternate Base Rate (as defined in the
Credit Agreement) plus 2%.
SECTION 15. GOVERNING LAW. THIS COLLATERAL ASSIGNMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 16. WAIVERS; AMENDMENT. (a) No failure or delay of the Collateral
Agent or any other Secured Party in exercising any power or right hereunder and
no course of dealing between the parties thereto shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and of
the other Secured Parties under the other Credit Transaction Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Collateral Assignment or any
other Credit Transaction Document or consent to any departure by any Grantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on any Grantor in any case shall entitle such Grantor or any other Grantor to
any other or further notice or demand in similar or other circumstances.
(b) Subject to the provisions of the Intercreditor Agreement, neither this
Collateral Assignment nor any provision hereof may be waived, amended or
modified except pursuant to a written agreement entered into by a Grantor or the
Grantors and the Collateral Agent, with the prior written consent of the
Required Lenders and the Required Holders; PROVIDED, HOWEVER, that except as
provided herein or in the other Credit Transaction Documents, no such agreement
shall amend, modify, waive or otherwise adversely affect a Secured Party's
rights and interests in any material amount of the Collateral without the prior
written consent of such Secured Party.
SECTION 17. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS COLLATERAL ASSIGNMENT OR ANY OF THE OTHER CREDIT
TRANSACTION DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS COLLATERAL ASSIGNMENT AND THE OTHER CREDIT
TRANSACTION DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 17.
SECTION 18. SEVERABILITY. In the event any one or more of the provisions
contained in this Collateral Assignment or in any other Credit Transaction
Document should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions
6
<PAGE>
with valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 19. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each Grantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Collateral Assignment or the other Credit Transaction Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Collateral Assignment shall
affect any right that the Collateral Agent or any other Secured Party may
otherwise have to bring any action or proceeding relating to this Collateral
Assignment or the other Credit Transaction Documents against either Grantor or
its properties in the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Collateral Assignment or the other Credit
Transaction Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Collateral Assignment irrevocably consents to
service of process in the manner provided for notices in Section 9. Nothing in
this Collateral Assignment will affect the right of any party to this Collateral
Assignment to serve process in any other manner permitted by law.
SECTION 20. TERMINATION; RELEASE. (a) This Collateral Assignment shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders and the Swingline Lender have no further commitment to lend under the
Credit Agreement, no Letters of Credit are outstanding and the Fronting Bank has
no further obligation to issue Letters of Credit under the Credit Agreement, at
which time the Collateral Agent shall take such actions as the Grantors shall
reasonably request at the expense of the Grantors to reassign and deliver to the
Grantors, without recourse or warranty, the Assigned Contracts and related
documents, if any, in which the Collateral Agent shall have any interest under
this Collateral Assignment and which shall then be held by the Collateral Agent
or be in its possession and the security interest of the Collateral Agent in the
Assigned Contracts shall terminate.
(b) Upon any assignment or conveyance by any Grantor of any Assigned
Contract or any of such Grantor's rights, title or interest therein that is
permitted under the Credit Agreement, the Guarantee Agreement and the Tranche A
Exchange Note Purchase Agreements (including releases in connection with any
disposition of assets pursuant to Sections 7.03 and 7.05 of the Credit
Agreement, Sections 9 and 10 of the Guarantee Agreement and Sections 7.3 and 7.5
of the Tranche A Exchange Note Purchase Agreements), or, subject to the terms of
the Intercreditor Agreement, upon the effectiveness of any written consent to
the release of the Collateral Agent's security interest in any Assigned Contract
pursuant to Section 10.08 of the Credit Agreement and Section 13 of the Tranche
A Exchange Note Purchase Agreements, the Collateral Agent's security interest in
such Assigned Contract shall be automatically released.
(c) In connection with any termination or release pursuant to paragraph
(a) or (b), the Collateral Agent shall execute and deliver to such Grantor, at
such Grantor's expense, all Uniform Commercial Code termination statements and
similar documents that such Grantor shall reasonably request to evidence such
termination or release. Any execution and delivery of termination statements or
documents pursuant to this Section 20 shall be without recourse to or warranty
by the Collateral Agent.
7
<PAGE>
SECTION 21. HEADINGS. Article and Section headings used herein are for
convenience of reference only, are not part of this Collateral Assignment and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Collateral Assignment.
SECTION 22. COUNTERPARTS. This Collateral Assignment may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 11.
SECTION 23. INTERCREDITOR AGREEMENT. (a) The Collateral Agent agrees, for
itself and for each other Secured Party, that it and each other Secured Party
shall be bound by the terms of the Intercreditor Agreement in connection with
the administration of this Collateral Assignment.
(b) Each Grantor hereby acknowledges receipt of a copy of and agrees to be
bound by the terms of the Intercreditor Agreement.
SECTION 24. REFERENCES TO CREDIT AGREEMENT. Upon the payment and discharge
in full of all outstanding Credit Agreement Obligations or all outstanding
Tranche A Exchange Notes, all references herein to the terms of the Credit
Agreement or the Tranche A Exchange Note Purchase Agreements, as the case may
be, shall become null and void (other than references for the purpose of
incorporating herein definitions of terms used therein, which terms will
continue to have the meanings assigned thereto immediately prior to such payment
and discharge, subject to subsequent amendment or modifications in accordance
with the terms hereof).
IN WITNESS WHEREOF, the parties hereto have caused this Collateral
Assignment to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.
TRAVELCENTERS OF AMERICA, INC.,
by
------------------------------
Name:
Title:
TA OPERATING CORPORATION,
by
------------------------------
Name:
Title:
NATIONAL AUTO/TRUCKSTOPS, INC.,
by
------------------------------
Name:
Title:
8
<PAGE>
TA FRANCHISE SYSTEMS INC.,
by
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by
------------------------------
Name:
Title:
9
<PAGE>
Annex 1
to the Collateral Assignment
March [ ], 1997
Reference is hereby made to (i) the Collateral Assignment dated as of
March [ ], 1997 (the "COLLATERAL ASSIGNMENT"), among The Chase Manhattan Bank
("CHASE"), as collateral agent (the "COLLATERAL AGENT"), TravelCenters of
America, Inc., a Delaware Corporation (the "BORROWER"), TA Operating
Corporation, a Delaware corporation ("TA"), National Auto/Truckstops, Inc., a
Delaware corporation ("NATIONAL") and TA Franchise Systems, Inc., a Delaware
corporation, (ii) the Asset Purchase Agreement dated as of [ ], 1993 (as amended
or modified from time to time, the "ASSET PURCHASE AGREEMENT"), between [Seller]
(the "SELLER") and [TA or National], (iii) the Environmental Agreement entered
into as of [ ] , 1993 (as amended or modified from time to time, (the
"ENVIRONMENTAL AGREEMENT"), between the Seller and [TA or National], (iv) the
Credit Agreement dated as of March [ ], 1997 (the "CREDIT AGREEMENT"), among the
Borrower and the financial institutions party thereto (the "LENDERS"), and
Chase, as agent, as fronting bank and as swingline lender, and (v) the Senior
Secured Exchange Note Agreements each dated as of March [ ], 1997 (the "TRANCHE
A EXCHANGE NOTE PURCHASE AGREEMENTS"), among the Borrower and the Tranche A
Exchange Note Purchasers party thereto. Capitalized terms used but not defined
herein shall have the meanings assigned thereto in the Credit Agreement and the
Tranche A Exchange Note Purchase Agreements.
In connection with the foregoing, the undersigned hereby consents and
agrees as follows:
(a) the undersigned hereby consents to the assignment to the
Collateral Agent, pursuant to the Collateral Assignment, of the Asset
Purchase Agreement, the Ancillary Agreements and the Environmental
Agreement and each of the undersigned hereby agrees that the Collateral
Agent may enforce such agreements against each of the undersigned in
accordance with the terms of such agreements and the terms of the
Collateral Assignment, subject to any defenses or rights of offset or
termination which the Seller may have under the Assigned Contracts;
(b) the undersigned agrees that Section 19 of the Environmental
Agreement permits the Collateral Agent to reassign, in whole or in part,
the rights assigned to it under the Collateral Assignment to:
(1) any successor to the rights and obligations of Chase, as
"Collateral Agent";
(2) any "Lender" or "Tranche A Exchange Note Purchaser" and
any of their respective successors and assigns;
(3) any purchaser or transferee (including Chase or any other
Lender or Tranche A Exchange Note Purchaser) of any Real Property at
a judicial or non-judicial sale or other foreclosure proceeding or
by deed or assignment in lieu of foreclosure and to any such
purchaser's or transferee's purchasers, transferees, successors or
assigns; and
(c) the undersigned agrees that the Environmental Agreement and the
other agreements referred to therein constitute the entire contract
between the parties relative to the subject matter of the Environmental
Agreement.
<PAGE>
[SELLER]
by
----------------------------
Name:
Title:
Acknowledged and Accepted as of the date first
above written:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
--------------------------------
Name:
Title:
2
<PAGE>
EXHIBIT F
GUARANTEE AGREEMENT dated as of March 27, 1997, among
TRAVELCENTERS OF AMERICA, INC., a Delaware corporation (the
"BORROWER"), TA OPERATING CORPORATION, a Delaware corporation
("TA"), NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware corporation
("NATIONAL" and, together with TA, the "GUARANTORS"), and THE CHASE
MANHATTAN BANK, a New York banking corporation ("CHASE"), as
collateral agent (in such capacity, the "COLLATERAL AGENT") for the
Secured Parties (as defined in the Credit Agreement referred to
below).
Reference is made to (a) the Master Collateral and Intercreditor Agreement
dated as of March 27, 1997 (as amended or modified from time to time, the
"INTERCREDITOR AGREEMENT"), among the Participating Creditors (as defined
therein) and the Collateral Agent and countersigned by the Borrower and the
Guarantors; (b) the Credit Agreement dated as of March 21, 1997 (as amended or
modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, the
financial institutions party thereto, as lenders (the "LENDERS"), and Chase, as
agent (in such capacity, the "AGENT"), as fronting bank (in such capacity, the
("FRONTING BANK") and as swingline lender (in such capacity, the "SWINGLINE
LENDER") and (c) the Senior Secured Note Exchange Agreements, each dated as of
March 21, 1997 (as amended or modified from time to time, the "TRANCHE A
EXCHANGE NOTE PURCHASE AGREEMENTS"), among the Borrower and the Tranche A
Exchange Note Purchasers named therein.
The Lenders, the Fronting Bank and the Swingline Lender, respectively,
have agreed to make Loans to the Borrower, to issue Letters of Credit for the
account of the Borrower and to make Swingline Loans to the Borrower pursuant to,
and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Tranche A Exchange Note Purchasers have agreed to accept
$35,500,000 aggregate principal amount of the Borrower's 8.94% Series I Senior
Secured Notes due 2002 (the "SERIES I TRANCHE A EXCHANGE NOTES") and $50,000,000
aggregate principal amount of the Borrower's Series II Senior Secured Notes due
2005 (the "SERIES II TRANCHE A EXCHANGE NOTES" and, together with the Series I
Tranche A Exchange Notes, the "TRANCHE A EXCHANGE NOTES") in exchange for (i)
$65,000,000 aggregate principal amount of the outstanding 8.76% Senior Secured
Notes due 2002 of National (the "NATIONAL SENIOR NOTES") and (ii) $20,500,000
aggregate principal amount of the outstanding 8.63% Senior Secured Notes due
2002 of TA (the "TA SENIOR NOTES" and, together with the National Senior Notes,
the "EXISTING SENIOR NOTES") held by them pursuant to, and upon the terms and
subject to the conditions specified in, the Tranche A Exchange Note Purchase
Agreements.
The obligations of the Lenders to make Loans and of the Fronting Bank to
issue Letters of Credit and of the Swingline Lender to make Swingline Loans
under the Credit Agreement and the obligations of the Tranche A Exchange Note
Purchasers to accept the Tranche A Exchange Notes in exchange for the Existing
Senior Notes held by them pursuant to the Tranche A Exchange Note Purchase
Agreements are conditioned upon, among other things, the execution and delivery
by each Guarantor of a guarantee agreement in the form hereof. In order to
induce the Lenders to make Loans, the Swingline Lender to make Swingline Loans,
the Fronting Bank to issue Letters of Credit and the Tranche A Exchange Note
Purchasers to accept the Tranche A Exchange Notes in exchange for the Existing
Senior Notes held by them, the Guarantors are willing to execute and deliver
this Agreement.
Accordingly, the Guarantors and the Collateral Agent, on behalf of itself,
and each other Secured Party (and each of their successors and assigns), hereby
agree as follows:
SECTION 1. DEFINITION OF TERMS USED HEREIN. All capitalized terms used but
not defined herein shall have the meanings set forth in the other Transaction
Documents.
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SECTION 2. DEFINITION OF CERTAIN TERMS USED HEREIN. As used herein, the
following terms shall have the following meanings:
"CREDIT TRANSACTION DOCUMENTS" shall mean the Loan Documents (as defined
in the Credit Agreement) and the Financing Documents (as defined in the Tranche
A Exchange Note Purchase Agreements).
SECTION 3. GUARANTEE. Each Guarantor absolutely and unconditionally
guarantees, jointly with the other Guarantor and severally, as a primary obligor
and not merely as a surety, (a) the due and punctual payment by the Borrower of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, the Swingline Loans and the Tranche A Exchange Notes,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when and
as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise, (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceedings, regardless of whether allowed or
allowable in such proceeding) of the Borrower to the Secured Parties under the
Credit Agreement, the Tranche A Exchange Note Purchase Agreements and the other
Credit Transaction Documents to which the Borrower is or is to be a party, (b)
the due and punctual performance of all covenants, agreements, obligations and
liabilities of the Borrower under or pursuant to the Credit Agreement, the
Tranche A Exchange Note Purchase Agreements, and the other Credit Transaction
Documents and (c) the due and punctual payment and performance of all
obligations of the Borrower, monetary or otherwise, under each Rate Protection
Agreement entered into with a counterparty that was a Lender (or an Affiliate of
a Lender) at the time such Rate Protection Agreement was entered into (all the
obligations referred to in the preceding clauses (a) through (c) above being
referred to collectively as the "OBLIGATIONS"). Each Guarantor further agrees
that the Obligations may be extended or renewed, in whole or in part, without
notice to or further assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any Obligation.
Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the greatest amount that would not render such Guarantor's
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the "FRAUDULENT TRANSFER
LAWS"), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of each
Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(b) under any Guarantee of senior unsecured Indebtedness or Indebtedness
subordinated in right of payment to the Obligations which Guarantee contains a
limitation as to maximum amount similar to that set forth in this paragraph,
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
contribution, reimbursement, indemnity or similar rights of such Guarantor
pursuant to (i) applicable law or (ii) any agreement providing for an equitable
allocation among such Guarantor and other Affiliates of the Borrower of
obligations arising under Guarantees by such parties.
SECTION 4. OBLIGATIONS NOT WAIVED. Each Guarantor waives presentment to,
demand of payment from and protest to the Borrower of any of the Obligations,
and also waives notice of acceptance of its guarantee and notice of protest for
nonpayment. The obligations of each Guarantor hereunder shall not be affected by
(a) the failure of the Collateral Agent or any other Secured Party to assert any
claim or demand or to enforce any right or remedy against the Borrower under the
provisions of any Credit Transaction Document or otherwise; (b) any
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rescission, waiver, amendment or modification of, or any release from any of the
terms or provisions of, any Credit Transaction Document, any guarantee or any
other agreement; (c) the release of any security held by the Collateral Agent or
any other Secured Party for the Obligations or any of them; or (d) the failure
of the Collateral Agent or any other Secured Party to exercise any right or
remedy against any other guarantor of the Obligations.
SECTION 5. GUARANTEE OF PAYMENT. Each Guarantor further agrees that its
guarantee hereunder constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any security held for payment of
the Obligations or to any balance of any deposit account or credit on the books
of the Collateral Agent or any other Secured Party in favor of the Borrower or
any other person.
SECTION 6. NO DISCHARGE OR DIMINISHMENT OF GUARANTEE. The obligations of
each Guarantor hereunder shall be absolute and unconditional and shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any setoff, counterclaim,
deduction, diminution, abatement, suspension deferment, reduction, recoupment,
termination or defense (other than full and strict indefeasible satisfaction of
the Obligations) whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, no obligation of either Guarantor hereunder shall
be released, discharged or impaired or otherwise affected by any circumstance or
condition whatsoever (whether or not the Borrower, either Guarantor, the
Collateral Agent or any other Secured Party has knowledge thereof) that may or
might in any manner or to any extent vary the risk of either Guarantor or
otherwise operate as a discharge of either Guarantor as a matter of law or
equity (other than the indefeasible payment in full of all the Obligations),
including, without limitation:
(a) any termination, amendment, modification, addition, deletion or
supplement to or other change to any of the terms of any Credit
Transaction Document or any other instrument or agreement applicable to
any of the parties hereto or thereto, or any assignment or transfer of any
thereof, or any furnishing or acceptance of security, or any release of
any security, for any Obligations of the Borrower or either Guarantor
hereunder or thereunder, or the failure of any security or the failure of
any person to perfect any interest in any collateral;
(b) any failure, forbearance, omission or delay on the part of the
Borrower or either Guarantor or the Collateral Agent or any other Secured
Party to conform or comply with any term of any Credit Transaction
Document or any other instrument or agreement, or any failure to give
notice to the Borrower or either Guarantor of the occurrence of an Event
of Default or any Default occurring under the Credit Agreement or the
Tranche A Exchange Note Purchase Agreements;
(c) any waiver of the payment, performance or observance of any of
the obligations, conditions, covenants or agreements contained in any
Credit Transaction Document, or any other waiver, consent, extension,
renewal, indulgence, compromise, release, settlement, refunding or other
action or inaction under or in respect of any Credit Transaction Document
or any other instrument or agreement, or under or in respect of any
obligation or liability of the Borrower or either Guarantor or the
Collateral Agent or any other Secured Party or any exercise or
non-exercise of any right, remedy, power or privilege under or in respect
of any such instrument of agreement or any such obligation or liability;
(d) any extension of the time for payment of the principal of or
interest on any Obligation, or of the time for performance of any other
obligations, covenants or agreements under or arising out of any Credit
Transaction Document, or the extension or the renewal of any thereof;
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(e) the exchange, surrender, substitution or modification of, or the
furnishing of any additional, collateral security for the Obligations
under any Credit Transaction Document;
(f) any failure, omission or delay on the part of the Collateral
Agent or any other Secured Party to enforce, assert or exercise any right,
power or remedy conferred on it in any Credit Transaction Document, or any
such failure, omission or delay on the part of the Collateral Agent or any
other Secured Party in connection with any Credit Transaction Document or
any other action or inaction on the part of the Collateral Agent or any
other Secured Party;
(g) to the extent permitted by applicable law, any voluntary or
involuntary bankruptcy, insolvency, reorganization, moratorium,
arrangement, adjustment, readjustment, composition, assignment for the
benefit of creditors, receivership, conservatorship, custodianship,
liquidation, marshalling of assets and liabilities or similar proceedings
with respect to the Borrower or either Guarantor or any other person or
any of their respective properties or creditors, or any action taken by
any trustee or receiver or by any court in any such proceeding (including,
without limitation, any automatic stay incident to any such proceeding);
(h) any limitation on the liability or obligations of the Borrower
or either Guarantor under any Credit Transaction Document or any other
instrument or agreement, which may now or hereafter be imposed by any
statute, regulation, rule of law or otherwise, or any discharge,
termination, cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any thereof;
(i) any merger, consolidation or amalgamation of the Borrower or
either Guarantor into or with any other person, or any sale, lease or
transfer of any of the assets of the Borrower or the Guarantor to any
other person;
(j) any change in the ownership of any shares of capital stock of
the Borrower or either Guarantor;
(k) to the extent permitted by applicable law, any release or
discharge, by operation of law, of the Borrower or either Guarantor from
the performance or observance of any obligation, covenant or agreement
contained in any Credit Transaction Document; or
(l) any other occurrence, circumstance, happening or event
whatsoever, whether similar or dissimilar to the foregoing, whether
foreseen or unforeseen and any other circumstance which might otherwise
constitute a legal or equitable defense, release or discharge (including
the release or discharge of the liabilities of a guarantor or surety or
which might otherwise limit recourse against the Borrower or either
Guarantor, whether or not the Borrower or either Guarantor shall have
notice or knowledge of the foregoing).
SECTION 7. CONTINUED EFFECTIVENESS. Each Guarantor further agrees that its
guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any Obligation is rescinded,
invalidated, declared to be fraudulent or preferential, or must otherwise be
returned, refunded, repaid or restored by the Collateral Agent or any other
Secured Party for any reason whatsoever, including, without limitation, upon the
bankruptcy or reorganization of the Borrower, such Guarantor or otherwise.
SECTION 8. WAIVER OF SUBROGATION. In furtherance of the foregoing and not
in limitation of any other right that the Collateral Agent or any other Secured
Party has at law or in equity against either Guarantor by virtue hereof, upon
the failure of the Borrower or either Guarantor to pay any Obligation when and
as the same shall become due, whether at maturity, by acceleration, after notice
of prepayment or otherwise, each Guarantor hereby promises to and will, upon
receipt of written demand by the Collateral Agent or any other Secured Party,
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forthwith pay, to the Collateral Agent for distribution to the Secured Parties
in accordance with the Intercreditor Agreement in cash the amount of such unpaid
Obligation. Each Guarantor hereby waives any claim, right or remedy which it may
now have or hereafter acquire against the Borrower that arises hereunder and/or
from the performance by such Guarantor hereunder including any claim, right or
remedy of the Collateral Agent or any Secured Party or any security which the
Collateral Agent or any Secured Party now has or hereafter acquires, regardless
of whether such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise.
Each Guarantor agrees that, as between such Guarantor, on the one hand,
and the Collateral Agent and the other Secured Parties, on the other hand, (a)
the maturity of the Obligations guaranteed hereby may be accelerated as provided
in the Intercreditor Agreement, the Credit Agreement or the Tranche A Exchange
Note Purchase Agreements for the purposes of such Guarantor's guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby and (b) in the
event of any declaration of acceleration of such Obligations as provided in the
Credit Agreement or the Tranche A Exchange Note Purchase Agreements, such
Obligations (whether or not due and payable) shall forthwith become due and
payable in full by such Guarantor for purposes of this Agreement.
SECTION 9. MORTGAGED PROPERTY CASUALTY AND CONDEMNATION. (a)
Notwithstanding any provision of the Credit Transactions Documents, the
Collateral Agent is authorized at its option (for the benefit of the Secured
Parties), to collect and receive, to the extent payable to either Guarantor, all
insurance proceeds, damages, claims and rights of action and the right thereto
under any insurance policies with respect to any casualty or other insured
damage ("CASUALTY") to any portion of any Mortgaged Property (collectively,
"INSURANCE PROCEEDs"), unless the amount of the related Insurance Proceeds is
less than [$100,000] and an Event of Default shall not have occurred and be
continuing. Each Guarantor agrees to notify the Collateral Agent, the holders of
the Tranche A Exchange Notes and the Agent, in writing, promptly after such
Guarantor obtains notice or knowledge of any Casualty to a Mortgaged Property,
which notice shall set forth a description of such Casualty and such Guarantor's
good faith estimate of the amount of related damages. If any Guarantor shall
receive any Insurance Proceeds, such Guarantor agrees, subject to the foregoing
limitations, to endorse and transfer any Insurance Proceeds it receives to the
Collateral Agent.
(b) Each Guarantor will notify the Collateral Agent, the holders of
the Tranche A Exchange Notes and the Agent immediately upon obtaining knowledge
of the institution of any action or proceeding for the taking of any Mortgaged
Property, or any part thereof or interest therein, for public or quasi-public
use under the power of eminent domain, by reason of any public improvement or
condemnation proceeding, or in any other manner (a "CONDEMNATION"). No
settlement or compromise of any claim in connection with any such action or
proceeding shall be made without the consent of the Collateral Agent, which
consent shall not be unreasonably withheld. The Collateral Agent is authorized,
at its option (for the benefit of the Secured Parties), to collect and receive
all proceeds of any such Condemnation (in each case, the "CONDEMNATION
PROCEEDS"). Each Guarantor agrees to execute such further assignment of any
Condemnation Proceeds as the Collateral Agent may reasonably require.
(c) In the event of a Condemnation of all or substantially all of
any Mortgaged Property (which determination shall be made by the Collateral
Agent in its reasonable discretion), unless the applicable Guarantor shall have
notified the Collateral Agent in writing promptly after such Condemnation that
it intends to replace the related Mortgaged Property (and no Default or Event of
Default shall have occurred and be continuing at the time of such election), the
Collateral Agent may deem such event to be a Prepayment Event, and shall apply
the Condemnation Proceeds received as a result of such Condemnation (less the
reasonable costs, if any, incurred by the Collateral Agent or such Guarantor in
the recovery of such Condemnation Proceeds, including reasonable attorneys'
fees, other charges and disbursements (the Collateral Agent having agreed to
reimburse such Guarantor from such Condemnation Proceeds such costs incurred by
such Guarantor)) to prepay obligations outstanding under the Credit Agreement
and outstanding Tranche A Exchange Notes to the extent
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required under Section 2.13(b) of the Credit Agreement and Section 5.3 of the
Tranche A Exchange Note Purchase Agreements, with any remaining Condemnation
Proceeds being returned to such Guarantor. If the applicable Guarantor shall
elect to replace a Mortgaged Property as contemplated above, (i) the replacement
property shall be of utility comparable to that of the replaced Mortgaged
Property and (ii) the insufficiency of any Condemnation Proceeds to defray the
entire expense of the related location, acquisition and replacement of such
replacement property shall in no way relieve such Guarantor of its obligation to
complete the construction of any replacement property if such Guarantor shall
have made such election and shall have acquired the related real property.
(d) In the event of any Condemnation of the Mortgaged Property, or
any part thereof (other than any Condemnation described in paragraph (c) above
(unless such Condemnation shall not be deemed to be a Prepayment Event or the
applicable Guarantor shall be permitted and shall have elected to replace the
related Mortgaged Property, in each case, as provided in paragraph (c) above)
and subject to the provisions of paragraph (f) below) the Collateral Agent shall
apply the Condemnation Proceeds, FIRST, in the case of a partial Condemnation,
to the repair or restoration of any integrated structure subject to such
Condemnation or, in the case of a total or "substantially all" Condemnation, to
the location of a replacement property, acquisition of such replacement property
and construction of the replacement structures, in each case, under the
conditions specified in paragraph (f) below, and, SECOND, shall apply the
remainder of such Condemnation Proceeds (less the reasonable costs, if any,
incurred by the Collateral Agent or such Guarantor in the recovery of such
Condemnation Proceeds, including reasonable attorneys fees (the Collateral Agent
having agreed to reimburse such Guarantor from such Condemnation Proceeds such
costs incurred by such Guarantor)) to prepay obligations outstanding under the
Credit Agreement and outstanding Tranche A Exchange Notes to the extent required
under Section 2.13(b) of the Credit Agreement and Section 5.3 of the Tranche A
Exchange Note Purchase Agreements with any remaining Condemnation Proceeds being
returned to such Guarantor.
(e) In the event of any Casualty of less than 50% of the useable
square footage of the improvements of any Mortgaged Property, the applicable
Guarantor shall, subject to the conditions contained in clause (f), restore the
Mortgaged Property to substantially its same condition immediately prior to such
Casualty. In the event of any Casualty of greater than 50% of the useable square
footage of the improvements of any Mortgaged Property and so long as no Default
or Event of Default has occurred and is continuing, the applicable Guarantor
shall have the option to either:
(i) restore the Mortgaged Property to a condition substantially
similar to its condition immediately prior to such Casualty and to invest
the balance, if any, of any Insurance Proceeds, in equipment, vehicles or
other assets used in such Guarantor's principal lines of business within
180 days after the receipt thereof, PROVIDED that such Guarantor, pending
such reinvestment, promptly deposits such excess Insurance Proceeds in a
cash collateral account established with the Collateral Agent for the
benefit of the Secured Parties, or
(ii) direct the Collateral Agent to apply the related Insurance
Proceeds to prepay obligations outstanding under the Credit Agreement and
outstanding Tranche A Exchange Notes to the extent required under Section
2.13(b) of the Credit Agreement and Section 5.3 of the Tranche A Exchange
Note Purchase Agreements, with any remaining Insurance Proceeds being
returned to such Guarantor.
It is understood that any excess Insurance Proceeds that are not reinvested in
such Guarantor's principal lines of business contemplated above will be applied
to prepay obligations outstanding under the Credit Agreement and outstanding
Tranche A Exchange Notes to the extent required under Section 2.13(b) of the
Credit Agreement and Section 5.3 of the Tranche A Exchange Note Purchase
Agreements.
If required to do so, the applicable Guarantor shall make the
election contemplated by the immediately preceding paragraph by notifying the
Collateral Agent, the holders of Tranche A Exchange Notes
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and the Agent promptly after the later to occur of (A) five days after such
Guarantor and its insurance carrier reach a final determination of the amount of
any Insurance Proceeds and (B) 30 days after the occurrence of the Casualty. If
the applicable Guarantor shall be required or shall elect to restore the
Mortgaged Property, the insufficiency of any Insurance Proceeds or Condemnation
Proceeds to defray the entire expense of such restoration shall in no way
relieve such Guarantor of such obligation to so restore if it is so required or
once such election has been made. In the event such Guarantor shall be required
to restore or shall notify the Collateral Agent, the holders of Tranche A
Exchange Notes and the Agent of its election to restore, such Guarantor shall
diligently and continuously prosecute the restoration of the Mortgaged Property
to completion. In the circumstance where the applicable Guarantor shall be
required to restore or shall so elect to restore and no Default or Event of
Default has occurred and is continuing such Guarantor shall not be required to
comply with the requirements of paragraph (f) below in connection with such
restoration (except as required by clauses (f)(i) and (ii)), so long as the cost
of such restoration shall be less than $400,000. In the event of a Casualty
where the applicable Guarantor is required to make the election set forth above
and such Guarantor either shall fail to notify the Collateral Agent, the holders
of Tranche A Exchange Notes and the Agent of its election within the period set
forth above or shall elect not to restore the Mortgaged Property, the Collateral
Agent shall (after being reimbursed for all reasonable costs of recovery of such
Insurance Proceeds including reasonable attorneys' fees and after reimbursing
such Guarantor for all such reasonable costs incurred by such Guarantor) apply
such Insurance Proceeds to prepay obligations outstanding under the Credit
Agreement and outstanding Tranche A Exchange Notes to the extent required under
Section 2.13(b) of the Credit Agreement and Section 5.3 of the Tranche A
Exchange Note Purchase Agreements. In addition, upon such prepayment, the
applicable Guarantor shall be obligated to place the remaining portion, if any,
of the Mortgaged Property in a safe condition that is otherwise in compliance
with the requirements of applicable Governmental Authorities and the provisions
of the Credit Agreement and the applicable Mortgage.
(f) Except as otherwise specifically provided in this Section 9, all
Insurance Proceeds and all Condemnation Proceeds recovered by the Collateral
Agent (A) are to be applied to the restoration of the applicable Mortgaged
Property (or, if permitted in the event of total or "substantially all"
Condemnation as contemplated in paragraph (c) above, to the location,
acquisition and construction of a replacement for the applicable Mortgaged
Property) (less the reasonable cost, if any, to the Collateral Agent of such
recovery and of paying out such proceeds, including reasonable attorneys' fees,
other charges and disbursements and costs allocable to inspecting the Work (as
defined below)) and (B) shall be applied by the Collateral Agent to the payment
of the cost of restoring or replacing the Mortgaged Property so damaged,
destroyed or taken or of the portion or portions of the Mortgaged Property not
so taken (the "WORK") and (C) shall be paid out from time to time to the
applicable Guarantor as and to the extent the Work (or the location and
acquisition of any replacement of any Mortgaged Property) progresses for the
payment thereof, but subject to each of the following conditions:
(i) such Guarantor must promptly commence the restoration process or
the location, acquisition and replacement process (in the case of a total
or "substantially all" Condemnation) in connection with the Mortgaged
Property;
(ii) the Work shall be in the charge of an architect or engineer and
before such Guarantor commences any Work, other than temporary work to
protect property or prevent interference with business, the Collateral
Agent shall have received the plans and specifications and the general
contract for the Work from such Guarantor. Said plans and specifications
shall provide for such Work that, upon completion thereof, the
improvements shall (A) be in compliance with all requirements of
applicable Governmental Authorities such that all representations or
warranties of such Guarantor relating to the compliance of such Mortgaged
Property with applicable laws, rules or regulations in the Credit
Transaction Documents will be correct in all respects and (B) be at least
equal in value and general utility to the improvements that were on such
Mortgaged Property (or that were on the
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Mortgaged Property that has been replaced, if applicable) prior to the
Casualty or taking, and in the case of a taking, subject to the affect of
such taking;
(iii) except as provided in (iv) below, each request for payment
shall be made on seven days' prior notice to the Collateral Agent and
shall be accompanied by a certificate to be made by such architect or
engineer, stating (A) that all the Work completed has been done in
substantial compliance with the plans and specifications, (B) that the sum
requested is justly required to reimburse such Guarantor for payments by
such Guarantor to, or is justly due to, the contractor, subcontractors,
materialmen, laborers, engineers, architects or other Persons rendering
services or materials for the Work (giving a brief description of such
services and materials) and that, when added to all sums previously paid
out by the Collateral Agent, does not exceed the value of the Work done to
the date of such certificate;
(iv) each request for payment in connection with the acquisition of
a replacement Mortgaged Property (in the case of a total or "substantially
all" Condemnation) shall be made on 30 days' prior notice to the
Collateral Agent and, in connection therewith, (A) each such request shall
be accompanied by a copy of the sales contract or other document governing
the acquisition of the replacement property by such Guarantor and a
certificate of such Guarantor stating that the sum requested represents
the sales price under such contract or document and the related reasonable
transaction fees and expenses (including brokerage fees) and setting forth
in sufficient detail the various components of such requested sum and (B)
such Guarantor shall (1) in addition to any other items required to be
delivered under this Section 9, provide the Agent, the holders of Tranche
A Exchange Notes and the Collateral Agent with such opinions, documents,
certificates, title insurance policies (as required by Section 5.02(l) of
the Credit Agreement and Section 3.14 of the Tranche A Exchange Note
Purchase Agreements), surveys and other insurance policies as they may
reasonably request and (2) take such other actions as the Agent and the
Collateral Agent may reasonable deem necessary or appropriate (including
actions with respect to the delivery to the Collateral Agent of a first
priority Mortgage as required by Section 5.02(l) of the Credit Agreement
and Section 3.14 of the Tranche A Exchange Note Purchase Agreements and
assignment with respect to such real property for the ratable benefit of
the Secured Parties);
(v) each request shall be accompanied by waivers of liens
satisfactory to the Collateral Agent covering that part of the Work for
which payment or reimbursement is being requested and, if required by the
Collateral Agent, by a search prepared by a title company or licensed
abstractor or by other evidence satisfactory to the Collateral Agent, that
there has not been filed with respect to such Mortgaged Property any
mechanics' or other lien or instrument for the retention of title in
respect of any part of the Work not discharged of record or bonded to the
reasonable satisfaction of the Collateral Agent;
(vi) there shall be no Default or Event of Default that has occurred
and is continuing;
(vii) the request for any payment after the Work has been completed
shall be accompanied by a copy of any certificate or certificates required
by law to render occupancy of the improvements being rebuilt, repaired or
restored legal; and
(viii) after commencing the Work, such Guarantor shall continue to
perform the Work diligently and in good faith to completion in accordance
with the approved plans and specifications.
Upon completion of the Work and payment in full therefor, the Collateral Agent
will disburse to such Guarantor the amount of any Insurance Proceeds or
Condemnation Proceeds then or thereafter in the hands of the Collateral Agent on
account of the Casualty or Taking that necessitated such Work, together with all
undisbursed accrued
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interest thereon to be applied (x) to prepay obligations outstanding under the
Credit Agreement and outstanding Tranche A Exchange Notes to the extent required
under Section 2.13(b) of the Credit Agreement and Section 5.3 of the Tranche A
Exchange Note Purchase Agreements, with any excess being returned to such
Guarantor, or (y) to be reinvested in such Guarantor's principal lines of
business within 180 days after the receipt thereof, PROVIDED that such
Guarantor, pending such reinvestment, promptly deposits such amounts in a cash
collateral account established with the Collateral Agent for the benefit of the
Secured Parties.
(g) Notwithstanding any other provisions of this Section 9, if the
applicable Guarantor shall have elected to replace a Mortgaged Property in
connection with a total or "substantially all" Condemnation as contemplated in
paragraph (c) above, all Condemnation Proceeds held by the Collateral Agent in
connection therewith shall be applied to prepay obligations outstanding under
the Credit Agreement and outstanding Tranche A Exchange Notes to the extent
required under Section 2.13(b) of the Credit Agreement and Section 5.3 of the
Tranche A Exchange Note Purchase Agreements if (i) such Guarantor notifies the
Collateral Agent, the holders of the Tranche A Exchange Notes and the Agent that
it does not intend to replace the related Mortgaged Property, (ii) an officer of
such Guarantor shall not have notified the Agent, the holders of the Tranche A
Exchange Notes and the Collateral Agent in writing that such Guarantor has
acquired or has entered into a binding contract to acquire land upon which it
will construct the replacement property within six months after the related
Condemnation or (iii) such Guarantor shall have not notified the Agent, the
holders of the Tranche A Exchange Notes and the Collateral Agent in writing that
it has begun construction of the replacement structures within one year after
the related Condemnation. Any funds not required to be applied in accordance
with Section 2.13(b) of the Credit Agreement and Section 5.3 of the Tranche A
Exchange Note Purchase Agreements shall be returned to the applicable Guarantor.
(h) Nothing in this Section 9 shall prevent the Collateral Agent
from applying at any time all or any part of the Insurance Proceeds or
Condemnation Proceeds to the curing of any Event of Default under any Credit
Transaction Document. The provisions of this Section 9 are subject to the
provisions of the Intercreditor Agreement so long as any Tranche A Exchange
Notes are or any Indebtedness under the Credit Agreement is outstanding.
SECTION 10. REAL ESTATE DEVELOPMENT ACTIVITIES. (a) Notwithstanding
any provision of the Credit Transaction Document or any other provision of this
Agreement, but subject to the provisions of this Section 10, either Guarantor
may convey with respect to a contribution or sale (with the related Net Cash
Proceeds, in the case of a sale, being applied in accordance with the provisions
of Section 2.13(b) of the Credit Agreement and Section 5.3 of the Tranche A
Exchange Note Purchase Agreements) a portion of the Land (as defined in the
related Mortgage) that has no significant improvements on it in respect of any
Mortgaged Property to a Permitted Development Entity for the purpose of
developing such conveyed Land, and the Lenders hereby consent to the release by
the Collateral Agent of its Lien on such Land if the following conditions are
satisfied:
(i) such Guarantor shall make no conveyance, contribution, loan or
other investment (other than the conveyance of the Land) to the Permitted
Development Entity in exchange for such Guarantor's ownership interest, if
any, in such Permitted Development Entity;
(ii) the Permitted Development Entity shall have a principal owner
or principal participant (other than such Guarantor) that is the managing
general partner or shareholder of the Permitted Development Entity (A)
whose primary business is the development of real estate projects of the
kind and nature of the proposed development of the Land and who possesses
a minimum of 10 years related experience in such area, (B) who shall have
sufficient net worth at the time the project is proposed and at all times
thereafter in an amount sufficient to lead a reasonable Person to conclude
that such Person is sufficiently capitalized to construct and complete the
proposed project and to comply with the conditions set forth herein and
(C) who shall be directly responsible for all aspects of the development,
financing, construction and operation of the proposed project (the
"PERMITTED DEVELOPER") and such
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Permitted Developer shall not assign its interest in the Permitted
Development Entity prior to the completion of the proposed project and the
passage of one year;
(iii) such Guarantor shall not be obligated in any respect
(including by way of guarantee) for the obligations of the Permitted
Development Entity or the Permitted Developer (PROVIDED, HOWEVER, that
such Guarantor may indemnify, defend and hold harmless the Permitted
Developer with respect to liabilities and obligations arising under
Environmental and Safety Laws as a result of or in connection with
conditions existing or actions, occurring on or prior to the date of
conveyance of the Land to the Permitted Developer), such Guarantor shall
not make or agree to make any further conveyance, contribution,
investment, loan or guarantee in connection with development of the
conveyed Land or the operation of such Land after the development thereof
and, in that regard, if the Permitted Development Entity is other than a
corporation and such Guarantor is to be an owner in such Permitted
Development Entity, such Guarantor shall be a limited partner in such
entity and not a general partner;
(iv) if the Permitted Development Entity shall be a limited
partnership and such Guarantor is to be an owner in such entity, (A) such
Guarantor shall deliver to the Collateral Agent an opinion of counsel in
form and substance and from counsel reasonably satisfactory to the
Collateral Agent to the effect that such Guarantor is a limited partner in
such Permitted Development Entity and as such is afforded the benefits of
limited liability under the laws of the state of such entity's
organization and (B) such Guarantor shall use its best efforts to secure
indemnities from the Permitted Developer (and/or the other participants in
the proposed project) to such Guarantor, in such form as shall be
satisfactory to the Collateral Agent, in respect of liabilities (including
contingent liabilities) that such Guarantor may incur in the event that
its limited liability status as the holder of a limited partnership
interest is not available to such Guarantor at any time during such
Guarantor's involvement in the Permitted Development;
(v) such Guarantor shall have given the Agent, the holders of the
Tranche A Exchange Notes and the Collateral Agent not less than 60 days'
prior written notice of any such proposed contribution setting forth (A)
the identity of the Permitted Developer and the proposed type of Permitted
Development Entity, (B) a survey of the Land proposed to be conveyed and
its relationship to the remaining Land, which survey shall show, among
other things, the location of the improvements proposed to be constructed
thereon, the location of or access to the conveyed Land and the location
of any easements that will benefit the conveyed land and burden the
remaining Land, (C) the development plans with respect to such conveyed
Land along with a description of the proposed project, (D) information
(including financial information and "track record" information) with
respect to the Permitted Developer and (E) such other information as shall
be necessary or appropriate for the Collateral Agent, the Agent, the
holders of the Tranche A Exchange Notes and the Lenders to evaluate the
proposed development and operation of such conveyed Land, the Permitted
Developer and the Land ownership structure of the related Permitted
Development Entity;
(vi) the Land proposed to be conveyed to the Permitted Development
Entity shall be, after giving effect to such conveyance, unnecessary to
the Mortgaged Property's (including the remaining Land's) use, operation
or continued compliance with all approvals, permits, variances, orders,
licenses or other similar actions of applicable Governmental Authorities
as well as its continued compliance with all material laws, rules,
regulations or statutes of applicable Governmental Authorities (including
any zoning, building, Environmental and Safety Laws, ordinances, codes) or
any restrictions of record or agreement affecting the Mortgaged Property
(including the remaining Land);
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(vii) the conveyance of such Land to the Permitted Development
Entity for development, the development of such Land and the proposed
operation of such Land as proposed to be developed:
(A) shall not result in the representations and warranties
contained in the related Mortgage, in this Agreement or in any other
Credit Transaction Documents to be untrue;
(B) shall not result in any material adverse effect on the
value or operations of the related Mortgaged Property as a
Truckstop:
(C) shall have no effect on the Collateral Agent's Lien in the
remaining Land under the related Mortgage;
(D) shall not restrict ingress and egress to, the operation of
or in anyway interfere with the business currently conducted on the
Mortgaged Property; and
(E) shall be done and conducted, as applicable, in accordance
with all material laws, rules, regulations or statutes (including
any zoning, building, Environmental and Safety Laws, ordinances,
codes or approvals or any building permits) or any restrictions of
record or agreements affecting the Mortgaged Property;
(viii) the Permitted Developer or the Permitted Development Entity
shall cause, at its cost and expense, the Land to be conveyed to the
Permitted Development Entity to be (A) subdivided as a separate legal lot
or lots pursuant to applicable zoning laws and (B) to be classified as a
tax lot separate and apart from the Mortgaged Property that is not to be
conveyed with such Land;
(ix) prior to each of the conveyance of the Land and the
commencement of the development of any conveyed Land, such Guarantor shall
deliver to the Collateral Agent such agreements, certificates (including a
certificate of a Financial Officer of such Guarantor as to the compliance
with the provisions of this paragraph (a)), including opinions of counsel
and endorsements to the mortgagee's title insurance policy and such other
information as the Collateral Agent may deem necessary or appropriate in
connection with such activities; and
(x) such Guarantor shall assign to the Collateral Agent, as
collateral for the benefit of the Secured Parties, all shares,
certificates or the like evidencing its ownership interest, if any, in the
Permitted Development Entity and the proceeds and rights thereto to be
held as Collateral in accordance with the terms of the Pledge Agreement.
(b) In connection with each permitted conveyance of real property
and the development thereof permitted pursuant to paragraph (a) above, the
applicable Guarantor agrees to use its best efforts (but consistent, if
applicable, with its status as a limited partner):
(i) to take or cause to be taken such actions as shall be necessary
or appropriate to continue to comply with the conditions set forth in
paragraph (a) above;
(ii) promptly to deliver to the Agent, the holders of the Tranche A
Exchange Notes and the Collateral Agent written notice if any of the
conditions of this Section 10 shall not be satisfied describing in
reasonable detail which condition shall not be satisfied and setting forth
such Guarantor's proposed actions with respect thereto; and
(iii) not to permit the contributed real property to be used in a
manner inconsistent with the use for which the related property was
contributed.
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(c) In connection with the conveyance of any Land to a Permitted
Development Entity otherwise permitted pursuant to this Section 10, the
applicable Guarantor may also convey to the related Permitted Development Entity
an easement on the remaining Land, PROVIDED that after giving effect to any such
conveyance the condition, set forth in paragraphs (a)(vi) and (vii) above would
be satisfied.
(d) The provisions of this Section 10 are subject to the provisions
of the Intercreditor Agreement so long as any Tranche A Exchange Notes are or
any Indebtedness under the Credit Agreement is outstanding.
SECTION 11. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and
warrants to and with the Collateral Agent and each other Secured Party that all
representations and warranties contained in the Credit Transaction Documents
that relate to such Guarantor are true and correct.
SECTION 12. NOTICES. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 10.01 of the Credit Agreement and Section 16.6 of the
Tranche A Exchange Note Purchase Agreements. All communications and notices
hereunder to the Collateral Agent shall be given to it at its address set forth
in Annex I hereto.
SECTION 13. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations, warranties and guarantees made by each Guarantor hereunder and
in any certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Credit Transaction Document
shall be considered to have been relied upon by the Secured Parties and shall
survive the making by the Lenders of the Loans, the making by the Swingline
Lender of the Swingline Loans and the acceptance by the Tranche A Exchange Note
Purchasers of the Tranche A Exchange Notes, the execution and delivery to the
Tranche A Exchange Note Purchasers of the Tranche A Exchange Notes, and the
issuance by the Fronting Bank of any Letter of Credit, regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on,
or any other fee or amount payable under or in respect of, any Loan, Swingline
Loan, Tranche A Exchange Note or Letter of Credit, or this Agreement or, without
duplication of the foregoing, under any of the other Credit Transaction
Documents is outstanding and unpaid and so long as the Commitments and the LC
Commitment have not been terminated.
SECTION 14. BINDING EFFECT; ASSIGNMENTS. This Agreement shall become
effective as to either Guarantor when a counterpart hereof executed on behalf of
such Guarantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties and their
respective successors and assigns, except that neither Guarantor shall have the
right to assign its rights hereunder or any interest herein or in the Collateral
(and any such attempted assignment shall be void) except as expressly
contemplated by this Agreement or the other Credit Transaction Documents.
SECTION 15. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of each Guarantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 17. WAIVERS; AMENDMENT. (a) No failure or delay of the Collateral
Agent or any other Secured Party in exercising any power or right hereunder and
no course of dealing between the parties hereto shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any
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abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and of
the other Secured Parties under the other Credit Transaction Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or any other
Credit Transaction Document or consent to any departure by either Guarantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on any Guarantor in any case shall entitle the Guarantor to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between each
Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders and the Required Holders; PROVIDED, HOWEVER, that except as
provided herein or in the other Credit Transaction Documents, no such agreement
shall amend, modify, waive or otherwise adversely affect a Secured Party's
rights and interests in any material amount of the Collateral without the prior
written consent of such Secured Party.
SECTION 18. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT TRANSACTION
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT TRANSACTION DOCUMENTS,
AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 18.
SECTION 19. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement or in any other Credit Transaction Document should
be held invalid, illegal or unenforceable in any respect with respect to either
Guarantor, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 20. RIGHT OF SETOFF. Subject to the terms of the Intercreditor
Agreement, if an Event of Default shall have occurred and be continuing under
the Credit Agreement or the Tranche A Exchange Note Purchase Agreements, each
Secured Party is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Secured Party to or for the credit
or the account of either Guarantor against any of and all the obligations of
such Guarantor now or hereafter existing under this Agreement irrespective of
whether or not such Secured Party shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each
Secured Party under this Section 20 are in addition to other rights and remedies
(including other rights of setoff) that such Secured Party may have and are
subject to the terms of the Intercreditor Agreement.
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SECTION 21. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Credit Transaction Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Credit
Transaction Documents against either Guarantor or its properties in the courts
of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Credit Transaction
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 12. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 22. TERMINATION. This Agreement and the security interests granted
hereby shall terminate when all the Obligations have been indefeasibly paid in
full and the Lenders and the Swingline Lender have no further commitment to lend
under the Credit Agreement, no Letters of Credit are outstanding and the
Fronting Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
SECTION 23. HEADINGS. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 24. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument.
SECTION 25. INTERCREDITOR AGREEMENT. (a) The Collateral Agent agrees, for
itself and for each other Secured Party, that it and each other Secured Party
shall be bound by the terms of the Intercreditor Agreement in connection with
the administration of this Agreement.
(b) Each Guarantor hereby acknowledges receipt of a copy of and agrees to
be bound by the terms of the Intercreditor Agreement.
SECTION 26. REFERENCES TO CREDIT AGREEMENT. Upon the payment and discharge
in full of all outstanding Credit Agreement Obligations or all outstanding
Tranche A Exchange Note Obligations, all references herein to the terms of the
Credit Agreement or the Tranche A Exchange Note Purchase Agreements, as the case
may be, shall become null and void (other than references for the purpose of
incorporating herein definitions of terms used therein, which terms will
continue to have the meanings assigned thereto immediately prior to such payment
and discharge, subject to subsequent amendment or modifications in accordance
with the terms hereof).
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
TA OPERATING CORPORATION,
by
--------------------------------
Name:
Title:
NATIONAL AUTO/TRUCKSTOPS, INC.,
by
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by
--------------------------------
Name:
Title:
15
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EXHIBIT G
INDEMNITY AND SUBROGATION AGREEMENT dated as of March
27, 1997, among TRAVELCENTERS OF AMERICA, INC., a Delaware
corporation (the "BORROWER"), TA OPERATING CORPORATION, a
Delaware corporation ("TA"), NATIONAL AUTO/TRUCKSTOPS, INC., a
Delaware corporation ("NATIONAL" and, together with TA, the
"GUARANTORS"), and THE CHASE MANHATTAN BANK, a New York
banking corporation ("CHASE"), as collateral agent (in such
capacity, the "COLLATERAL AGENT") for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to (a) the Master Collateral and Intercreditor
Agreement dated as of March 27, 1997 (as amended or modified from time to time,
the "INTERCREDITOR AGREEMENT"), among the Participating Creditors (as defined
therein) and the Collateral Agent and countersigned by the Borrower and the
Guarantors, (b) the Credit Agreement dated as of March 21, 1997 (as amended or
modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, the
financial institutions party thereto, as lenders (the "LENDERS"), and Chase, as
agent (in such capacity, the "AGENT"), as fronting bank (in such capacity, the
"FRONTING BANK") and as swingline lender (in such capacity, the "SWINGLINE
LENDER"); and (c) the Senior Secured Note Exchange Agreements, each dated as of
March 21, 1997 (as amended or modified from time to time, the "TRANCHE A
EXCHANGE NOTE PURCHASE AGREEMENTS"), among the Borrower and the Tranche A
Exchange Note Purchasers named therein.
The Lenders, the Fronting Bank and the Swingline Lender,
respectively, have agreed to make Loans to the Borrower, to issue letters of
Credit for the account of the Borrower and to make Swingline Loans to the
Borrower pursuant to, and upon the terms and subject to the conditions specified
in, the Credit Agreement. The Tranche A Exchange Note Purchasers have agreed to
accept $35,500,000 aggregate principal amount of the Borrower's 8.94% Series I
Senior Secured Notes due 2002 (the "SERIES I TRANCHE A EXCHANGE NOTES") and
$50,000,000 aggregate principal amount of the Borrower's Series II Senior
Secured Notes due 2005 (the "SERIES II TRANCHE A EXCHANGE NOTES" and, together
with the Series I Tranche A Exchange Notes, the "TRANCHE A EXCHANGE NOTES") in
exchange for (i) $65,000,000 aggregate principal amount of the outstanding 8.76%
Senior Secured Notes due 2002 of National (the "NATIONAL SENIOR NOTES") and (ii)
$20,500,000 aggregate principal amount of the outstanding 8.63% Senior Secured
Notes due 2002 of TA (the "TA SENIOR NOTES" and, together with the National
Senior Notes, the "EXISTING SENIOR NOTES") held by them pursuant to, and upon
the terms and subject to the conditions specified in, the Tranche A Exchange
Note Purchase Agreements.
The obligations of the Lenders to make Loans and of the Fronting
Bank to issue Letters of Credit and of the Swingline Lender to make Swingline
Loans under the Credit Agreement and the obligations of the Tranche A Exchange
Note Purchasers to accept the Tranche A Exchange Notes in exchange for the
Existing Senior Notes held by them pursuant to the Tranche A Exchange Note
Purchase Agreements are conditioned upon, among other things, the execution and
delivery by the Guarantors of a guarantee agreement (the "GUARANTEE") and the
execution and delivery, by the Borrower and the Guarantors of an agreement in
the form hereof. Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Credit Agreement, the Tranche A Exchange Note
Purchase Agreements and the other Loan Documents.
Accordingly, the Borrower, the Guarantors and the Collateral Agent
agree as follow:
SECTION 1. INDEMNITY AND SUBROGATION. In addition to all such rights
of indemnity and subrogation as the Guarantors may have under applicable law
(but subject to Section 3), the Borrower agrees that (a) in the event a payment
shall be made by any Guarantor under the Guarantee, the Borrower shall indemnify
such Guarantor for the full amount of such payment and such Guarantor shall be
subrogated to the rights of the person to whom such payment shall have been made
to the extent of such payment and (b) in the event any asset of any Guarantor
shall be sold pursuant to any Security Document to satisfy a claim of any
Secured Party, the Borrower shall indemnify such Guarantor in an amount equal to
the greater of the book value or the fair market value of the assets so sold.
SECTION 2. CONTRIBUTION AND SUBROGATION. Each Guarantor (a
"CONTRIBUTING GUARANTOR") agrees (subject to Section 3) that, in the event a
payment shall be made by any other Guarantor under the Guarantee or assets of
any other Guarantor shall be sold pursuant to any Security Document to satisfy a
claim of any Secured Party and such other Guarantor (the "CLAIMING GUARANTOR")
shall not have been fully indemnified by the Borrower as provided in Section 1,
the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment or the greater of the book value
<PAGE>
2
or the fair market value of such assets, as the case may be, in each case
multiplied by a fraction of which the numerator shall be the net worth of the
Contributing Guarantor on the date hereof and the denominator shall be the
aggregate net worth of all the Guarantors on the date hereof. Any Contributing
Guarantor making any payment to a Claiming Guarantor pursuant to this Section 2
shall be subrogated to the rights of such Claiming Guarantor under Section 1 to
the extent of such payment.
SECTION 3. SUBORDINATION. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantor under Sections 1 and 2
and all other rights or indemnity, contribution or subrogation under applicable
law, or otherwise shall be fully subordinated to the indefeasible payment in
full of the Obligations; PROVIDED, HOWEVER, that to the extent any right of
indemnity or subrogation that any Guarantor might have pursuant to this
Agreement or otherwise would render such Guarantor a "creditor" of the Borrower
within the meaning of Section 547 of Title II of the United States Code as now
in effect or hereafter amended or any comparable provision of any successor
statute, such Guarantor hereby irrevocably waives such right of indemnity or
subrogation. No failure on the part of the Borrower or any Guarantor to make the
payments required by Sections 1 and 2 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor with respect to the Guarantee, and each Guarantor
shall remain liable for the full amount of the obligations of such Guarantor
under the Guarantee.
SECTION 4. TERMINATION. This Agreement shall survive and be in full
force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the LC Exposure has not been
reduced to zero or any of the Commitments or the LC Commitment under the Credit
Agreement have not been terminated, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
principal of or interest on an), Obligation is rescinded or must otherwise be
restored by the Secured Party or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. NO WAIVER. No failure on the part of the Collateral Agent
or the right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other to further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. None the
Collateral Agent and the Guarantors shall be deemed to have exercised any rights
hereunder unless such waiver shall be in writing and signed by such parties.
SECTION 7. NOTICES. All communications, and notices hereunder shall
be in writing and given as provided in Section 12 of the Guarantee and addressed
as specified in Section 12.
SECTION 8. BINDING AGREEMENT; ASSIGNMENTS. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successor and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Neither the Borrower nor any Guarantor may assign or
transfer any of its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior written consent of the
Required Lenders and the Required Holders.
SECTION 9. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All covenants,
agreements, representations, warranties and guarantees made by the Borrower and
each Guarantor hereunder and in any certificates or other instruments prepared
or delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Secured Parties and
shall survive the making by the Lenders of the Loans, the making by the
Swingline Lender of the Swingline Loans and the purchase by the Tranche A
Exchange Note Purchasers of the Tranche A Exchange Notes, the execution and
delivery to the Tranche A Exchange Note Purchasers of the Tranche A Exchange
Notes, and the issuance by the Fronting Bank of any Letter of Credit, regardless
of any investigation made by the Secured Parties or on their behalf, and shall
continue in full force and effect as long as the principal of or any accrued
interest on, or any other fee or amount payable under or in respect of, any
Loan, Swingline Loan, Tranche A Exchange Note or Letter of Credit, or this
Agreement or, without duplication of the foregoing, under any of the other Loan
Documents, is outstanding and unpaid and so long as the Commitments and the LC
Commitment have not been terminated.
<PAGE>
3
(b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, no
party hereto shall be required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 10. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. This Agreement shall
be effective with respect to any Guarantor when a counterpart bearing the
signature of such Guarantor shall have been delivered to the Collateral Agent.
SECTION 11. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 12. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each of
the Borrower and the Guarantors hereby irrevocably and unconditionally submits,
for itself and its property, to the jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each of the parties hereto agrees that it will not institute or seek to
institute any action or proceeding arising
<PAGE>
4
out of or relating to this Agreement (other than an action or proceeding seeking
enforcement of a judgment) in any forum other than a New York State court or
Federal court of the United States of America sitting in New York City.
(b) Each of the Borrower and the Guarantors hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
New York State or Federal court of the United States of America sitting in New
York. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 13. WAIVER OF JURY TRIAL. Each party hereto hereby waives,
to the fullest extent permitted by applicable law, any right it may have to a
trial by, jury in respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement. Each party hereto (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
and the other parties hereto have been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this Section.
SECTION 14. REFERENCE TO CREDIT AGREEMENT. Upon the payment and
discharge in full of all outstanding Credit Agreement Obligations or all
outstanding Tranche A Exchange Note Obligations, all references herein to the
terms of the Credit Agreement or the Tranche A Exchange Note Agreements, as the
case may be, shall become null and void (other than references for the purpose
of incorporating herein definitions of terms used therein, which terms will
continue to have the meanings assigned thereto immediately prior to such payment
and discharge, subject to subsequent amendment or modifications in accordance
with the terms hereof).
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first appearing
above.
TRAVELCENTERS OF AMERICA, INC.,
by
----------------------------
Name:
Title:
TA OPERATING CORPORATION,
by
----------------------------
Name:
Title:
NATIONAL AUTO/TRUCKSTOPS, INC.,
by
----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by
----------------------------
Name:
Title:
<PAGE>
EXHIBIT H
MASTER COLLATERAL AND INTERCREDITOR AGREEMENT dated
as of March 27, 1997, among the Participating Creditors (as
defined below) and The Chase Manhattan Bank, a New York
banking corporation ("CHASE"), as collateral agent (the
"COLLATERAL AGENT") for the Participating Creditors.
A. The Lenders (as defined below) have agreed to extend credit in an
aggregate principal amount of up to $120,000,000 to TravelCenters of America,
Inc., a Delaware corporation (the "COMPANY"), pursuant to the Credit Agreement
dated as of March 21, 1997 (as amended and in effect from time to time, the
"CREDIT AGREEMENT"), among the Company, the financial institutions party thereto
as lenders (the "LENDERS"), and Chase, as agent for the Lenders (in such
capacity the "AGENT"), as fronting bank (in such capacity, the "FRONTING BANK")
and as swingline lender (in such capacity, the "SWINGLINE LENDEr" and, together
with the Lenders, the Agent and the Fronting Bank, the "CREDIT AGREEMENT
CREDITORS").
B. The Tranche A Exchange Note Purchasers (as defined below) have agreed
to accept $35,500,000 aggregate principal amount of the Company's 8.94% Series I
Senior Secured Notes due 2002 (the "SERIES I TRANCHE A EXCHANGE NOTES") and
$50,000,000 aggregate principal amount of the Company's Series II Senior Secured
Notes due 2005 (the "SERIES II TRANCHE A EXCHANGE NOTES" and, together with the
Series I Tranche A Exchange Notes, the "TRANCHE A EXCHANGE NOTES") in exchange
for (i) $65,000,000 aggregate principal amount of the outstanding 8.76% Senior
Secured Notes due 2002 (the "NATIONAL SENIOR NOTES") of National
Auto/Truckstops, Inc., a Delaware corporation ("NATIONAL"), and (ii) $20,500,000
aggregate principal amount of the outstanding 8.63% Senior Secured Notes due
2002 (the "TA SENIOR NOTES" and together with the National Senior Notes, the
"EXISTING SENIOR NOTES") of TA Operating Corporation, a Delaware corporation
("TA"), pursuant to the Senior Secured Note Exchange Agreements, each dated as
of March 21, 1997 (as amended and in effect from time to time, the "TRANCHE A
EXCHANGE NOTE PURCHASE AGREEMENTS"), among the Company and the respective
financial institutional investors party thereto (collectively, the "TRANCHE A
EXCHANGE NOTE PURCHASERS").
C. Pursuant to the Credit Agreement and the Tranche A Exchange Note
Purchase Agreements, (i) the Company, TA, National and TA Franchise Systems
Inc., a Delaware corporation ("TAFSI"), are entering into certain Security
Documents (as defined below), under which they are granting to the Collateral
Agent a lien on and security interest in certain of their properties and assets
to secure the Obligations (as defined below), and (ii) TA and National are
entering into a Guarantee Agreement (as defined below) under which each is
guaranteeing the Obligations.
D. To induce the Tranche A Exchange Note Purchasers to accept the Tranche
A Exchange Notes in exchange for the Existing Senior Notes held by them pursuant
to the Tranche A Exchange Note Purchase Agreements, each of the Credit Agreement
Creditors is willing to enter into this Agreement. To induce each of the
Lenders, the Swingline Lender and the Fronting Bank to extend credit to the
Company pursuant to the Credit Agreement, each of the Tranche A Exchange Note
Purchasers is willing to enter into this Agreement. In extending credit to the
Company and in entering into this Agreement, each of the Credit Agreement
Creditors is relying on the undertakings of each of the Tranche A Exchange Note
Purchasers as set forth herein. In acquiring the Tranche A Exchange Notes and in
entering into this Agreement, each of the Tranche A Exchange Note Purchasers is
relying on the undertakings of each of the Credit Agreement Creditors as set
forth herein.
E. Each of the Participating Creditors (as defined below) desires to
provide for their respective rights in respect of the Collateral and certain
collections from the Company, TA, National and TAFSI and to make certain other
commitments and undertakings in connection with the Credit Agreement, the
Tranche A Exchange Note Purchase Agreements, the Security Documents, the
Guarantee Agreement, the obligations incurred by the Company, TA, National and
TAFSI under such agreements and the rights of the Participating Creditors under
such agreements.
<PAGE>
Accordingly, each of the Participating Creditors and the Collateral Agent
hereby agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS OF CERTAIN TERMS. As used herein, the following
terms shall have the meanings set forth below:
"ACTIONABLE DEFAULT" shall mean any Event of Default under and as defined
in the Credit Agreement or any Event of Default under and as defined in the
Tranche A Exchange Note Purchase Agreements.
"AFFILIATE" shall have the meaning set forth in the Credit Agreement and
the Tranche A Exchange Note Purchase Agreements.
"BUSINESS DAY" shall mean any day (other than a day that is a Saturday, a
Sunday or a legal holiday in the State of New York) on which banks are open for
business in New York City.
"COLLATERAL" shall mean all the properties and assets of whatever nature,
tangible or intangible, now owned or existing or hereafter acquired or arising,
of the Company, TA, National and TAFSI on or in which the Collateral Agent has
been granted a Lien or security interest pursuant to any of the Security
Documents.
"COLLATERAL ACCOUNTS" shall have the meaning set forth in Section 4.01.
"COMMITMENT" shall have the meaning set forth in the Credit Agreement.
"CREDIT AGREEMENT CREDITORS" shall have the meaning assigned in the
preamble to this Agreement.
"CREDIT AGREEMENT REFINANCING Indebtedness" shall have the meaning
assigned to such term in the Tranche A Exchange Note Purchase Agreements.
"CREDIT TRANSACTION DOCUMENTS" shall mean the Loan Documents (as defined
in the Credit Agreement) and the Financing Documents (as defined in the Tranche
A Exchange Note Purchase Agreements).
"GUARANTEE AGREEMENT" shall mean the Guarantee Agreement dated as of the
date hereof entered into by TA and National pursuant to the Credit Agreement and
the Tranche A Exchange Note Purchase Agreements, as amended and in effect from
time to time.
"LETTER OF CREDIT" shall mean any letter of credit issued by the Fronting
Bank pursuant to the Credit Agreement.
"LETTER OF CREDIT COLLATERAL ACCOUNT" shall have the meaning set forth in
Section 4.01.
"LC DISBURSEMENT" shall mean a payment or disbursement made by the
Fronting Bank pursuant to a Letter of Credit.
"LIEN" shall have the meaning set forth in the Credit Agreement and the
Tranche A Exchange Note Purchase Agreements.
"LOANS" shall have the meaning set forth in the Credit Agreement.
"LOC CREDITORS" shall mean the Fronting Bank and the Lenders that hold
participations in Letters of Credit.
"MAJORITY CREDITORS" shall mean Participating Creditors holding Voting
Obligations representing a majority of the Voting Obligations.
"NOTICE OF ACTIONABLE DEFAULT" shall mean a notice delivered by any
Participating Creditor to the Collateral Agent, stating that an Actionable
Default has occurred. A Notice of Actionable Default shall be
2
<PAGE>
deemed to have been given when the notice referred to in the preceding sentence
has actually been received by the Collateral Agent and to have been rescinded
when the Collateral Agent has received satisfactory evidence that such
Actionable Default has been cured or when such Actionable Default has been
effectively waived for purposes of this Agreement. A Notice of Actionable
Default shall be deemed to be outstanding at all times after such Notice has
been given until such time, if any, as such Notice has been rescinded.
"OBLIGATIONS" shall mean all obligations defined as "Obligations" in the
Support Documents.
"OUTSTANDING CREDIT AGREEMENT OBLIGATIONS" shall mean, at any time, the
sum (without duplication) of Outstanding Revolving Credit Facility Obligations
and Outstanding Term Facility Obligations.
"OUTSTANDING REVOLVING CREDIT FACILITY OBLIGATIONS" shall mean, at any
time, the sum (without duplication) of (a) the aggregate principal amount of the
Revolving Credit Loans and the Swingline Loans outstanding at such time and the
aggregate amount of accrued and unpaid interest thereon at such time, (b) the
aggregate amount of all LC Disbursements not yet reimbursed to the LOC Creditors
and accrued and unpaid interest thereon at such time, (c) the aggregate amount
of accrued and unpaid fees payable to the Credit Agreement Creditors, or any of
them, under or in connection with the obligations set forth in clauses (a) and
(b) under the Credit Agreement and (d) the pro rata share (determined as
provided below) of the aggregate amount of all other monetary obligations of the
Company, TA, National and TAFSI that are accrued and owing at such time to the
Credit Agreement Creditors or any of them under the Credit Agreement and the
Support Documents, including indemnification and expense reimbursement
obligations (but excluding any Unfunded LOC Exposure). For purposes of
determining the pro rata share of the aggregate amount of monetary obligations
owed to the Lenders pursuant to clause (d) above, such amount shall be
determined on the basis of the ratio of (i) the amount owed to the Lenders
pursuant to clauses (a), (b) and (c) of this definition to (ii) the sum of (A)
the amount owed to the Lenders pursuant to clauses (a), (b) and (c) of this
definition and (B) the amounts owed to the Lenders pursuant to clauses (a) and
(b) of the definition of the term "OUTSTANDING TERM FACILITY OBLIGATIONs".
"OUTSTANDING TERM FACILITY OBLIGATIONS" shall mean, at any time, the sum
(without duplication) of (a) the aggregate principal amount of the Term Loans
outstanding at such time and the aggregate amount of accrued and unpaid interest
thereon at such time, (b) the aggregate amount of accrued and unpaid fees
payable to the Credit Agreement Creditors, or any of them, under or in
connection with the obligations set forth in clause (a) under the Credit
Agreement and (c) the pro rata share (determined as provided below) of the
aggregate amount of all other monetary obligations of the Company, TA, National
and TAFSI that are accrued and owing at such time to the Credit Agreement
Creditors or any of them under the Credit Agreement and the Support Documents,
including indemnification and expense reimbursement obligations. For purposes of
determining the pro rata share of the aggregate amount of monetary obligations
owed to the Lenders pursuant to clause (c) above, such amount shall be
determined on the basis of the ratio of (i) the amount owed to the Lenders
pursuant to clauses (a) and (b) of this definition to (ii) the sum of (A) the
amount owed to the Lenders pursuant to clauses (a) and (b) of this definition
and (B) the amounts owed to the Lenders pursuant to clauses (a), (b) and (c) of
the definition of the term "Outstanding Revolving Credit Facility Obligations".
"OUTSTANDING OBLIGATIONS" shall mean, at any time, the sum of (a) the
Outstanding Credit Agreement Obligations at such time, (b) the Outstanding
Tranche A Exchange Note Purchase Agreement Obligations at such time and (c) the
Unfunded LOC Exposure at such time.
"OUTSTANDING TRANCHE A EXCHANGE NOTE PURCHASE AGREEMENT OBLIGATIONS" shall
mean, at any time, the sum (without duplication) of (a) the aggregate principal
amount of the outstanding Tranche A Exchange Notes at such time and the
aggregate amount of accrued and unpaid interest thereon at such time and (b) the
aggregate amount of all other monetary obligations of the Company, TA, National
and TAFSI that are accrued and owing at such time to the Tranche A Exchange Note
Purchasers or any of them under the Tranche A Exchange Note Purchase Agreements
and the Support Documents, including indemnification and expense reimbursement
obligations and premium and any break funding cost, if any.
"PARTIAL MORTGAGE" shall have the meaning set forth in Section 4.01(h).
"PARTICIPATING CREDITORS" shall mean the Credit Agreement Creditors and
the Tranche A Exchange Note Purchasers and their respective successors and
permitted assigns under the Credit Agreement or the Tranche A Exchange Note
Purchase Agreements (including the holders from time to time of the Tranche A
Exchange Notes), as the case may be.
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<PAGE>
"PAYMENT DEFAULT" shall mean any Actionable Default arising from a failure
to pay any of the Outstanding Credit Agreement Obligations or Outstanding
Tranche A Exchange Note Purchase Agreement Obligations when and as due, but only
if such Obligations that have not been paid include principal, interest,
premium, fees or unreimbursed LC Disbursements.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within three months from the date of acquisition
thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within three months from the date
of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from Standard & Poor's and from Moody's
Investors Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and
time deposits (including eurodollar time deposits) maturing within three
months from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, (i)
any domestic office of the Collateral Agent or (ii) any domestic office of
any other commercial bank of recognized standing organized under the laws
of the United States of America or any state thereof that (A) has a
combined capital and surplus and undivided profits of not less than
$250,000,000 and (B) is rated (or the senior debt securities of the
holding company of such commercial bank are rated) A or better by Standard
& Poor's or A2 by Moody's Investors Service, Inc., or carry an equivalent
rating by another nationally recognized rating agency if neither of the
two named rating agencies shall rate such commercial bank (or the holding
company of such commercial bank);
(d) investments in commercial paper maturing within three months
from the date of acquisition thereof and issued by (i) the holding company
of the Collateral Agent or (ii) the holding company of any other
commercial bank of recognized standing organized under the laws of the
United States of America or any state thereof that has (A) a combined
capital and surplus in excess of $250,000,000 and (B) commercial paper
rated at least A-1 or the equivalent thereof by Standard & Poor's or at
least P-1 or the equivalent thereof by Moody's Investors Service, Inc., or
carrying an equivalent rating by another nationally recognized rating
agency, if both of the two named rating agencies cease publishing ratings
of investments;
(e) repurchase agreements having a term of seven days or less with
(i) any domestic office of the Agent or (ii) any domestic office of any
other commercial bank of recognized standing organized under the laws of
the United States of America or any state thereof that has a combined
capital and surplus and undivided profits of not less than $250,000,000
and which is rated (or the senior debt securities of the holding company
of such commercial bank are rated) A or better by Standard & Poor's or A2
by Moody's Investors Service, Inc., or carrying an equivalent rating by
another nationally recognized rating agency if neither of the two named
rating agencies shall rate such bank relating to marketable direct
obligations issued or unconditionally guaranteed by the United States but
only if the securities collateralizing such repurchase agreements are
delivered to or on the order of the Collateral Agent; and
(f) other investment instruments approved in writing by the Required
Creditors and offered by financial institutions which have a combined
capital and surplus and undivided profits of not less than $250,000,000.
"REQUIRED CREDIT AGREEMENT CREDITORS" shall mean the Credit Agreement
Creditors holding a majority of the Voting Credit Agreement Obligations.
"REQUIRED CREDITORS" shall mean the Majority Creditors, so long as at the
time of determination such Majority Creditors shall include (a) Voting Credit
Agreement Obligations representing at least 33-1/3% of the Voting Credit
Agreement Obligations (excluding Voting Credit Agreement Obligations owed to any
Tranche A Exchange Note Purchaser or any Affiliate thereof) and (b) Voting
Tranche A Exchange Note Purchase Agreement Obligations representing at least
33-1/3% of the Voting Tranche A Exchange Note Purchase Agreement
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<PAGE>
Obligations (excluding Voting Tranche A Exchange Note Purchase Agreement
Obligations owed to any Credit Agreement Creditor or any Affiliate thereof).
"REVOLVING CREDIT FACILITY COLLATERAL ACCOUNT" shall have the meaning set
forth in Section 4.01.
"SECURITY DOCUMENTS" shall mean each of the documents and agreements
defined as a "Security Document" in the Tranche A Exchange Note Purchase
Agreements and the Credit Agreement.
"SPECIAL COLLATERAL ACCOUNT" shall have the meaning set forth in Section
7.02(b).
"SUBORDINATED NOTE INDENTURE" shall have the meaning set forth in the
Credit Agreement and the Tranche A Exchange Note Purchase Agreements.
"SUBORDINATED NOTE REFINANCING INDEBTEDNESS" shall have the meaning
assigned to such term in the Credit Agreement.
"SUPPORT DOCUMENTS" shall mean the Security Documents and the Guarantee
Agreement.
"TERM FACILITY COLLATERAL ACCOUNT" shall have the meaning set forth in
Section 4.01.
"TRANCHE A EXCHANGE NOTE PURCHASE AGREEMENT COLLATERAL ACCOUNT" shall have
the meaning set forth in Section 4.01.
"TRANCHE A EXCHANGE NOTE REFINANCING INDEBTEDNESS" shall have the meaning
assigned to such term in the Credit Agreement.
"UNFUNDED LOC EXPOSURE" shall mean, at any time, the aggregate undrawn
amount of all outstanding Letters of Credit at such time.
"VOTING ACTIONS" shall mean (a) all amendments and modifications to, and
waivers of any provisions of, and consents granted under, any of the Support
Documents and (b) any delivery of a notice, determination or any other action
whatsoever permitted to be taken or withheld by the Collateral Agent pursuant to
Section 7.08.
"VOTING CREDIT AGREEMENT OBLIGATIONS" shall mean, at any time, (a) the
aggregate principal amount of the Loans and the Swingline Loans outstanding at
such time, (b) the Unfunded LOC Exposure at such time, (c) the aggregate amount
of unreimbursed LC Disbursements at such time and (d) the aggregate unused
amount of the Commitments in effect at such time, PROVIDED that any of the
foregoing obligations owed to the Company, any Subsidiary or any Affiliate of
the Company at such time shall be deemed not to be outstanding for purposes of
this definition.
"VOTING OBLIGATIONS" shall mean the Voting Credit Agreement Obligations
and the Voting Tranche A Exchange Note Purchase Agreement Obligations.
"VOTING TRANCHE A EXCHANGE NOTE PURCHASE AGREEMENT OBLIGATIONS" shall
mean, at any time, the aggregate principal amount of the outstanding Tranche A
Exchange Notes at such time, PROVIDED that any Tranche A Exchange Notes owned by
the Company, any Subsidiary or any Affiliate of the Company at such time shall
be deemed not to be outstanding for the purposes of this definition.
SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles and Sections shall be deemed references to Articles and
Sections of this Agreement unless the context shall otherwise require.
5
<PAGE>
ARTICLE II
ACTS OF PARTICIPATING CREDITORS;
AMOUNTS OF OBLIGATIONS
SECTION 2.01. ACTS OF PARTICIPATING CREDITORS. Any request, demand,
authorization, direction, notice, consent, waiver or other action permitted or
required by this Agreement to be given or taken by the Participating Creditors
or any portion thereof (including the Required Creditors or the Majority
Creditors) may be and, at the request of the Collateral Agent, shall be embodied
in and evidenced by one or more instruments satisfactory in form to the
Collateral Agent and signed by or on behalf of such persons and, except as
otherwise expressly provided in any such instrument, any such action shall
become effective when such instrument or instruments shall have been delivered
to the Collateral Agent. The instrument or instruments evidencing any action
(and the action embodied therein and evidenced thereby) are sometimes referred
to herein as an "ACT" of the persons signing such instrument or instruments. The
Collateral Agent shall be entitled to rely absolutely upon an Act of any
Participating Creditor if such Act purports to be taken by or on behalf of such
Participating Creditor, and nothing in this Section 2.01 or elsewhere in this
Agreement shall be construed to require any Participating Creditor to
demonstrate that it has been authorized to take any action that it purports to
be taking, the Collateral Agent being entitled to rely conclusively, and being
fully protected in so relying, on any Act of such Participating Creditor.
SECTION 2.02. DETERMINATION OF AMOUNTS OF OBLIGATIONS. Whenever the
Collateral Agent is required to determine the existence or amount of any of the
Outstanding Obligations or Voting Obligations or any portion thereof or the
existence of any Actionable Default for any purposes of this Agreement, it shall
be entitled to make such determination on the basis of one or more certificates
of any Participating Creditor (with respect to the Obligations owed to such
Participating Creditor) or the Agent (with respect to the Obligations owed to
the Credit Agreement Creditors, or any of them); PROVIDED, HOWEVER, that if,
notwithstanding the request of the Collateral Agent, any Participating Creditor
shall fail or refuse within five business days of such request to certify as to
the existence or amount of any Outstanding Obligations or Voting Obligations or
any portion thereof owed to it or the existence of any Actionable Default, the
Collateral Agent shall be entitled to determine such existence or amount by such
method as the Collateral Agent may, in its sole discretion, determine, including
by reliance upon a certificate of the Company, TA, National or TAFSI; PROVIDED
FURTHER, HOWEVER, that, promptly following determination of any such amount, the
Collateral Agent shall notify such Participating Creditor of such determination
and thereafter shall correct any error that such Participating Creditor brings
to the attention of the Collateral Agent. In addition, the Collateral Agent may
rely on any certificate of the Company with respect to the amount of Notes
considered not outstanding for purposes of the definition of the terms "Voting
Tranche A Exchange Note Purchase Agreement Obligations" and "Voting Obligations"
as a result of such notes being owned by the Company, any Subsidiary or any
Affiliate of the Company. The Collateral Agent may rely conclusively, and shall
be fully protected in so relying, on any determination made by it in accordance
with the provisions of the preceding sentence (or as otherwise directed by a
court of competent jurisdiction) and shall have no liability to the Company, TA,
National or TAFSI, any Participating Creditor or any other person as a result of
any action taken by the Collateral Agent based upon such determination prior to
receipt of notice of any error in such determination. Upon any request of the
Collateral Agent, the Company will, and by countersigning this Agreement the
Company agrees to, as promptly as practicable furnish a certificate to the
Collateral Agent as to the existence or amount of any Outstanding Obligation or
Voting Obligation or as to the existence of any Actionable Default. For all
purposes of this Agreement to the extent any Outstanding Obligation has been
taken into account for purposes of determining the amount to which any
Participating Creditor is entitled in any distribution hereunder, any guarantee
of such Outstanding Obligation that is itself an Outstanding Obligation shall
not be taken into account for such purpose.
SECTION 2.03. RESTRICTIONS ON ACTIONS. Each Participating Creditor agrees
that, as long as any Outstanding Obligations exist, the provisions of this
Agreement shall provide the exclusive method by which any Participating Creditor
may exercise rights and remedies under the Support Documents. Therefore, each
Participating Creditor shall, for the mutual benefit of all Participating
Creditors, except as permitted under this Agreement:
(a) refrain from taking or filing any action, judicial or otherwise,
to enforce any rights or pursue any remedies under the Support Documents,
except for delivering notices hereunder; and
(b) refrain from exercising any rights or remedies under the Support
Documents that may be exercisable as a result of an Actionable Default;
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<PAGE>
PROVIDED, HOWEVER, that the foregoing shall not prevent (i) any Participating
Creditor from imposing a default rate of interest in accordance with the Credit
Agreement or the Tranche A Exchange Note Purchase Agreements, as applicable,
(ii) a Participating Creditor from raising any defenses in any action in which
it has been made a party defendant or has been joined as a third party, except
that the Collateral Agent may direct and control any defense to the extent
directly relating to the Collateral or any one or more of the Support Documents,
subject to and in accordance with the provisions of this Agreement, or (iii) a
Participating Creditor from exercising its rights and remedies as a general
creditor in accordance with the Credit Transaction Documents and applicable law,
including the right to commence legal proceedings to collect any Outstanding
Obligation due and payable to such Participating Creditor and remaining unpaid,
to obtain a judgment and to enforce such judgment, in each case to the same
extent as if such Participating Creditor were an unsecured creditor.
ARTICLE III
DUTIES OF COLLATERAL AGENT
SECTION 3.01. NOTICES TO PARTICIPATING CREDITORS. The Collateral Agent
shall promptly notify each Participating Creditor listed on Schedules I and II
in the event it shall receive any Notice of Actionable Default or certificate
rescinding a Notice of Actionable Default or any request by any party hereto or
by the Company, TA, National or TAFSI for any consent, waiver or amendment with
respect hereto or any other Credit Transaction Document.
SECTION 3.02. ACTIONS UNDER SUPPORT DOCUMENTS. (a) The Collateral Agent
shall not be obligated to take any action under this Agreement or any of the
Support Documents except for the performance of such duties as are specifically
set forth herein or therein. Subject to the provisions of Article V and Section
7.05, the Collateral Agent shall take any action under or with respect to the
Support Documents that is requested by the Required Creditors and which is not
inconsistent with or contrary to the provisions of this Agreement or the Support
Documents. The Collateral Agent may take, but shall have no obligation to take,
any and all such actions under the Support Documents or any of them or otherwise
as it shall deem to be in the best interests of the Participating Creditors in
order to maintain the Collateral and protect and preserve the Collateral and the
rights of the Participating Creditors; PROVIDED, HOWEVER, that, except as
provided in paragraph (b) below or the last sentence of Section 5.03(d), in the
absence of written instructions (which may relate to the exercise of specific
remedies or to the exercise of remedies in general) from the Required Creditors,
the Collateral Agent shall not foreclose any Lien on the Collateral or exercise
any other remedies available to it under any Support Documents with respect to
the Collateral or any part thereof.
(b) If the Collateral Agent has requested instructions from the Required
Creditors at a time when a Notice of Actionable Default shall be outstanding and
the Required Creditors have not responded to such request within 30 days
thereafter, the Collateral Agent may take, but shall have no obligation to take,
any and all actions under the Support Documents or any of them or otherwise,
including foreclosure of any Lien or any other exercise of remedies, as the
Collateral Agent, in good faith, shall determine to be in the interests of the
Participating Creditors and to maximize both the value of the Collateral and the
present value of the recovery by each of the Participating Creditors on the
Outstanding Obligations; PROVIDED, HOWEVER, that, if instructions are thereafter
received from the Required Creditors, then the actions of the Collateral Agent
shall be subject to paragraph (a) above.
SECTION 3.03. MEETINGS; VOTING. (a) When the Collateral Agent receives a
Notice of Actionable Default, the Collateral Agent shall give prompt notice
thereof to the Participating Creditors and, upon the request of any
Participating Creditor, shall schedule a meeting of all Participating Creditors
to be held at the offices of the Collateral Agent, or another mutually
convenient place, PROVIDED that any Participating Creditor may participate via
telephone. At such meeting the Participating Creditors shall consult with one
another in an attempt to determine a mutually acceptable course of conduct
regarding the Company, TA, National, TAFSI, the collection of the Outstanding
Obligations and the exercise of rights and remedies under the Support Documents.
(b) Whenever it is necessary to take any Voting Action, the Collateral
Agent shall notify each Participating Creditor entitled to participate therein
of the proposed Voting Action, shall collect instructions from the Participating
Creditors regarding such Voting Action and shall notify all Participating
Creditors entitled to participate in such Voting Action of the results thereof.
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SECTION 3.04. RECORDS. The Collateral Agent shall maintain records
regarding Voting Actions, determinations of the amounts of the Outstanding
Obligations and Voting Obligations for any purpose, the allocation of deposits
to the Collateral Accounts and any distributions therefrom. The information
contained in such records shall be made available to any Participating Creditor
upon request.
ARTICLE IV
PROCEEDS RECEIVED UNDER SUPPORT DOCUMENTS
SECTION 4.01. COLLATERAL ACCOUNTS. (a) The Collateral Agent shall
establish and maintain at its principal banking office in New York City four
accounts into which it shall (except as otherwise explicitly provided in any
Support Document) deposit all amounts received by it in its capacity as
Collateral Agent (and not in any other capacity) in respect of the Collateral or
pursuant to enforcement of the Guarantee Agreement upon an Actionable Default,
including all monies received on account of any sale of or other realization
upon any of the Collateral pursuant to any Security Document; PROVIDED, HOWEVER,
that notwithstanding any other provision of this Agreement, amounts that Chase
shall receive on account of the Outstanding Credit Agreement Obligations in its
capacity as Agent, and not through enforcement of the Guarantee Agreement upon
an Actionable Default or through the sale of or other realization upon any
Collateral as provided herein and in the Security Documents, shall be
distributed by it in accordance with the provisions of the Credit Agreement and
shall not be deposited in the Collateral Accounts. One of the four accounts
referred to in the preceding sentence shall be established and maintained for
the benefit of the Credit Agreement Creditors in respect of the Outstanding
Revolving Credit Facility Obligations (the "REVOLVING CREDIT FACILITY COLLATERAL
ACCOUNT"), the second shall be established and maintained for the benefit of the
Credit Agreement Creditors in respect of the Outstanding Term Facility
Obligations (the "TERM FACILITY COLLATERAL ACCOUNT"), the third account shall be
established and maintained for the benefit of the Tranche A Exchange Note
Purchasers (the "TRANCHE A EXCHANGE NOTE PURCHASE AGREEMENT COLLATERAL ACCOUNT")
and the fourth shall be established and maintained for the benefit of the LOC
Creditors (the "LETTER OF CREDIT COLLATERAL ACCOUNT" and, together with the
Revolving Credit Facility Collateral Account, the Term Facility Collateral
Account and the Tranche A Exchange Note Purchase Agreement Collateral Account,
the "COLLATERAL ACCOUNTS"). All amounts deposited in the respective Collateral
Accounts shall be held by the Collateral Agent subject to the terms hereof and
of the Support Documents, it being understood that any such amounts may be
released to the Company to the extent required by any of the Security Documents
(any amounts so released to be released from the respective Collateral Accounts
pro rata in accordance with the aggregate amounts deposited in such accounts
during the term of this Agreement; PROVIDED, HOWEVER, that the aggregate amounts
deposited in the Letter of Credit Collateral Account shall be deemed to have
been reduced by any amounts released from such Account pursuant to paragraph (d)
below). The Company, TA, National and TAFSI shall have no rights with respect
to, and the Collateral Agent shall have exclusive dominion and control over, the
Collateral Accounts.
(b) Except as set forth in paragraphs (d), (g) and (h) below, and subject
to the provisions of paragraph (h) below, all amounts that the Collateral Agent
is required at any time to deposit in the respective Collateral Accounts
pursuant to paragraph (a) above shall be allocated between, and deposited in,
the Revolving Credit Facility Collateral Account, the Term Facility Collateral
Account, the Tranche A Exchange Note Purchase Agreement Collateral Account and
the Letter of Credit Collateral Account pro rata in accordance with the
aggregate amount of Outstanding Revolving Credit Facility Obligations,
Outstanding Term Facility Obligations, Outstanding Tranche A Exchange Note
Purchase Agreement Obligations and Unfunded LOC Exposure, respectively, at such
time.
(c) The Collateral Agent shall establish sub-accounts in the Letter of
Credit Collateral Account with respect to each outstanding Letter of Credit. All
amounts deposited in the Letter of Credit Collateral Account shall be allocated
between, and deposited in, the respective sub-accounts therein pro rata in
accordance with the Unfunded LOC Exposure with respect to the related Letters of
Credit. If, on or after the date on which any funds are deposited in the Letter
of Credit Collateral Account pursuant to paragraph (b) above, any
Letter of Credit is drawn upon by the beneficiary thereof, the Collateral Agent
shall, upon the written request of the Agent, apply any funds in the sub-account
with respect to such Letter of Credit to the reimbursement of such LC
Disbursement as if such reimbursement were being made by the Company pursuant to
the Credit Agreement (but not in an amount in excess of the amount of such
drawing).
(d) At the time of any expiration or cancellation of any outstanding
Letter of Credit, or any other reduction in the amount of Unfunded LOC Exposure
thereunder (other than as a result of an LC Disbursement),
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the amount of funds in the sub-account with respect to such Letter of Credit
(or, in the case of any partial reduction in the amount of Unfunded LOC Exposure
thereunder, a pro rata portion of such funds) shall be released from such
sub-account, and the funds so released shall be allocated between, and deposited
in, the Revolving Credit Facility Collateral Account, the Term Facility
Collateral Account, the Tranche A Exchange Note Purchase Agreement Collateral
Account and the Letter of Credit Collateral Account pro rata in accordance with
the aggregate amount of the Outstanding Revolving Credit Facility Obligations,
Outstanding Term Facility Obligations, Outstanding Tranche A Exchange Note
Purchase Agreement Obligations and Unfunded LOC Exposure, respectively, at such
time.
(e) The Collateral Agent shall have the right at any time and from time to
time to apply any amounts in the Collateral Accounts to the payment of the
out-of-pocket costs and expenses (including reasonable attorney fees and
disbursements) incurred by the Collateral Agent in administering and carrying
out its obligations under this Agreement or any of the Support Documents, in
exercising or attempting to exercise any right or remedy hereunder or thereunder
or in taking possession of, protecting, preserving or disposing of any item of
Collateral, and all amounts against or for which the Collateral Agent is to be
indemnified or reimbursed hereunder (excluding any such costs, expenses or
amounts which have theretofore been reimbursed) until all of such costs,
expenses and amounts have been paid in full; PROVIDED, HOWEVER, that any such
application shall be allocated as between the Revolving Credit Facility
Collateral Account, Term Facility Collateral Account, the Letter of Credit
Collateral Account (provided that the aggregate amounts deposited in the Letter
of Credit Collateral Account shall be deemed to have been reduced by any amounts
released from such Account pursuant to paragraph (d) above) and the Tranche A
Exchange Note Purchase Agreement Collateral Account ratably in accordance with
the aggregate amounts deposited in such Accounts during the term of this
Agreement. The Collateral Agent shall reimburse any Credit Agreement Creditor or
Tranche A Exchange Note Purchaser, as the case may be, prior to applying any
amounts in the Collateral Accounts pursuant to Section 4.02 for any and all
losses with respect to any amounts expended with respect to any indemnity
provided in accordance with Section 5.03(e) by such Credit Agreement Creditor or
Tranche A Exchange Note Purchaser by application of funds in the Collateral
Accounts in the same manner as provided in the proviso to the preceding
sentence.
(f) For purposes of determining allocations and deposits of funds (but not
distributions of funds) pursuant to this Section 4.01 and Section 4.02, any
Outstanding Obligations shall be deemed to be reduced by the amount, if any,
held by the Collateral Agent in the Collateral Account (or sub-account therein)
from which distributions are to be paid in respect of such Outstanding
Obligations.
(g) If, at any time that the Collateral Agent receives any amounts to be
deposited in the Collateral Accounts, any portion of the Outstanding Obligations
consists of out-of-pocket costs and expenses (including attorney fees and
disbursements) or other claims in respect of any indemnification or expense
reimbursement obligations of the Company, TA, National or TAFSI under any of the
Credit Transaction Documents (collectively, "REIMBURSEMENT OBLIGATIONS"), then,
prior to allocating such amounts among the Collateral Accounts, the Collateral
Agent shall, to the extent it shall have received notice of such Reimbursement
Obligations, apply such amounts to pay such Reimbursement Obligations (pro rata
among such Reimbursement Obligations, in the event that the amount to be so
applied is insufficient to pay all such Reimbursement Obligations in full);
PROVIDED, HOWEVER, that the aggregate cumulative amount applied pursuant to this
paragraph (g) to pay Reimbursement Obligations to Participating Creditors (other
than the Collateral Agent or otherwise in respect of amounts referred to in
paragraph (e) above) shall not exceed $4,000,000.
(h) (i) If, at any time that the Collateral Agent receives any amounts to
be deposited in the Collateral Accounts in respect of any Mortgaged Property and
the related Mortgage omits as a secured obligation the Outstanding Revolving
Credit Facility Obligations (including Letters of Credit) (each such Mortgage
being a "PARTIAL MORTGAGE"), then, (A) all such amounts that the Collateral
Agent is required to deposit in the respective Collateral Accounts pursuant to
paragraph (a) above shall be allocated between, and deposited in, the Term
Facility Collateral Account and the Tranche A Exchange Note Purchase Agreement
Collateral Account pro rata in accordance with the aggregate amount of the
Outstanding Term Facility Obligations and the Outstanding Tranche A Exchange
Note Purchase Agreement Obligations and (B) none of the amounts so deposited in
the Term Facility Collateral Account and the Tranche A Exchange Note Purchase
Agreement Collateral Account shall be deposited in the Revolving Credit Facility
Collateral Account or the Letter of Credit Collateral Account pursuant to
Section 4.02(b) or 4.02(c), respectively.
(ii)It is the intent of the parties hereto that each of the Participating
Creditors shall share in all proceeds of the Collateral required to be deposited
in the Collateral Accounts pursuant to Section 4.01 on a pro rata basis.
Accordingly, on each occasion that proceeds in respect of Mortgaged Property
subject to a Partial Mortgage are not allocated to Outstanding Revolving Credit
Facility Obligations due to their omission as secured
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obligations under the related Partial Mortgage, (i) each of the Participating
Creditors agrees (A) that the Collateral Agent shall be permitted to reallocate
FROM (I) the Term Facility Collateral Account and the Tranche A Exchange Note
Purchaser Collateral Account (on a pro rata basis based on the aggregate amounts
deposited in such accounts during the term of this Agreement (excluding
Collateral proceeds in respect of any Partial Mortgages)) TO (II) the Revolving
Credit Facility Collateral Account and the Letter of Credit Collateral Account
Collateral amounts then on deposit in the Term Facility Collateral Account and
the Tranche A Exchange Note Purchase Agreement Account (excluding Collateral
proceeds in respect of any Partial Mortgage) in an amount equal to the amounts
in respect of the Mortgaged Property subject to such Partial Mortgage that would
have been allocated to the Revolving Credit Facility Collateral Account and the
Letter of Credit Collateral Account but for the omission of Outstanding
Revolving Credit Facility Obligations as secured obligations under such Partial
Mortgage and (B) in allocating and depositing amounts to the respective
Collateral Accounts pursuant to paragraph (b) of this Section 4.01, the
Collateral Agent may give effect to and consider (I) any amounts that were
previously permitted to be reallocated to the Revolving Credit Facility
Collateral Account and the Letter of Credit Collateral Account pursuant to
clause (A) above but which have not theretofore been so reallocated and (II) if
the Collateral Agent deems it appropriate given the amount and nature of all the
remaining Collateral at such time, the number of and the expected proceeds in
respect of any remaining Partial Mortgages.
(iii)Consistent with the general intent that each of the Participating
Creditors shall share in the Collateral on a pro rata basis, if the aggregate
proceeds in respect of the Collateral shall be insufficient to satisfy all the
Outstanding Obligations, each of the Participating Creditors (other than the
Lenders in respect of the Outstanding Revolving Credit Facility Obligations)
agrees that they shall reimburse the Lenders in respect of the Outstanding
Revolving Credit Facility Obligations on a pro rata basis (based on the
aggregate amounts deposited in the Collateral Accounts during the term of this
Agreement for the benefit of such Participating Creditors) to the extent that
such Lenders shall have not received (after giving effect to the other
provisions of this paragraph (h)) their pro rata share of such aggregate
proceeds due to the omission of the Outstanding Revolving Credit Facility
Obligations as secured obligations under the Partial Mortgages.
(iv)In connection with the provisions of this paragraph (h), the
Collateral Agent agrees that it shall properly account for and keep accurate and
complete records of all amounts received in respect of the Partial Mortgages and
allocations and reallocations of Collateral proceeds pursuant to this paragraph
(h).
SECTION 4.02. APPLICATION OF PROCEEDS. (a) Amounts deposited in the
Revolving Credit Facility Collateral Account shall be applied in the following
order of priority:
FIRST, to the payment of all Outstanding Revolving Credit Facility
Obligations that consist of costs and expenses incurred in connection with
the enforcement or protection of the rights of the Credit Agreement
Creditors;
SECOND, to the Credit Agreement Creditors in respect of the
Outstanding Revolving Credit Facility Obligations pro rata in accordance
with the aggregate amounts of the Outstanding Revolving Credit Facility
Obligations at such time, until the Outstanding Revolving Credit Facility
Obligations shall have been paid in full;
THIRD, if there are any Outstanding Term Facility Obligations, or if
there are any Outstanding Tranche A Exchange Note Purchase Agreement
Obligations or if there is any Unfunded LOC Exposure, to the Term Facility
Collateral Account, the Tranche A Exchange Note Purchase Agreement
Collateral Account and the Letter of Credit Collateral Account pro rata in
accordance with the respective amounts of such Outstanding Obligations;
and
FOURTH, the balance, if any, to the Company or such other person or
persons as shall be entitled thereto.
(b) Subject to the provisions of Section 4.01(h) and paragraph (f) of this
Section 4.02 in respect of amounts in respect of Partial Mortgages, Amounts
deposited in the Term Facility Collateral Account shall be applied in the
following order of priority:
FIRST, to the payment of all Outstanding Term Facility Obligations
that consist of costs and expenses incurred in connection with the
enforcement or protection of the rights of the Credit Agreement Creditors;
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SECOND, to the Credit Agreement Creditors in respect of the
Outstanding Term Facility Obligations pro rata in accordance with the
aggregate amounts of the Outstanding Term Facility Obligations at such
time, until the Outstanding Term Facility Obligations shall have been paid
in full;
THIRD, if there are any Outstanding Revolving Credit Facility
Obligations, or if there are any Outstanding Tranche A Exchange Note
Purchase Agreement Obligations or if there is any Unfunded LOC Exposure,
to the Revolving Credit Facility Collateral Account, the Tranche A
Exchange Note Purchase Agreement Collateral Account and the Letter of
Credit Collateral Account pro rata in accordance with the respective
amounts of such Outstanding Obligations; and
FOURTH, the balance, if any, to the Company or such other person or
persons as shall be entitled thereto.
(c) Subject to the provisions of Section 4.01(h) and paragraph (f) of this
Section 4.02 in respect of amounts in respect of Partial Mortgages, all amounts
deposited in the Tranche A Exchange Note Purchase Agreement Collateral Account
shall be applied in the following order of priority:
FIRST, to the payment of all Outstanding Tranche A Exchange Note
Purchase Agreement Obligations that consist of costs and expenses incurred
in connection with the enforcement or protection of the rights of the
Tranche A Exchange Note Purchasers;
SECOND, to the Tranche A Exchange Note Purchasers pro rata in
accordance with the aggregate amounts of the Outstanding Tranche A
Exchange Note Purchase Agreement Obligations at such time, until the
Outstanding Tranche A Exchange Note Purchase Agreement Obligations shall
have been paid in full;
THIRD, if there are any Outstanding Revolving Credit Facility
Obligations (or if the Lenders shall have any remaining commitments to
lend under the Credit Agreement), or if there are any Outstanding Term
Facility Obligations or if there is any Unfunded LOC Exposure (or if the
Lenders shall have any remaining commitments to participate in the
issuance of Letters of Credit), to the Revolving Credit Facility
Collateral Account, the Term Facility Collateral Account and the Letter of
Credit Collateral Account pro rata in accordance with the respective
amounts of such Outstanding Obligations; and
FOURTH, the balance, if any, to the Company or such other person or
persons as shall be entitled thereto.
(d) All amounts deposited in any sub-account in the Letter of Credit
Collateral Account shall be applied as provided in Sections 4.01(c) and (d).
(e) Each Participating Creditor agrees that, notwithstanding any provision
of this Agreement or the other Credit Transaction Documents, any sums and
amounts received by such Participating Creditor pursuant to this Section 4.02
shall be applied to the payment of its Outstanding Obligations as follows:
FIRST, to the payment of all Outstanding Obligations owed to such Participating
Creditor, other than principal, interest and obligations in respect of
reimbursement of LC Disbursements; SECOND, to the payment of all Outstanding
Obligations owed to such Participating Creditor consisting of accrued interest;
and THIRD, to the payment of all Outstanding Obligations owed to such
Participating Creditor consisting of principal and obligations in respect of
reimbursement of LC Disbursements.
(f) Each Lender in respect of the Outstanding Term Facility Obligations
and each Tranche A Exchange Note Purchaser agrees that, notwithstanding any
provision of this Agreement or the other Credit Transaction Documents, any sums
and amounts received by such Participating Creditor pursuant to this Section
4.02 in respect of any Mortgaged Property that is subject to a Partial Mortgage
shall be applied before the application of all other amounts received by such
Participating Creditor to the payment of its Outstanding Obligations in the
manner set forth in paragraph (e) above.
SECTION 4.03. TIME OF PAYMENTS. Unless the Collateral Agent shall have
received written instructions from the Majority Creditors as to the times at
which any amounts are to be distributed pursuant to Section 4.02, all
distributions under Section 4.02 shall be made at such times as the Collateral
Agent shall in its sole discretion determine, subject to Section 4.04; PROVIDED
that any distributions from the Revolving Credit Facility Collateral
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Account, the Term Facility Collateral Account and the Tranche A Exchange Note
Purchase Agreement Collateral Account shall be made substantially
simultaneously.
SECTION 4.04. APPLICATION OF AMOUNTS NOT DISTRIBUTABLE. If any
Participating Creditor shall inform the Collateral Agent that there is no
provision under the Credit Agreement or the Tranche A Exchange Note Purchase
Agreements, as the case may be, for the application of amounts that are to be
distributed to the parties to such Agreement pursuant to Section 4.02 (whether
by virtue of the applicable Outstanding Obligations thereunder not being then
due and payable or otherwise) or for the holding of such amounts by or on behalf
of such parties pending application thereof, then the Collateral Agent shall
invest the amounts in the applicable Collateral Account in investments permitted
by Section 4.05 and shall hold such amounts and all proceeds of such investments
in such Collateral Account for the benefit of such Participating Creditor until
such Participating Creditor shall request the delivery thereof by the Collateral
Agent for application against such Outstanding Obligations or shall notify the
Collateral Agent that such Outstanding Obligations have been paid.
SECTION 4.05. INVESTMENT OF AMOUNTS IN COLLATERAL ACCOUNTS. Pending the
disbursement thereof pursuant to the terms of this Agreement, all amounts in the
Collateral Accounts shall (to the extent the Collateral Agent deems practical)
be invested by the Collateral Agent in Permitted Investments. The Collateral
Agent shall, to the extent that the timing of distributions to be made from any
Collateral Account is known or can be reasonably anticipated, select Permitted
Investments for such Collateral Account that mature prior to the anticipated
date of any distribution to be made from such Collateral Account. The Collateral
Agent shall not discriminate between Collateral Accounts in the selection of
Permitted Investments; PROVIDED that the foregoing shall not be construed to
prevent the selection of longer-term investments for the Letter of Credit
Collateral Account if distributions from such Account are expected to be made at
a later date than distributions from the other Collateral Accounts.
ARTICLE V
CONCERNING THE COLLATERAL AGENT
SECTION 5.01. APPOINTMENT OF COLLATERAL AGENT. Each of the Participating
Creditors appoints Chase to act as Collateral Agent pursuant to the terms of the
Support Documents and this Agreement and authorizes the Collateral Agent to
execute and perfect the Support Documents in the name of and for the benefit of
the Secured Parties, and Chase agrees to act as Collateral Agent for such
Participating Creditors, pursuant to the terms of the Support Documents and this
Agreement.
SECTION 5.02. LIMITATIONS ON RESPONSIBILITY OF COLLATERAL AGENT. The
Collateral Agent shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties contained
herein or in any other Credit Transaction Document, except for those expressly
made by it herein. The Collateral Agent makes no representation as to the value
or condition of the Collateral or any part thereof, as to the title of the
Company, TA, National or TAFSI to the Collateral, as to the security afforded by
this Agreement or any Support Document or, except as expressly set forth in
Article VI, as to the validity, execution, enforceability, legality or
sufficiency of this Agreement or any other Credit Transaction Document, and the
Collateral Agent shall incur no liability or responsibility in respect of any
such matters. The Collateral Agent shall not be responsible for insuring the
Collateral, for the payment of taxes, charges, assessments or liens upon the
Collateral or otherwise as to the maintenance of the Collateral, except as
provided in the immediately following sentence when the Collateral Agent has
possession of the Collateral. The Collateral Agent shall have no duty to the
Company, TA, National or TAFSI or to the Participating Creditors as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of the Collateral Agent or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto, except the duty to accord such of the Collateral as may be in its
possession substantially the same care as it accords its own assets and the duty
to account for monies received by it. The Collateral Agent shall not be required
to ascertain or inquire as to the performance by the Company, TA, National or
TAFSI of any of the covenants or agreements contained herein or in the other
Credit Transaction Documents. Neither the Collateral Agent nor any officer,
agent or representative thereof shall be personally liable for any action taken
or omitted to be taken by any such person in connection with this Agreement or
any other Credit Transaction Document except for its or such person's own gross
negligence or wilful misconduct. Neither the Collateral Agent nor any officer,
agent or representative thereof shall be personally liable for any action taken
by it or any such person in accordance with any notice given by the requisite
number of Participating Creditors hereunder entitled to give such notice, even
if, at the time such action is taken by it or any such person, the Participating
Creditors that gave the notice to take such action are no longer Participating
Creditors and if the Collateral Agent has not
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received written notice of such fact. The Collateral Agent may execute any of
the powers granted under this Agreement or any of the Support Documents and
perform any duty hereunder or thereunder either directly or by or through agents
or attorneys-in-fact, and shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care and without gross negligence or wilful misconduct.
SECTION 5.03. RELIANCE BY COLLATERAL AGENT; INDEMNITY AGAINST LIABILITIES;
ETC. (a) Whenever in the performance of its duties under this Agreement the
Collateral Agent shall deem it necessary or desirable that a matter be proved or
established with respect to the Company, TA, National, TAFSI or any other person
in connection with the taking, suffering or omitting of any action hereunder by
the Collateral Agent, such matter may be conclusively deemed to be proved or
established by a certificate purporting to be executed by an officer of such
person, and the Collateral Agent shall have no liability with respect to any
action taken, suffered or omitted in reliance thereon.
(b) The Collateral Agent may consult with counsel and shall be fully
protected in taking any action hereunder in accordance with any advice of such
counsel. The Collateral Agent shall have the right but not the obligation at any
time to seek instructions concerning the administration of this Agreement, the
duties created hereunder or the Collateral from any court of competent
jurisdiction.
(c) The Collateral Agent shall be fully protected in relying upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other paper or document that it believes to be
genuine and to have been signed or presented by the proper party or parties. In
the absence of its gross negligence or wilful misconduct or actual notice to the
contrary, the Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificate or opinions furnished to the Collateral Agent in connection with
this Agreement.
(d) The Collateral Agent shall not be deemed to have actual, constructive,
direct or indirect notice or knowledge of the occurrence of any Actionable
Default unless and until the Collateral Agent shall have received a Notice of
Actionable Default or a notice from the Company, TA, National or TAFSI to the
Collateral Agent in its capacity as Collateral Agent indicating that an
Actionable Default has occurred. The Collateral Agent shall have no obligation
whatsoever either prior to or after receiving such a notice to inquire whether
an Actionable Default has, in fact, occurred and shall be entitled to rely
conclusively, and shall be fully protected in so relying, on any notice so
furnished to it. The Collateral Agent may (but shall not be obligated to) take
action hereunder on the basis of an Actionable Default of the type specified in
clause (g) or (h) of Article VIII of the Credit Agreement or Section 10.01(g) or
(h) of the Tranche A Exchange Note Purchase Agreements regardless of whether the
Collateral Agent has received any Notice of Actionable Default stating that such
Actionable Default has occurred, PROVIDED that any such action taken by the
Collateral Agent without direction from the Required Creditors shall be limited
to actions that the Collateral Agent determines to be necessary to protect and
preserve the Collateral and the rights of the Participating Creditors.
(e) If the Collateral Agent has been requested to take any specific action
pursuant to any provision of this Agreement, the Collateral Agent shall not be
under any obligation to exercise any of the rights or powers vested in it by
this Agreement in the manner so requested unless it shall have been provided
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by it in compliance with such request or direction.
SECTION 5.04. RESIGNATION OF THE COLLATERAL AGENT. The Collateral Agent
may at any time, by giving 30 days' prior written notice to the Company and each
Participating Creditor, resign and be discharged from the responsibilities
hereby created, such resignation to become effective upon the earlier of (a) the
acceptance of the appointment of a successor pursuant to the next sentence of
this Section or (b) the appointment of a successor by the Required Creditors
(or, if a Co-Collateral Agent has been appointed pursuant to Section 5.07, then
by the Required Lenders, as defined in the Credit Agreement) and the acceptance
of such appointment by such successor. If no successor shall be appointed and
approved pursuant to clause (b) above within 30 days after the date of any such
resignation, the Collateral Agent may apply to any court of competent
jurisdiction to appoint a successor to act until a successor shall have been
appointed by the Required Creditors (or the Required Lenders, as applicable) as
above provided or may, on behalf of the Participating Creditors, appoint a
successor Collateral Agent. Any successor Collateral Agent shall be a bank with
an office in New York, New York, having a combined capital and surplus of at
least $500,000,000 that is authorized to perform the functions of the Collateral
Agent hereunder.
SECTION 5.05. EXPENSES AND INDEMNIFICATION BY COMPANY. By countersigning
this Agreement, the Company agrees (a) to reimburse the Collateral Agent, on
demand, for any expenses incurred by the Collateral
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Agent, including counsel fees, other charges and disbursements and compensation
of agents, arising out of, in any way connected with, or as a result of, the
execution or delivery of this Agreement or any Support Document or any agreement
or instrument contemplated hereby or thereby or the performance by the parties
hereto or thereto of their respective obligations hereunder or thereunder or in
connection with the enforcement or protection of the rights of the Collateral
Agent and the Participating Creditors under this Agreement and the Support
Documents and (b) to indemnify and hold harmless the Collateral Agent and its
directors, officers, employees and agents, on demand, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Collateral Agent in its
capacity as the Collateral Agent or any of them in any way relating to or
arising out of this Agreement or any Support Document or any action taken or
omitted by them under this Agreement or any Support Document, PROVIDED that the
Company shall not be liable to the Collateral Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Collateral Agent or any of its directors, officers, employees
or agents.
SECTION 5.06. EXPENSES AND INDEMNIFICATION BY LENDERS AND TRANCHE A
EXCHANGE NOTE PURCHASERS. Each Lender and Tranche A Exchange Note Purchaser
agrees (a) to reimburse the Collateral Agent, on demand, in the amount of its
pro rata share (based on the amount of its Voting Obligations), for any expenses
referred to in Section 5.05 that shall not have been reimbursed by the Company,
TA, National or TAFSI or paid from the proceeds of Collateral as provided herein
and (b) to indemnify and hold harmless the Collateral Agent and its directors,
officers, employees and agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements referred
to in Section 5.05, to the extent the same shall not have been reimbursed by the
Company, TA, National or TAFSI or paid from the proceeds of Collateral as
provided herein; PROVIDED that no Lender or Tranche A Exchange Note Purchaser
shall be liable to the Collateral Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Collateral Agent or any of its directors, officers, employees
or agents.
SECTION 5.07. CO-COLLATERAL AGENT. (a) If an Actionable Default has
occurred and remains continuing for a period in excess of 30 days, then Tranche
A Exchange Note Purchasers holding 66-2/3% of the Voting Tranche A Exchange Note
Purchase Agreement Obligations may, by notice to the Collateral Agent, appoint a
co-collateral agent (a "CO-COLLATERAL AGENT"), which shall be an institution
that would otherwise qualify as a successor Collateral Agent. Except as set
forth below, any Co-Collateral Agent so appointed shall have all the rights,
powers, duties and obligations of the Collateral Agent. Upon the appointment of
a Co-Collateral Agent, except as expressly provided below, all rights, powers,
duties and obligations of the Collateral Agent hereunder shall be exercised and
performed jointly by the Collateral Agent and the Co-Collateral Agent (or by one
of such Agents with the consent of the other). The Collateral Agent shall
execute and deliver all such instruments and agreements as shall be necessary or
proper to provide to any Co-Collateral Agent joint rights and powers with
respect to the Collateral.
(b) Any Co-Collateral Agent shall, to the extent permitted by law, be
appointed and act as such, subject to the following provisions and conditions:
(i)all rights, powers, duties and obligations conferred upon the
Collateral Agent in respect of the custody, control and management of
moneys, papers or securities shall be exercised solely by the Collateral
Agent; and
(ii)all other rights, powers, duties and obligations conferred
upon the Collateral Agent or the Co-Collateral Agent shall be exercised
jointly by the Co-Collateral Agent and the Collateral Agent (or by one of
such Agents with the consent of the other).
(c) Neither the Collateral Agent nor the Co-Collateral Agent shall be
liable by reason of any act or omission of the other.
(d) If a Co-Collateral Agent is appointed, each reference to the
"COLLATERAL AGENT" in any Credit Transaction Document shall be deemed to refer
to the Collateral Agent and the Co-Collateral Agent jointly, unless the context
clearly indicates otherwise.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Collateral Agent and each Participating Creditor represents and
warrants to the other parties hereto that (a) the execution, delivery and
performance of this Agreement (i) have been duly authorized by all requisite
corporate action on its part and (ii) will not contravene any provision of its
charter or by-laws or any order of any court or other Governmental Authority
having applicability to it or any applicable law and (b) this Agreement has been
duly executed and delivered by it and constitutes its legal, valid and binding
obligation.
ARTICLE VII
INTERCREDITOR ARRANGEMENTS
SECTION 7.01. SECURITY INTERESTS. The Collateral Agent and each of the
Participating Creditors hereby agrees that the liens and security interests
granted to the Collateral Agent under the Security Documents, and the guarantees
provided under the Guarantee Agreement, shall be treated, as among the
Participating Creditors, as having equal priority and shall at all times be
shared by the Participating Creditors as provided herein. Any and all amounts
required to be provided as cash collateral for Unfunded LOC Exposure pursuant to
Section 3.06 of the Credit Agreement shall be deemed to be Collateral for
purposes of this Agreement. In addition, amounts held in escrow with the
Collateral Agent as contemplated by Section 10.16 of the Credit Agreement and
Section 8 of the Tranche A Exchange Note Purchase Agreements shall be deemed to
be Collateral for purposes of this Agreement.
SECTION 7.02. TURNOVER OF COLLATERAL AND CERTAIN PAYMENTS. (a) If any
Participating Creditor (i) acquires custody, control or possession of any
Collateral or proceeds therefrom or (ii) receives any payment at any time that
an Actionable Default has occurred and is continuing pursuant to enforcement of
the Guarantee Agreement or the Subordinated Note Indenture (or any agreement
governing any Subordinated Note Refinancing Indebtedness), in each case other
than pursuant to the terms of this Agreement, then such Participating Creditor
shall promptly cause such Collateral, proceeds or payments to be delivered to or
put in the custody, possession or control of the Collateral Agent for
disposition or distribution in accordance with the provisions of Sections 4.01
and 4.02. Until such time as the provisions of the immediately preceding
sentence have been complied with, such Participating Creditor shall be deemed to
hold such Collateral, proceeds or payments in trust for the parties entitled
thereto hereunder. Notwithstanding the foregoing, subject to paragraph (b)
below, no Participating Creditor shall be required to deliver to or put in the
custody, possession or control of the Collateral Agent or to hold in trust as
specified in the preceding sentence any amount of any Outstanding Obligation
paid or prepaid by the Company to it (and not obtained by it through any sale of
or other realization upon any Collateral or by enforcement of its rights under
the Guarantee Agreement or the Subordinated Note Indenture (or any agreement
governing any Subordinated Note Refinancing Indebtedness) as provided herein and
in the Support Documents) in accordance with the terms of the Credit Agreement
or the Tranche A Exchange Note Purchase Agreements, as applicable.
(b) In the event that any Payment Default occurs and continues unremedied
for three Business Days, the Collateral Agent shall, promptly following receipt
of notice or actual knowledge thereof, notify all Participating Creditors of (i)
such Payment Default, (ii) the amount and nature thereof, (iii) the date on
which the payment was due that is the subject of such Payment Default and (iv)
their obligations under this paragraph (b). Each Participating Creditor agrees
that, in the event that it receives any payment (other than pursuant to this
Agreement) in respect of its Outstanding Obligations at any time that any other
Participating Creditor's Outstanding Obligations, or any part thereof, are due
and payable but have not been paid (any such payment so received being referred
to as a "NON-PRO-RATA PAYMENT"), then, promptly following receipt of any notice
pursuant to the preceding sentence (and thereafter promptly following any
receipt of a Non-Pro-Rata Payment), such Participating Creditor will deliver
such payment to the Collateral Agent for deposit in a special collateral account
(the "SPECIAL COLLATERAL ACCOUNT"), and such amounts shall be retained in the
Special Collateral Account until distributed as described below. In the event
that all Payment Defaults are cured, the Collateral Agent shall return all
amounts on deposit in the Special Collateral Account to the Participating
Creditors from which such amounts were received, together with their pro rata
share of any earnings thereon from the investment of such amounts. In the event
that, prior to the return of amounts on deposit in the Special Collateral
Account to the applicable Participating Creditors as provided herein, all the
Outstanding Credit Agreement Obligations or all the Outstanding Tranche A
Exchange Note Purchase Agreement Obligations are declared due and payable as
provided in Section 7.06, all amounts on deposit in the Special Collateral
Account shall be
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allocated and applied as Collateral pursuant to Article IV. In the event that
any Payment Default occurs and remains continuing for more than 30 days without
all the Outstanding Credit Agreement Obligations and Outstanding Tranche A
Exchange Note Purchase Agreement Obligations having been declared due and
payable, then the Collateral Agent shall apply the amounts then on deposit in
the Special Collateral Account to pay (and shall continue to apply Non-Pro-Rata
Payments thereafter received by it to pay) Outstanding Obligations that are then
due and payable pro rata in accordance with the amounts so due and payable,
PROVIDED that the foregoing shall not relieve any Participating Creditor from
its obligation to deliver to the Collateral Agent any Non-Pro-Rata Payment
received by it while any Payment Default remains continuing. By its execution
hereof, the Company agrees that any amounts paid to a Participating Creditor in
respect of any Outstanding Obligation shall not relieve the Company from
liability in respect of such Outstanding Obligation to the extent that such
amounts are distributed to other Participating Creditors pursuant to this
paragraph.
SECTION 7.03. SETOFFS. If any Participating Creditor exercises any right
of setoff or similar right with respect to any assets (regardless of whether
such assets shall constitute Collateral) of the Company, TA, National or TAFSI
for payment of any Outstanding Obligations at any time that an Actionable
Default has occurred and is continuing, the amounts so set off shall constitute
Collateral for purposes of this Agreement and such Participating Creditor shall
promptly cause such amounts to be delivered to or put in the custody, possession
or control of the Collateral Agent for disposition or distribution in accordance
with the provisions of Sections 4.01 and 4.02. Until such time as the provisions
of the immediately preceding sentence have been complied with, such
Participating Creditor shall be deemed to hold such Collateral in trust for the
parties hereto entitled thereto hereunder.
SECTION 7.04. AMENDMENT OF CERTAIN PROVISIONS OF THE CREDIT AGREEMENT AND
THE TRANCHE A EXCHANGE NOTE PURCHASE AGREEMENTS. (a) The Lenders agree that,
after the date hereof, they shall not, without prior notice to the Tranche A
Exchange Note Purchasers and without the prior written consent of Tranche A
Exchange Note Purchasers holding Voting Tranche A Exchange Note Purchase
Agreement Obligations representing at least 51% of the Voting Tranche A Exchange
Note Purchase Agreement Obligations, amend or revise the Credit Agreement in any
manner that would:
(i)change the date or amount of any scheduled principal payment
or prepayment;
(ii)alter the provisions of Section 2.13 of the Credit Agreement
to provide for (A) any additional mandatory principal prepayment or (B)
the payment of any premium in connection with any mandatory prepayment;
(iii)adjust the method or formula by which the interest due on
the Loans is determined so as to increase the effective interest rate,
except for adjustments made pursuant to Sections 2.06, 2.07, 2.08, 2.14
and 2.15 of the Credit Agreement;
(iv)adjust the method of calculating any Commitment Fee or other
fee provided for in the Credit Agreement in any manner that would have the
effect of increasing the amount thereof;
(v)alter any of the covenants set forth in Article VI or Article
VII of the Credit Agreement in a manner that would make it materially more
difficult for the Company to comply with or remain in compliance with
those covenants, or add additional financial covenants in Article VII to
the Credit Agreement;
(vi)place restrictions upon the Company's making any payment or
prepayment on the Tranche A Exchange Notes, other than the restrictions
currently set forth in Sections 2.12 and 2.13 of the Credit Agreement;
(vii)alter the definition of the term "Pro Rata Share";
(viii)alter Article VIII of the Credit Agreement (or any defined
term used in such Article VIII) in a manner that would (A) make it
materially more likely that any of the events set forth therein will
occur, (B) add additional events thereto or (C) add additional rights or
remedies that would result from the occurrence of any of the events set
forth therein; or
(ix)alter the definition of the term "Required Lenders"; or
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(x)alter the provisions of Section 2.13 of the Credit Agreement
in any manner adverse to the interests of the Tranche A Exchange Note
Purchasers including any amendment to lengthen the offering period, if
any, in respect of a Prepayment Event set forth therein or any amendment
to the treatment of rejected or deemed rejected offers contemplated
therein.
(b) The Tranche A Exchange Note Purchasers agree that, after the date
hereof, they shall not, without prior notice to the Lenders and without the
prior written consent of Lenders holding Voting Credit Agreement Obligations
representing at least 51% of the Voting Credit Agreement Obligations, amend or
revise any Tranche A Exchange Note Purchase Agreement in any manner that would:
(i) change the date or amount of any scheduled principal payment
or prepayment;
(ii) alter the provisions of Section 5 of the Tranche A Exchange
Note Purchase Agreements to provide for (A) any additional mandatory
principal prepayment or (B) the payment of any premium (including a
Make-Whole Premium or Break Funding Cost) in connection with any mandatory
prepayment;
(iii) increase the stated interest rate or default interest rate
borne by the Tranche A Exchange Notes except for adjustments made pursuant
to Section 1.4 of the Tranche A Exchange Note Purchase Agreements;
(iv) alter the definition of the term of "Make-Whole" Premium,
Break Funding Cost or "Additional Amount" provided for in the Tranche A
Exchange Note Purchase Agreements in any manner that would have the effect
of increasing the amount thereof;
(v) alter any of the covenants set forth in Section 6 or 7 of the
Tranche A Exchange Note Purchase Agreements in a manner that would make it
materially more difficult for the Company to comply with or remain in
compliance with those covenants or add additional financial covenants in
Section 7 of the Tranche A Exchange Note Purchase Agreements;
(vi) place restrictions upon the Company making any payment or
prepayment on the Loans or the Swingline Loans other than the restrictions
currently set forth in Section 7.9 of the Tranche A Exchange Note Purchase
Agreements;
(vii) alter the definition of the term "Pro Rata Share";
(viii) alter Section 10 of the Tranche A Exchange Note Purchase
Agreements (or any defined terms used in such section) in a manner that
would (A) make it materially more likely that any of the events set forth
therein will occur, (B) add additional events thereto or (C) add
additional rights or remedies that would result from the occurrence of any
of the events set forth therein;
(ix) alter the definition of the term "Required Holders";
(x) alter Section 5.3 of the Tranche A Exchange Note Purchase
Agreement in any manner adverse to the interests of the Credit Agreement
Creditors including any amendment to lengthen the offering period in
respect of a Prepayment Event set forth therein or any amendment to the
treatment of rejected or deemed rejected offers contemplated therein; or
(xi) alter Section 5.4 of the Tranche A Exchange Note Purchase
Agreements or the definition of the term "Change in Control" (or any
defined terms used in Section 5.4 or such definition) in a manner that
would make it materially more likely that any Change in Control or Change
in Control Prepayment Date will occur or that would add additional rights
or remedies that would result from the occurrence of any Change in
Control.
SECTION 7.05. RELEASE OF COLLATERAL. (a) In connection with any sale,
transfer or disposition of any Collateral that is permitted by the Credit
Agreement and the Tranche A Exchange Note Purchase Agreements (or is
contemplated in Section 7.12 of the Security Agreement and Section 3.05 of the
Mortgages), or approved by the Required Creditors, the Participating Creditors
agree that any Liens on such Collateral created pursuant to the Security
Documents will be released upon the delivery of evidence satisfactory to the
Collateral Agent that such sale, transfer or disposition is in compliance with
the requirements of such agreements (or the terms of any such approval by the
Required Creditors) and the proceeds of such transaction have been or will be
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applied to the extent required as set forth in Section 2.13(b) of the Credit
Agreement and Section 5.3 of the Tranche A Exchange Note Purchase Agreements (or
any applicable terms of any such approval).
(b) Collateral may be released in connection with the exercise of any
rights, powers or remedies by the Collateral Agent pursuant to and in accordance
with Section 3.02 and such release shall not require any approval under this
Section 7.05.
(c) The Participating Creditors hereby authorize the Collateral Agent to
execute releases and other documents in form and substance satisfactory to the
Collateral Agent in respect of any release of Collateral permitted under this
Section 7.05.
SECTION 7.06. ACCELERATION. The Credit Agreement Creditors and the Tranche
A Exchange Note Purchasers hereby covenant and agree that, notwithstanding any
contrary provisions of the Credit Transaction Documents, as long as this
Agreement is in effect, (a) the Loans and the Swingline Loans may not be
declared to be due and payable and the Commitments may not be terminated
pursuant to Article VIII of the Credit Agreement unless (i) the Agent or the
Required Lenders shall notify the Company and the Collateral Agent of such
declaration and termination in writing at any time that an Actionable Default
under the Credit Agreement has occurred and is continuing and (ii) at least 10
days shall have passed since the time of the giving of such notice and (b) the
Tranche A Exchange Notes may not be declared to be due and payable pursuant to
Section 10.1 of the Tranche A Exchange Note Purchase Agreements unless (i) the
Required Holders (as defined in the Tranche A Exchange Note Purchase Agreements)
shall notify the Company, the Collateral Agent and the Agent of such declaration
in writing at any time that an Actionable Default under the Tranche A Exchange
Note Purchase Agreements has occurred and is continuing and (ii) at least 10
days shall have passed since the giving of such notice; PROVIDED, HOWEVER, that
(i) the foregoing shall not affect the consequences specified under the Credit
Agreement and the Tranche A Exchange Note Purchase Agreements in respect of an
Actionable Default with respect to the Company described in paragraph (g) or (h)
of Article VIII of the Credit Agreement or Section 10.1(g) or (h) of the Tranche
A Exchange Note Purchase Agreements, (ii) the foregoing shall not affect the
rights of any Tranche A Exchange Note Purchaser to declare its Tranche A
Exchange Notes to be due and payable in accordance with the Tranche A Exchange
Note Purchase Agreements in the event of a Payment Default in respect of such
Tranche A Exchange Notes or the obligation of the Company to purchase Tranche A
Exchange Notes in the event of a Change in Control, as defined in the Tranche A
Exchange Note Purchase Agreements, (iii) the foregoing shall not affect the
rights of the Agent to declare the Loans and the Swingline Loans or any of them
to be due and payable and to terminate the Commitments and the LC Commitment in
accordance with Article VIII of the Credit Agreement in the event of a Payment
Default in respect of any of the Outstanding Credit Agreement Obligations or in
the event of a Change in Control, as defined in the Credit Agreement, (iv) if
the Tranche A Exchange Notes, or any of them, or the Loans and the Swingline
Loans, or any of them, are declared to be due and payable in accordance herewith
as a result of any Actionable Default, then the foregoing shall not affect the
rights of any Tranche A Exchange Note Purchaser or the Agent to declare the
balance of the Tranche A Exchange Notes or any of them or the balance of the
Loans and the Swingline Loans or any of them to be due and payable and to
terminate the Commitments and the LC Commitment, (v) the Commitments and the LC
Commitment shall automatically terminate if and when the Loans and the Swingline
Loans are declared to be due and payable in accordance with this Section 7.06,
(vi) solely for purposes of an action under this Section 7.06 to declare the
Loans and the Tranche A Exchange Notes to be due and payable, the aggregate
unused amount of the Commitments shall not constitute Voting Credit Agreement
Obligations and (vii) the provisions of this Section 7.06 may be waived with the
consent of each Lender and Tranche A Exchange Note Purchaser.
SECTION 7.07. ADDITIONAL COLLATERAL. Each of the Participating Creditors
hereby covenants and agrees that it (a) will not accept any guarantee of any of
the Obligations by TA or National unless such guarantee is provided pursuant to
the Guarantee Agreement or otherwise guarantees the payment of all the
Obligations on a PARI PASSU basis and (b) will not take any security interest in
or Lien on any assets of TA, National or TAFSI or the Company to secure any of
the Obligations unless such security interest or Lien secures the payment of all
the Obligations on a PARI PASSU basis pursuant to the Security Documents.
SECTION 7.08. SUBORDINATED DEBT DOCUMENTS. (a) Each of the Participating
Creditors hereby covenants and agrees that the Collateral Agent shall be the
authorized representative of such Participating Creditor in respect of the
Subordinated Notes and Subordinated Note Refinancing Indebtedness.
(b) Each of the Participating Creditors covenants and agrees that the
Collateral Agent shall have the sole right (i) to give any notice under the
Subordinated Note Indenture and under any contract or agreement governing any
Subordinated Note Refinancing Indebtedness and (ii) to file proofs of claims
under the Subordi-
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nated Note Indenture or any contract or agreement governing any Subordinated
Note Refinancing Indebtedness. The Collateral Agent agrees that it will not take
any action in respect of the Subordinated Note Indenture or any contract or
agreement governing any Subordinated Note Refinancing Indebtedness in an
aggregate unpaid principal amount of $[1,000,000], except in accordance with
instructions from the Required Creditors.
SECTION 7.09. PURCHASE OF COLLATERAL. Any Participating Creditor may
purchase Collateral at any public sale of such Collateral pursuant to any of the
Security Documents and may make payment on account thereof by using any
Outstanding Obligation then due and payable to such Participating Creditor from
the person that granted a security interest in such Collateral as a credit
against the purchase price to the extent, but only to the extent, approved by
the Required Creditors.
SECTION 7.10. FURTHER ASSURANCES, ETC. Each party hereto shall execute and
deliver such other documents and instruments, in form and substance reasonably
satisfactory to the other parties hereto, and shall take such other action, in
each case as any other party hereto may reasonably have requested (at the cost
and expense of the Company which, by countersigning this Agreement, agrees to
pay such costs and expenses), to effectuate and carry out the provisions of this
Agreement, including by recording or filing in such places as the requesting
party may deem desirable, this Agreement or such other documents or instruments.
SECTION 7.11. SOLICITATIONS. By countersigning this Agreement, the Company
agrees that it will not, and will not permit any person acting on its behalf to,
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or any other Credit
Transaction Document (other than in connection with matters not requiring the
consent or approval of any particular class or group of Participating Creditors,
in which case this sentence shall not apply to such class or group) unless each
Participating Creditor shall be informed thereof by the Company and shall be
afforded the opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any amendment,
waiver or consent effected pursuant to the provisions of this Agreement shall be
delivered by the Company to each Participating Creditor forthwith following the
date on which the same shall have been executed and delivered by the required
percentage of the Participating Creditors. By countersigning this Agreement, the
Company agrees that it will not, and will not permit any person acting on its
behalf to, directly or indirectly, pay or cause to be paid any remuneration,
whether by way of purchase of all or any part of any Tranche A Exchange Note or
Loan or Swingline Loan or payment of any supplemental or additional interest,
fee or otherwise, to any Participating Creditor as consideration for or as an
inducement to the entering into by any Participating Creditor of any waiver or
amendment of any of the terms and provisions of this Agreement or any other
Credit Transaction Document (other than in connection with matters not requiring
the consent or approval of any particular class or group of Participating
Creditors, in which case this sentence shall not apply to such class or group)
unless such remuneration is concurrently paid, on the same terms, ratably to
each Participating Creditor that shall consent to such waiver or amendment.
ARTICLE VIII
APPROVAL BY THE COMPANY, TA, NATIONAL AND TAFSI
By entering into the Support Documents, each of the Company, TA, National
and TAFSI, although not a party hereto, acknowledges and consents to and agrees
to perform and be bound by the provisions hereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. NO INDIVIDUAL ACTION. No Participating Creditor may require
the Collateral Agent to take or refrain from taking any action hereunder or
under any of the Support Documents or with respect to any of the Collateral
except as and to the extent expressly set forth in this Agreement.
SECTION 9.02. SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding
on and inure to the benefit of the Collateral Agent, each of the Participating
Creditors and their respective successors and permitted assigns (including any
assignee of any Lender in accordance with the Credit Agreement and the holders
from
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time to time of the Tranche A Exchange Notes); PROVIDED, HOWEVER, that, except
as provided in the next sentence, no Credit Agreement Creditor or Tranche A
Exchange Note Purchaser may assign its rights or obligations hereunder. The
rights and obligations of any Credit Agreement Creditor or Tranche A Exchange
Note Purchaser under this Agreement shall be assigned automatically, without the
need for the execution of any document or any other action, to, and the term
"CREDIT AGREEMENT CREDITOR" or "TRANCHE A EXCHANGE NOTE PURCHASER" as used in
this Agreement shall include, any assignee, transferee or successor of such
Participating Creditor under the Credit Agreement or any Tranche A Exchange Note
Purchase Agreement, as the case may be, in accordance with the terms of and upon
the effectiveness of an assignment pursuant to Section 10.04 of the Credit
Agreement (in the case of a Lender), Article IX of the Credit Agreement (in the
case of the Agent), Section 3.09 of the Credit Agreement (in the case of the
Fronting Bank) or Section 2.21 of the Credit Agreement (in the case of the
Swingline Lender) or a transfer of Tranche A Exchange Notes pursuant to Section
11 of any Tranche A Exchange Note Purchase Agreement, as the case may be, and
any such assignee, transferee or successor shall automatically become a party to
this Agreement. In addition to the foregoing, the lender(s) or purchaser(s) in
respect of any Tranche A Exchange Note Refinancing Indebtedness or Credit
Agreement Refinancing Indebtedness shall be considered to be an assignee or
successor of the Tranche A Exchange Note Purchasers or the Credit Agreement
Creditors, as the case may be, in the event that such refinancing creditors
agree with the Credit Agreement Creditors or Tranche A Exchange Note Purchasers,
as the case may be, to continue the effectiveness of this Agreement in
connection with the issuance of any such refinancing Indebtedness. If required
by any party to this Agreement (including in connection with the issuance of any
refinancing Indebtedness as contemplated above), such assignee, transferee or
successor shall execute and deliver to the other parties to this Agreement a
written confirmation of its assumption of the obligations of the assignor or
transferor hereunder. Each of the Credit Agreement Creditors and the Tranche A
Exchange Note Purchasers agrees that it shall deliver a complete copy of this
Agreement to any potential assignee, transferee or successor of such Credit
Agreement Creditor or Tranche A Exchange Note Purchaser prior to the execution
of any such assignment or transfer. Any Lender or Tranche A Exchange Note
Purchaser may, without the consent of the other Credit Agreement Creditors and
Tranche A Exchange Note Purchasers, sell one or more participations in the
Loans, the Swingline Loans or Letters of Credit or the Tranche A Exchange Notes,
as the case may be, held by it or issued pursuant to the terms and conditions of
the Credit Agreement or the Tranche A Exchange Note Purchase Agreement, as the
case may be; PROVIDED, HOWEVER, that (except as otherwise specified herein) each
of the Credit Agreement Creditors and the Tranche A Exchange Note Purchasers
shall remain liable to each other for the full performance of their obligations
hereunder with the same effect as though no such participation had been sold and
as though any and all amounts, payments or security received by a participant
with whom it dealt in respect of the loan or note participation were received by
such party and shall continue to deal solely and directly with each other with
respect to their respective rights and obligations under this Agreement. Except
as specifically set forth above and in paragraph (b) below, this Agreement is
not intended to confer any benefit on, or create any obligation of the
Collateral Agent or any Participating Creditor to, the Company, TA, National,
TAFSI or any third party.
(b) The provisions of Sections 7.04, 7.05 and 7.06 (and the provisions of
this paragraph (b) and clause (iii) of Section 9.06) are intended to confer a
benefit upon the Company and shall be enforceable by the Company.
SECTION 9.03. NOTICES. Notices and other communications provided for
herein or in any Support Document shall be in writing and shall be delivered by
hand or overnight courier service, mailed or sent by telex, graphic scanning or
other telegraphic communications equipment of the sending party, as follows:
(a) if to any Credit Agreement Creditor, to it as set forth on
Schedule I;
(b) if to any Tranche A Exchange Note Purchaser, to it as set forth
on Schedule II;
(c) if to the Collateral Agent, to it as set forth with respect to
the Agent on Schedule I; and
(d) if to the Company, TA, National or TAFSI, to it as specified in
the Credit Agreement or the Tranche A Exchange Note Purchase Agreement.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex, graphic scanning or other telegraphic communications equipment of the
sender, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.03 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.03 (each such unrevoked direction
20
<PAGE>
from any Credit Agreement Creditor or Tranche A Exchange Note Purchaser or any
assignee or successor of either shall be deemed to be an amendment of and to be
listed on Schedule I or II, as the case may be).
SECTION 9.04. TERMINATION. (a) This Agreement shall terminate
automatically upon the indefeasible payment in full of the Outstanding Credit
Agreement Obligations or the Outstanding Tranche A Exchange Note Purchase
Agreement Obligations; PROVIDED, HOWEVER, that (a) Articles I, II, III, IV, V,
VIII and IX, and Sections 7.01, 7.02, 7.03, 7.05, 7.07, 7.08 and 7.10, shall
survive, and remain operative and in full force and effect, as long as there are
any Outstanding Obligations that are secured by any of the Security Documents or
guaranteed pursuant to the Guarantee Agreement and (b) this Section 9.04 and
Sections 5.05, 5.06 and 9.05 of this Agreement shall survive, and remain
operative and in full force and effect, regardless of the termination of this
Agreement.
(b) Notwithstanding the provisions of paragraph (a) above, this Agreement
shall not terminate if (i) the Company shall have in connection with the
indefeasible payment in full of the Outstanding Credit Agreement Obligations or
the Outstanding Tranche A Exchange Note Purchase Agreement Obligations, as the
case may be, issued Credit Agreement Refinancing Indebtedness or Tranche A
Exchange Note Refinancing Indebtedness and (ii) the Company, TA, National,
TAFSI, the Tranche A Exchange Note Purchasers or the Credit Agreement Creditors,
as applicable, and such refinancing creditors shall have elected to continue the
effectiveness of this Agreement. For purposes of this Agreement, such
refinancing creditors as contemplated in Section 9.02(a) shall be considered to
be assignees or successors to the exiting creditors and all references herein to
the exiting creditors and the Obligations owed thereto shall be deemed to
constitute references to the related refinancing creditors and the Obligations
owed thereto.
SECTION 9.05. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.06. MODIFICATION OF AGREEMENT. No modification or amendment of
any provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by the Required Lenders (as defined in the Credit
Agreement) and the Required Holders (as defined in the Tranche A Exchange Note
Purchase Agreements); PROVIDED, HOWEVER, that (a) no such modification or
amendment shall adversely affect any of the Collateral Agent's rights,
immunities or rights to indemnification hereunder or under any Support Document
or expand its duties hereunder or under any Support Document, without the prior
written consent of the Collateral Agent, (b) no such modification or amendment
shall modify any provision hereof that is intended to provide for the equal and
ratable security of all Outstanding Obligations without the prior written
consent of all Participating Creditors, (c) no such modification or amendment
shall be made to Section 7.04, 7.05 or 7.06, or to the definition of the term
"Required Creditors" or "Majority Creditors" for purposes of such Sections, or
to Section 9.02(b) or to this clause (c), without the prior written consent of
the Company and (d) no such modification or amendment shall change the
definition of the term "Required Creditors" or "Majority Creditors" or this
Section or Section 3.02, 7.02, 7.03, 7.04, 7.05 or 7.06 without the prior
written consent of each Lender and Tranche A Exchange Note Purchaser. No waiver
of any provision of this Agreement and no consent to any departure by any party
hereto from the provisions hereof shall be effective unless such waiver or
consent shall be set forth in a written instrument executed by the party against
which it is sought to be enforced, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any party hereto in any case shall entitle such party to
any other or further notice or demand in the same, similar or other
circumstances.
SECTION 9.07. WAIVER OF RIGHTS. Neither any failure nor any delay on the
part of any party hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, and a single or partial exercise thereof
shall not preclude any other or further exercise or the exercise of any other
right, power or privilege.
SECTION 9.08. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.09. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
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SECTION 9.10. SECTION HEADINGS. The Article and Section headings used
herein are for convenience of reference only and are not to affect the
construction of or be taken into consideration in interpreting this Agreement.
SECTION 9.11 INCORPORATION BY REFERENCE. Section 2.13(g) of the Credit
Agreement and Section 5.3(e) of the Tranche A Exchange Note Purchase Agreements
are hereby incorporated by reference and the Collateral Agent and the
Participating Creditors hereby agree to be bound by such provisions as if such
provisions were included herein.
SECTION 9.12. COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior representations, negotiations, writings, memoranda and
agreements. To the extent any provision of this Agreement conflicts with any
other Credit Transaction Document, the provisions of this Agreement shall be
controlling.
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<PAGE>
IN WITNESS WHEREOF, the Collateral Agent, the Credit Agreement Creditors
and the Tranche A Exchange Note Purchasers have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
THE CHASE MANHATTAN BANK, as Agent,
Collateral Agent, Fronting Bank and a Lender,
by
---------------------------------
Name:
Title:
Countersigned by:
TRAVELCENTERS OF AMERICA, INC.,
by
------------------------------
Name:
Title:
TA OPERATING CORPORATION,
by
------------------------------
Name:
Title:
NATIONAL AUTO/TRUCKSTOPS, INC.,
by
------------------------------
Name:
Title:
TA FRANCHISE SYSTEMS INC.,
by
------------------------------
Name:
Title:
23
<PAGE>
EXHIBIT I
MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
LEASES AND RENTS dated as of March 27, 1997 (this "Mortgage"),
by [MORTGAGOR], a Delaware corporation, having an office at
[ ] (the "Mortgagor"), to THE CHASE MANHATTAN
BANK ("Chase"), as Collateral Agent for the Agent, the
Lenders, the Swingline Lender, the Fronting Bank and the
Tranche A Exchange Note Purchasers (all such terms as defined
herein), having an office at 270 Park Avenue, New York, New
York 10017 (the "Mortgagee");
WITNESSETH THAT:
A. Pursuant to the Credit Agreement among TravelCenters of America,
Inc. (the "Borrower"), the Lenders and Chase, as Agent, as Swingline Lender and
as Fronting Bank, dated as of March 21, 1997 (the "Credit Agreement"), and
pursuant to the several Senior Secured Note Exchange Agreements, each dated as
of March 21, 1997, among the Borrower and the Tranche A Exchange Note Purchasers
listed on Schedule I thereto (the "Tranche A Exchange Note Purchase
Agreements"), (a) Mortgagee, the Lenders, the Swingline Lender and the Fronting
Bank, respectively, have loaned or agreed to loan or issue to the Borrower (i)
on a term basis by the Lenders, Term Loans in an aggregate principal amount not
to exceed $80,000,000, (ii) on a revolving basis by the Lenders, Revolving Loans
at any time and from time to time prior to the seventh anniversary of the date
hereof, an aggregate principal amount (subject to reduction pursuant to the
terms and provisions of the Credit Agreement) not in excess of $40,000,000 (less
the amount of any Swingline Loans and Letters of Credit), (iii) on a revolving
basis by the Swingline Lender, Swingline Loans in an aggregate principal amount
at any time not in excess of $5,000,000 and (iv) Letters of Credit by the
Fronting Bank, upon terms and subject to the conditions of the Credit Agreement,
in an aggregate face amount at any time outstanding not in excess of
$20,000,000, and (b) said Tranche A Exchange Note Purchasers have agreed to
accept $85,500,000 in aggregate principal amount of the Tranche A Exchange Notes
in exchange for (i) $65,000,000 aggregate principal amount of the outstanding
National Senior Notes and (ii) $20,500,000 aggregate principal amount of the
outstanding TA Senior Notes. Capitalized terms used herein and not defined
herein shall have the meanings set forth in the Credit Agreement.
<PAGE>
B. Mortgagor is a wholly owned Subsidiary of the Borrower and will
derive substantial benefit from the making of the Loans by the Lenders, the
making of the Swingline Loans by the Swingline Lender, the issuance of Letters
of Credit by the Fronting Bank and the acceptance of the Tranche A Exchange
Notes by the Tranche A Exchange Note Purchasers. In order to induce the Lenders
to make Loans, the Swingline Lender to make Swingline Loans, the Fronting Bank
to issue Letters of Credit and the Tranche A Exchange Note Purchasers to accept
the Tranche A Exchange Notes, the Mortgagor has agreed to guarantee pursuant to
the Guarantee Agreement the Obligations (as defined in the Credit Agreement)(the
due and punctual payment and performance of the covenants, agreements,
obligations and liabilities of the Mortgagor under the Guarantee Agreement, this
Mortgage and the other Loan Documents are herein referred to as the "Guarantee
Obligations").
C. The proceeds of the Term Loans will be used by the Borrower (a)
to repay in full the Existing Indebtedness, including accrued interest, (b) to
fund certain operator lease repurchase costs (including the repurchase of all
shares of the Borrower's Class A Common Stock held by such operators), inventory
purchases and anticipated capital expenditures of the Borrower and its
Subsidiaries and (c) to pay the fees and expenses incurred in connection with
the Transactions and to pay certain other related expenses. The proceeds of the
Revolving Loans and the Swingline Loans will be used for the general corporate
purposes of the Borrower. Letters of Credit will be used by the Borrower for
general corporate purposes in the ordinary course of the Borrower's business.
The Tranche A Exchange Notes will be issued in exchange for (a) $65,000,000
aggregate principal amount of the outstanding National Senior Notes and (b)
$20,500,000 aggregate principal amount of the outstanding TA Senior Notes.
D. The obligations of the Lenders to make Loans, of the Fronting
Bank to issue Letters of Credit and of the Swingline Lender to make Swingline
Loans under the Credit Agreement and the obligations of the Tranche A Exchange
Note Purchasers to accept the Tranche A Exchange Notes under the Tranche A
Exchange Note Purchase Agreements are conditioned upon, among other things, the
execution and delivery by the Mortgagor of this Mortgage, in the form hereof, to
secure (a) the due and punctual payment of (i) the principal of, premium, if
any, and interest on the Loans and the Tranche A Exchange Notes, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by the Borrower
under the Credit Agreement in respect of any Letter of Credit, when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii) all other monetary
obligations of the Mortgagor (including the Guarantee Obligations) and the
Borrower to the Lenders, the Swingline Lender, the Fronting Bank, the Agent, the
Tranche A Exchange Note Purchasers or the Collateral Agent under the Credit
Agreement, the Tranche A Exchange Note Purchase Agreements, this Mortgage and
the other Loan Documents and Tranche A Exchange Note Documents to which the
Mortgagor or the Borrower is or is to be a party and (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Mortgagor and the Borrower under or pursuant to the Credit Agreement, the
Tranche A Exchange Note Purchase Agreements, this Mortgage and the other Loan
Documents and Tranche A Exchange
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<PAGE>
Note Documents and (c) the due and punctual payment and performance of all
obligations of the Borrower, monetary or otherwise, under each Rate Protection
Agreement entered into with a counterparty that was a Lender (or an Affiliate of
a Lender) at the time such Rate Protection Agreement was entered into (all the
obligations referred to in the preceding clauses (a) through (c) being referred
to, collectively, as the "Secured Obligations").
E. Pursuant to the requirements of the Credit Agreement and the
Tranche A Exchange Note Purchase Agreements, the Mortgagor is entering into this
Mortgage to create a security interest in the Mortgaged Property (as defined
herein) to secure the performance and payment by the Mortgagor of the Secured
Obligations. The Credit Agreement and Tranche A Exchange Note Purchase
Agreements also require the granting by the Mortgagor and the other Grantors
under the Security Agreement of mortgages (the "Other Mortgages") that create
security interests in certain Mortgaged Properties other than the Mortgaged
Property to secure the performance of the Obligations.
GRANTING CLAUSES
NOW, THEREFORE, IN CONSIDERATION OF the foregoing and in order to
secure (A) the due and punctual payment and performance of the Secured
Obligations by the Mortgagor, (B) the due and punctual payment by the Mortgagor
of all taxes, common area charges and insurance premiums relating to the
Mortgaged Property and (C) all disbursements made by Mortgagee for the payment
of taxes, common area charges or insurance premiums, all fees, expenses or
advances in connection with or relating to the Mortgaged Property, and interest
on such disbursements and other amounts not timely paid in accordance with the
terms of the Credit Agreement, the Tranche A Exchange Note Purchase Agreements,
this Mortgage, the Loan Documents and the Tranche A Exchange Note Documents,
Mortgagor hereby assigns and conveys as security, grants a security interest in,
hypothecates, mortgages, pledges and sets over unto Mortgagee, with mortgage
covenants, all the following described property (the "Mortgaged Property")
whether now owned or held or hereafter acquired:
(1) all of Mortgagor's right, title and interest in all the fee
estate in the land more particularly described on Exhibit A hereto (the
"Land"), together with all rights appurtenant thereto, including the
easements over certain other adjoining land granted by any easement
agreements, covenant or restrictive agreements and all air rights, mineral
rights, water rights, oil and gas rights and development rights, if any,
relating thereto, and also together with all of the other easements,
rights, privileges, interests, permits, hereditaments and appurtenances
thereunto belonging or in any wise appertaining and all of the estate,
right, title, interest, claim or demand whatsoever of Mortgagor therein
and in the streets and ways adjacent thereto, either in law or in equity,
in possession or expectancy, now or hereafter acquired (the "Premises");
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<PAGE>
(2) all of Mortgagor's right, title and interest in all buildings,
improvements, structures, paving, parking areas, walkways and landscaping
now or hereafter erected or located upon the Land, and all legal fixtures
of every kind and type affixed to the Premises or attached to or forming
part of any structures, buildings or improvements and replacements thereof
now or hereafter erected or located upon the Land (the "Improvements");
(3) all of Mortgagor's right, title and interest in all apparatus,
movable appliances, building materials, equipment, fittings, furnishings,
furniture, machinery and other articles of tangible personal property of
every kind and nature, and replacements thereof, now or at any time
hereafter placed upon or used in any way in connection with the use,
enjoyment, occupancy or operation of the Improvements or the Premises,
including all of Mortgagor's books and records relating thereto and
including all pumps, tanks, goods, machinery, tools, equipment, lifts
(including fire sprinklers and alarm systems, fire prevention or control
systems, cleaning rigs, air conditioning, heating, boilers, refrigerating,
electronic monitoring, water, loading, unloading, lighting, power,
sanitation, waste removal, entertainment, communications, computers,
recreational, window or structural, maintenance, truck or car repair and
all other equipment of every kind), restaurant, bar and all other indoor
or outdoor furniture (including tables, chairs, booths, serving stands,
planters, desks, sofas, racks, shelves, lockers and cabinets), bar
equipment, glasses, cutlery, uniforms, linens, memorabilia and other
decorative items, furnishings, appliances, supplies, inventory, rugs,
carpets and other floor coverings, draperies, drapery rods and brackets,
awnings, venetian blinds, partitions, chandeliers and other lighting
fixtures, freezers, refrigerators, walk-in coolers, signs (indoor and
outdoor), computer systems, cash registers and inventory control systems,
and all other apparatus, equipment, furniture, furnishings, and articles
used in connection with the use or operation of the Improvements or the
Premises, it being understood that the enumeration of any specific
articles of property shall in no way result in or be held to exclude any
items of property not specifically mentioned (the property referred to in
this paragraph (3) being hereinafter called the "Personal Property");
(4) all of Mortgagor's right, title and interest in all general
intangibles relating to design, development, operation, management and use
of the Premises or the Improvements, all certificates of occupancy, zoning
variances, building, use or other permits, approvals, authorizations and
consents obtained from and all materials prepared for filing or filed with
any governmental agency in connection with the development, use, operation
or management of the Premises and improvements, all construction, service,
engineering, consulting, leasing, architectural and other similar
contracts concerning the design, construction, management, operation,
occupancy and/or use of the Premises and Improvements, all architectural
drawings, plans, specifications, soil tests, feasibility studies,
appraisals, environmental studies, engineering reports and similar
materials relating to any portion of or all of the
Premises and Improvements, and all payment and performance bonds or
warranties or guarantees relating to the Premises or the Improvements, all
to the extent assignable (the "Permits, Plans and Warranties");
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<PAGE>
(5) Mortgagor's interest in and rights under each Operating Lease
(as hereinafter defined), if any, all other leases or licenses (under
which Mortgagor is landlord or licensor) and subleases (under which
Mortgagor is sublandlord), concession, management, mineral or other
agreements of a similar kind that permit the use or occupancy of the
Premises or the Improvements for any purpose in return for any payment, or
the extraction or taking of any gas, oil, water or other minerals from the
Premises in return for payment of any fee, rent or royalty (collectively,
"Leases"), and all agreements or contracts for the sale or other
disposition of all or any part of the Premises or the Improvements, now or
hereafter entered into by Mortgagor, together with all charges, fees,
income, issues, profits, receipts, rents, revenues or royalties payable
thereunder ("Rents");
(6) all of Mortgagor's right, title and interest in and to all real
estate tax refunds and all proceeds of the conversion, voluntary or
involuntary, of any of the Mortgaged Property into cash or liquidated
claims ("Proceeds"), including Proceeds of insurance maintained by the
Mortgagor or caused by the Mortgagor to be maintained by any operator (as
hereinafter defined) and condemnation awards, any awards which may become
due by reason of the taking by eminent domain or any transfer in lieu
thereof of the whole or any part of the Premises or Improvements or any
rights appurtenant thereto, and any awards for change of grade of streets,
together with any and all moneys now or hereafter on deposit for the
payment of real estate taxes, assessments or common area charges levied
against the Mortgaged Property, unearned premiums on policies of fire and
other insurance maintained by the Mortgagor or caused by the Mortgagor to
be maintained by any Operator covering any interest in the Mortgaged
Property or required by the Credit Agreement; and
(7) all right, title and interest of the Mortgagor in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of and all additions and appurtenances to, the Land, the
Premises, the Improvements, the Personal Property, the Permits, Plans and
Warranties and the Leases, hereinafter acquired by or released to the
Mortgagor or constructed, assembled or placed by the Mortgagor on the
Land, the Premises or the Improvements, and all conversions of the
security constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case may be, and
in each such case, without any further mortgage, deed of trust,
conveyance, assignment or other act by the Mortgagor, all of which shall
become subject to the lien of this Mortgage as fully and completely, and
with the same effect, as though now owned by the Mortgagor and
specifically described herein.
TO HAVE AND TO HOLD by Mortgagee and its successors and assigns
forever, subject only to the Permitted Encumbrances (as hereinafter defined) and
to satisfaction and cancelation as provided in Section 3.05.
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<PAGE>
ARTICLE I
REPRESENTATIONS, WARRANTIES AND COVENANTS OF MORTGAGOR
Mortgagor agrees, covenants, represents and/or warrants as follows:
SECTION 1.01. TITLE; OPERATING LEASES. (a) Mortgagor has good and
marketable title to an indefeasible fee estate in the Land and Improvements
subject to no lien, charge or encumbrance except for, and this Mortgage is and
will remain a valid and enforceable first and prior lien on the Premises,
Improvements and the Rents subject only to, in each case, Liens permitted by
Section 7.02 of the Credit Agreement and Section 7.02 of the Tranche A Exchange
Note Purchase Agreements and the exceptions and encumbrances referred to in
SCHEDULE A annexed hereto (collectively, the "Permitted Encumbrances").
(b) Mortgagor has good and marketable title to all the Personal
Property subject to no lien, charge or encumbrance other than this Mortgage and
the Permitted Encumbrances. The Personal Property constitutes and will
constitute all of such items as are necessary for the use of the Premises and
Improvements as a full service truckstop facility (or truckstop facilities in
the case where the Mortgaged Property is comprised of more than one independent,
fully integrated truckstop facility) of the type there conducted on the date
hereof (each a "Truckstop"). The Personal Property is not and will not (except
as expressly permitted by Section 7.08 of the Credit Agreement and Section 7.08
of the Tranche A Exchange Note Purchase Agreements) become the subject matter of
any lease or other arrangement that is not a Permitted Encumbrance whereby the
ownership of any Personal Property will be held by any person or entity other
than Mortgagor; except as expressly permitted by Section 7.05 of the Credit
Agreement and Section 7.05 of the Tranche A Exchange Note Purchase Agreements,
none of the Personal Property will be removed from the Premises or the
Improvements unless the same is no longer needed for the continued operation of
the Premises and the Improvements as currently operated (or as then operated, to
the extent that any change from the current manner of operation was permitted by
the Credit Agreement and the Tranche A Exchange Note Purchase Agreements) or is
replaced by other Personal Property of substantially equal or greater utility
and value; and, except as expressly permitted by Section 7.05 of the Credit
Agreement and Section 7.05 of the Tranche A Exchange Note Purchase Agreements,
Mortgagor will not create or cause to be created (other than Permitted
Encumbrances) any security interest covering any of the Personal Property other
than the security interest in the Personal Property created in favor of
Mortgagee by this Mortgage or any other agreement collateral hereto.
(c) Except as set forth on Schedule B hereto, there are no Leases
affecting a material portion of the Mortgaged Property. Each Lease is in full
force and effect, and, except as set forth on SCHEDULE B hereto, Mortgagor has
not given, nor has it received, any notice of default with respect to any
material obligation under any Lease. Each Lease is subject to no lien, charge or
encumbrance other than this Mortgage and the Permitted Encumbrances.
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<PAGE>
(d) All easement agreements, covenant or restrictive agreements,
supplemental agreements and any other instruments hereinabove referred to and
mortgaged hereby are and will remain valid, subsisting and in full force and
effect, unless the failure to remain valid, subsisting and in full force and
effect, individually or in the aggregate, would not have a material adverse
effect on the Mortgaged Property, and Mortgagor is not in default thereunder and
has fully performed the material terms thereof required to be performed through
the date hereof, and has no knowledge of any default thereunder or failure to
fully perform the terms thereof by any other party, nor of the occurrence of any
event which after notice or the passage of time or both will constitute a
default thereunder. Each Truckstop on the Mortgaged Property is fully served by
water, gas, electric, storm and sanitary sewage facilities, such utilities
serving the Premises and the Improvements are located in and in the future will
be located in, and adequate vehicular access to the Premises and the
Improvements is provided by, either a public right-of-way abutting and
contiguous with the Land or valid recorded unsubordinated easements.
(e) Mortgagor has good and lawful right and full power and authority
to mortgage the Mortgaged Property and will forever warrant and defend its title
to the Mortgaged Property, the rights of Mortgagee therein under this Mortgage
and the validity and priority of the lien of this Mortgage thereon against the
claims of all persons and parties except those having rights under Permitted
Encumbrances to the extent of those rights.
(f) This Mortgage, when duly recorded in the appropriate public
records and when financing statements are duly filed in the appropriate public
records, will create a valid, perfected and enforceable lien upon and security
interest in all the Mortgaged Property and there will be no defenses or offsets
to this Mortgage or to any of the Secured Obligations.
SECTION 1.02. CREDIT AGREEMENT AND TRANCHE A EXCHANGE NOTE PURCHASE
AGREEMENTS; CERTAIN AMOUNTS. (a) This Mortgage is given pursuant to the Credit
Agreement and Tranche A Exchange Note Purchase Agreements. Each and every term
and provision of the Credit Agreement and Tranche A Exchange Note Purchase
Agreements, including the rights, remedies, obligations, covenants, conditions,
agreements, indemnities, representations and warranties of the parties thereto
shall be considered as if a part of this Mortgage. Not in limitation of the
foregoing, Sections 9 and 10 of the Guarantee Agreement and Section 10.16 of the
Credit Agreement are hereby incorporated by reference and the Mortgagor hereby
agrees to be bound by such provisions as if such provisions were included
herein.
(b) If any remedy or right of Mortgagee pursuant hereto is acted
upon by Mortgagee or if any actions or proceedings (including any bankruptcy,
insolvency or reorganization proceedings) are commenced in which Mortgagee is
made a party and is obliged to defend or uphold or enforce this Mortgage or the
rights of Mortgagee hereunder or the terms of any Lease, or if a condemnation
proceeding is instituted affecting the Mortgaged Property, Mortgagor will pay
all sums, including reasonable attorneys' fees and disbursements, incurred by
Mortgagee related to the exercise of any remedy or right of Mortgagee pursuant
hereto or for the expense of any such action or proceeding together with all
statutory or other costs, disbursements and allowances, interest thereon from
the date of demand for payment thereof at the Default Rate,
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<PAGE>
and such sums and the interest thereon shall, to the extent permissible by law,
be a lien on the Mortgaged Property prior to any right, title to, interest in or
claim upon the Mortgaged Property attaching or accruing subsequent to the
recording of this Mortgage and shall be secured by this Mortgage to the extent
permitted by law. Any payment of amounts due under this Mortgage not made on or
before the due date for such payments shall accrue interest daily without notice
from the due date until paid at the Default Rate, and such interest at the
Default Rate shall be immediately due upon demand by Mortgagee.
SECTION 1.03. PAYMENT OF TAXES, LIENS AND CHARGES. (a) Except as may
be permitted by Section 6.03 of the Credit Agreement and by Section 6.03 of the
Tranche A Exchange Note Purchase Agreements, Mortgagor will pay and discharge
from time to time when the same shall become due and payable, and before any
interest or penalty accrues thereon or attaches thereto, all taxes of every kind
and nature, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents, all vault charges, and all other public
charges, and all service charges, common area charges, private maintenance
charges, utility charges and all other private charges, whether of a like or
different nature, imposed upon or assessed against the Mortgaged Property or any
part thereof or upon the Rents from the Mortgaged Property or arising in respect
of the occupancy, use or possession thereof. At Mortgagee's option, Mortgagee
will enter into a contract, at Mortgagor's reasonable expense, with a tax
service firm who will provide to Mortgagee on or about the same times each year,
receipts evidencing the payment of all such taxes, assessments, levies, fees and
other public charges imposed upon or assessed against the Mortgaged Property.
(b) In the event of the passage of any state, Federal, municipal or
other governmental law, order, rule or regulation subsequent to the date hereof
(i) deducting from the value of real property for the purpose of taxation any
lien or encumbrance thereon or in any manner changing or modifying the laws now
in force governing the taxation of this Mortgage or debts secured by mortgages
(other than laws governing income, franchise and similar taxes generally) or the
manner of collecting taxes thereon and (ii) imposing a tax to be paid by
Mortgagee, either directly or indirectly, on this Mortgage, the Notes, the
Tranche A Exchange Notes or any of the Loan Documents or Tranche A Exchange Note
Documents or to require an amount of taxes to be withheld or deducted therefrom,
Mortgagor will promptly notify Mortgagee of such event. In such event Mortgagor
shall (i) agree to enter into such further instruments, including but not
limited to new notes or new senior notes to be issued in exchange for the Notes
or the Tranche A Exchange Notes theretofore issued, as may be reasonably
necessary or desirable to obligate Mortgagor to make any applicable additional
payments, and (ii) Mortgagor shall make such additional payments under the Notes
or the Tranche A Exchange Notes. If Mortgagor is not permitted by law to do that
which is required by the preceding sentence, Mortgagee shall be entitled to
exercise any or all of its rights and remedies under the Loan Documents and/or
the Tranche A Exchange Note Documents, including the right to accelerate the
Obligations.
(c) At any time that an Event of Default shall occur hereunder, or
if required by any law applicable to Mortgagor or to Mortgagee, Mortgagee shall
have the right to direct Mortgagor to make an initial deposit on account of real
estate taxes and assessments, insurance
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premiums and common area charges, levied against or payable in respect of the
Mortgaged Property in advance and thereafter semiannually, each such deposit to
be equal to one-half of any such annual charges estimated by Mortgagee in order
to accumulate with Mortgagee sufficient funds to pay such taxes, assessments,
insurance premiums and charges.
SECTION 1.04. PAYMENT OF CLOSING COSTS. Mortgagor shall pay all
costs in connection with, relating to or arising out of the preparation,
execution and recording of this Mortgage, including title company premiums and
charges, inspection costs, survey costs, recording fees and taxes, attorneys',
engineers', appraisers' and consultants' fees and disbursements and all other
similar expenses of every kind.
SECTION 1.05. ALTERATIONS AND WASTE; PLANS. (a) No Improvements will
be materially altered or demolished or removed in whole or in part by Mortgagor
or any Operator except as provided by Section 7.05 of the Credit Agreement and
by Section 7.05 of the Tranche A Exchange Note Purchase Agreements. Mortgagor
will not erect any additions to the existing Improvements or other structures on
the Premises which will materially interfere with the Truckstop operation
conducted thereon on the date hereof, without the prior written consent of
Mortgagee. Mortgagor will not commit any waste on the Mortgaged Property or make
any alteration to, or change in the use of, the Mortgaged Property which will
diminish the fair market value thereof or materially increase any ordinary fire
or other hazard arising out of construction or operation, but in no event shall
any such alteration or change be contrary to the terms of any insurance policy
required to be kept pursuant to paragraph 1.06. Mortgagor will maintain and
operate (or cause each Operator, if any, to maintain and operate) the
Improvements and Personal Property in good repair, working order and condition,
reasonable wear and tear excepted.
(b) Mortgagor shall maintain a complete set of final plans,
specifications, blueprints and drawings for the Mortgaged Property either at the
Mortgaged Property or in a particular office at the headquarters of Mortgagor to
which Mortgagee shall have access upon reasonable advance notice.
SECTION 1.06. INSURANCE. Mortgagor will keep or cause to be kept the
Improvements and Personal Property insured against such risks, and in the
manner, required by Section 6.02 of the Credit Agreement and Section 6.02 of the
Tranche A Exchange Note Purchase Agreements.
SECTION 1.07. CASUALTY; RESTORATION OF CASUALTY DAMAGE. (a)
Mortgagor, in accordance with Section 9 of the Guarantee Agreement and Section
8.01 of the Tranche A Exchange Note Purchase Agreements, shall give Mortgagee
prompt written notice of any Casualty to the Mortgaged Property. Subject to the
provisions of Section 9 of the Guarantee Agreement and Section 8.01 of the
Tranche A Exchange Note Purchase Agreements, payment of any loss will be made
directly in its entirety to Mortgagee and any such proceeds relating to a
Casualty shall be held or applied by Mortgagee in accordance with Section 9 of
the Guarantee Agreement and Section 8.01 of the Tranche A Exchange Note Purchase
Agreements.
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SECTION 1.08. CONDEMNATION/EMINENT DOMAIN. The Mortgagor shall, in
accordance with Section 9 of the Guarantee Agreement and Section 8.01 of the
Tranche A Exchange Note Purchase Agreements, notify the Mortgagee promptly upon
obtaining knowledge of any pending or threatened Condemnation of the Mortgaged
Property. All Condemnation Proceeds shall be held and applied by Mortgagee in
accordance with Section 9 of the Guarantee Agreement and Section 8.01 of the
Tranche A Exchange Note Purchase Agreements.
SECTION 1.09. ASSIGNMENT OF LEASES AND RENTS. (a) Mortgagor hereby
irrevocably and absolutely grants, transfers and assigns all of its right, title
and interest in each Operating Lease, if any, and all other Leases, together
with any and all extensions and renewals thereof for purposes of securing and
discharging the performance by Mortgagor of the Secured Obligations. Mortgagor
has not assigned or executed any assignment of, and will not assign or execute
any assignment of, any Operating Lease or any other Lease or their respective
Rents to anyone other than Mortgagee.
(b) Without Mortgagee's prior written consent, Mortgagor will not
(1) modify, amend, terminate or consent to the cancelation or surrender of any
Operating Lease or any other Lease if such modification, amendment, termination
or consent would, in the reasonable judgment of the Mortgagee, be adverse in any
material respect to the Lenders, the value of the Mortgaged Property or the lien
created by this Mortgage or (2) consent to an assignment of any Operator's
interest in any Operating Lease or to a subletting thereof covering a material
portion of any Truckstop comprising a portion of the Mortgaged Property, except
as may be permitted by this Mortgage, the Credit Agreement or the Tranche A
Exchange Note Purchase Agreements.
(c) Subject to paragraph 1.09(d), Mortgagor has assigned and
transferred to Mortgagee all of Mortgagor's right, title and interest in and to
the Rents now or hereafter arising from each Operating Lease, if any, and all
other Leases heretofore or hereafter made or agreed to by Mortgagor, it being
intended that this assignment establish, subject to paragraph 1.09(d), an
absolute transfer and assignment of all Rents and each such Operating Lease, if
any, and all other Leases to Mortgagee and not merely to grant a security
interest therein. Subject to paragraph 1.09(d), Mortgagee may in Mortgagor's
name and stead (with or without first taking possession of any of the Mortgaged
Property personally or by receiver as provided herein) operate the Mortgaged
Property and rent, lease or let all or any portion of any of the Mortgaged
Property to any party or parties at such rental and upon such terms as Mortgagee
shall, in its sole discretion, determine, and may collect and have the benefit
of all of said Rents arising from or accruing at any time thereafter or that may
thereafter become due under each Lease.
(d) Until an Event of Default occurs or after an Event of Default
has occurred but is no longer continuing, Mortgagee will not exercise any of its
rights under paragraph 1.09(c), and Mortgagor shall receive and collect the
Rents accruing under any Operating Lease or any other Lease; but after the
happening of any Event of Default (but only while such Event of Default
continues), Mortgagee may, at its option, receive and collect all Rents and
enter upon the Premises and Improvements through its officers, agents, employees
or attorneys for such purpose and for the operation and maintenance thereof.
Upon the happening of an Event of Default, Mortgagor
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hereby irrevocably authorizes and directs each operator, if any, each other
tenant, if any, and each successor, if any, to the interest of any Operator or
tenant under each Operating Lease, if any, or any other Lease, respectively, to
rely upon any notice of a claimed Event of Default sent by Mortgagee to any such
Operator, if any, or tenant or any of their successors in interest, and
thereafter to pay Rents to Mortgagee without any obligation or right to inquire
as to whether an Event of Default actually exists and even if some notice to the
contrary is received from the Mortgagor, who shall have no right or claim
against any such Operator, if any, or tenant or successor in interest for any
such Rents so paid to Mortgagee. Each Operator, if any, or tenant or any of
their successors in interest from whom Mortgagee or any officer, agent, attorney
or employee of Mortgagee shall have collected any Rents, shall be authorized to
pay Rents to Mortgagor only after such Operator, if any, or tenant or any of
their successors in interest shall have received written notice from Mortgagee
that the Event of Default is no longer continuing, which notice Mortgagee shall
be obligated to give if Mortgagee agrees that such Event of Default is no longer
continuing, unless and until a further notice of an Event of Default is given by
Mortgagee to such tenant or any of their successors in interest.
(e) Mortgagee will not become a mortgagee in possession so long as
it does not enter or take actual possession of the Mortgaged Property. In
addition, Mortgagee shall not be responsible or liable for performing any of the
obligations of the landlord under any Operating Lease or any other Lease, for
any waste by any Operator or any tenant, or others, for any dangerous or
defective conditions of any of the Mortgaged Property, for negligence in the
management, upkeep, repair or control of any of the Mortgaged Property or any
other act or omission by any other person.
(f) Mortgagor shall furnish to Mortgagee, within 30 days after a
request by Mortgagee to do so, a written statement containing the names of each
Operator, if any, all tenants, subtenants and concessionaires of the Premises or
Improvements, the terms of each Operating Lease, if any, or any other Lease, the
space occupied and the rentals or license fees payable thereunder.
SECTION 1.10. RESTRICTIONS ON TRANSFERS AND ENCUMBRANCES. (a) Except
as permitted hereby, by the Credit Agreement or by the Tranche A Exchange Note
Purchase Agreements, Mortgagor shall not directly or indirectly sell, convey,
alienate, assign, lease, sublease, license, mortgage, pledge, encumber or
otherwise transfer, create, consent to or suffer the creation of any lien,
charges or any form of encumbrance upon any interest in or any part of the
Mortgaged Property, or be divested of its title to the Mortgaged Property or any
interest therein in any manner or way, whether voluntarily or involuntarily
(other than resulting from a taking), or engage in any common, cooperative,
joint, time-sharing or other congregate ownership of all or part thereof;
PROVIDED, HOWEVER, that Mortgagor may in the ordinary course of business within
reasonable commercial standards, enter into easement or covenant agreements
which relate to and/or benefit the operation of the Mortgaged Property and which
do not materially or adversely affect the use and operation of the same (except
for customary utility easements which service the Mortgaged Property).
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SECTION 1.11. SECURITY AGREEMENT. This Mortgage is both a mortgage
of real property and a grant of a security interest in personal property, and
shall constitute and serve as a "Security Agreement" within the meaning of the
uniform commercial code as adopted in the state wherein the Premises are
located. Mortgagor has hereby granted unto Mortgagee a security interest in and
to all the Mortgaged Property described in this Mortgage that is not real
property, and simultaneously with the recording of this Mortgage, Mortgagor has
filed or will file UCC financing statements, and will file continuation
statements prior to the lapse thereof, at the appropriate offices in the state
in which the Premises are located to perfect the security interest granted by
this Mortgage in all the Mortgaged Property that is not real property. Mortgagor
hereby appoints Mortgagee as its true and lawful attorney-in-fact and agent, for
Mortgagor and in its name, place and stead, in any and all capacities, to
execute any document and to file the same in the appropriate offices (to the
extent it may lawfully do so), and to perform each and every act and thing
requisite and necessary to be done to perfect the security interest contemplated
by the preceding sentence. Mortgagee shall have all rights with respect to the
part of the Mortgaged Property that is the subject of a security interest
afforded by the uniform commercial code as adopted in the state wherein the
Premises are located in addition to, but not in limitation of, the other rights
afforded Mortgagee hereunder.
SECTION 1.12. FILING AND RECORDING. Mortgagor will cause this
Mortgage, any other security instrument creating a security interest in or
evidencing the lien hereof upon the Mortgaged Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect the lien hereof upon, and the security interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incidental to the execution and
acknowledgment of this Mortgage, any mortgage supplemental hereto, any security
instrument with respect to the Personal Property, and any instrument of further
assurance and all Federal, state, county and municipal recording, documentary or
intangible taxes and other taxes, duties, imposts, assessments and charges
arising out of or in connection with the execution, delivery and recording of
this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Personal Property or any instrument of further assurance.
SECTION 1.13. FURTHER ASSURANCES. Upon demand by Mortgagee,
Mortgagor will, at the cost of Mortgagor and without expense to Mortgagee, do,
execute, acknowledge and deliver all such further acts, deeds, conveyances,
mortgages, assignments, notices of assignment, transfers and assurances as
Mortgagee shall from time to time reasonably require for the better assuring,
conveying, assigning, transferring and confirming unto Mortgagee the property
and rights hereby conveyed or assigned or intended now or hereafter so to be, or
which Mortgagor may be or may hereafter become bound to convey or assign to
Mortgagee, or for carrying out the intention or facilitating the performance of
the terms of this Mortgage, or for filing, registering or recording this
Mortgage, and on demand, Mortgagor will also execute and deliver and hereby
appoints Mortgagee as its true and lawful attorney-in-fact and agent, for
Mortgagor and in its name, place and stead, in any and all capacities, to
execute and file to the extent it may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments
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reasonably requested by Mortgagee to evidence more effectively the lien hereof
upon the Personal Property and to perform each and every act and thing requisite
and necessary to be done to accomplish the same.
SECTION 1.14. ADDITIONS TO MORTGAGED PROPERTY. All right, title and
interest of Mortgagor in and to all extensions, improvements, betterments,
renewals, substitutes and replacements of, and all additions and appurtenances
to, the Mortgaged Property hereafter acquired by or released to Mortgagor or
constructed, assembled or placed by Mortgagor upon the Premises or the
Improvements, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by Mortgagor, shall become subject
to the lien and security interest of this Mortgage as fully and completely and
with the same effect as though now owned by Mortgagor and specifically described
in the grant of the Mortgaged Property above, but at any and all times Mortgagor
will execute and deliver to Mortgagee any and all such further assurances,
mortgages, conveyances or assignments thereof as Mortgagee may reasonably
require for the purpose of expressly and specifically subjecting the same to the
lien and security interest of this Mortgage.
SECTION 1.15. NO CLAIMS AGAINST MORTGAGEE. Nothing contained in
this Mortgage shall constitute any consent or request by Mortgagee, express or
implied, for the performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof, nor as giving Mortgagor any right, power or authority to contract for
or permit the performance of any labor or services or the furnishing of any
materials or other property in such fashion as would permit the making of any
claim against Mortgagee in respect thereof.
ARTICLE II
DEFAULTS AND REMEDIES
SECTION 2.01. EVENTS OF DEFAULT. It shall be an Event of Default
under this Mortgage if any Event of Default (as therein defined) shall exist
pursuant to (1) the Credit Agreement, (2) the Tranche A Exchange Note Purchase
Agreements or (3) any Other Mortgage.
SECTION 2.02. DEMAND FOR PAYMENT. If an Event of Default as set
forth herein shall occur and be continuing, then, upon written demand of
Mortgagee, Mortgagor will pay to Mortgagee upon demand all amounts due hereunder
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including attorneys' fees, disbursements and expenses incurred by
Mortgagee. In case Mortgagor shall fail forthwith to pay such amounts or any
amounts due under any other Section of this Mortgage upon Mortgagee's demand,
Mortgagee shall be entitled and empowered to institute an action or proceedings
at law or in equity as advised by counsel for the collection of the sums so due
and unpaid, to prosecute any such action or proceedings to judgment or final
decree, to enforce any such judgment or final decree against
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Mortgagor and to collect, in any manner provided by law, all moneys adjudged or
decreed to be payable.
SECTION 2.03. RIGHTS TO TAKE POSSESSION, OPERATE AND APPLY REVENUES.
(a) If an Event of Default shall occur and be continuing, Mortgagor shall, upon
demand of Mortgagee, forthwith surrender to Mortgagee actual possession of the
Mortgaged Property and, if and to the extent permitted by law, Mortgagee itself,
or by such officers or agents as it may appoint, may then enter and take
possession of all the Mortgaged Property without the appointment of a receiver
or an application therefor, exclude Mortgagor and its agents and employees
wholly therefrom, and have access (with Mortgagor) to the books, papers and
accounts of Mortgagor.
(b) If Mortgagor shall for any reason fail to surrender or deliver
the Mortgaged Property or any part thereof after such demand by Mortgagee,
Mortgagee may obtain a judgment or decree conferring upon Mortgagee the right to
immediate possession or requiring Mortgagor to deliver immediate possession of
the Mortgaged Property to Mortgagee, to the entry of which judgment or decree
Mortgagor hereby specifically consents. Mortgagor will pay to Mortgagee, upon
demand, all expenses of obtaining such judgment or
decree, including compensation to Mortgagee's attorneys and agents with interest
thereon at the Default Rate, and all such expenses and compensation shall, until
paid, be secured by this Mortgage.
(c) Upon every such entry or taking of possession, Mortgagee may
hold, store, use, operate, manage and control the Mortgaged Property, conduct
the business thereof and, from time to time, (1) make all necessary and proper
maintenance, repairs, renewals, replacements, additions, betterments and
improvements thereto and thereon, (2) purchase or otherwise acquire additional
fixtures, personalty and other property, (3) insure or keep the Mortgaged
Property insured, (4) manage and operate the Mortgaged Property and exercise all
the rights and powers of Mortgagor to the same extent as Mortgagor could in its
own name or otherwise with respect to the same, or (5) enter into any and all
agreements with respect to the exercise by others of any of the powers herein
granted Mortgagee, all as may from time to time be directed or determined by
Mortgagee to be in its best interest and Mortgagor hereby appoints Mortgagee as
its true and lawful attorney-in-fact and agent, for Mortgagor and in its name,
place and stead, in any and all capacities, to perform any of the foregoing
acts. Mortgagee may collect and receive all the Rents, issues, profits and
revenues from the Mortgaged Property, including those past due as well as those
accruing thereafter, and, after deducting (i) all expenses of taking, holding,
managing and operating the Mortgaged Property (including compensation for the
services of all persons employed for such purposes), (ii) the costs of all such
maintenance, repairs, renewals, replacements, additions, betterments,
improvements, purchases and acquisitions, (iii) the costs of insurance, (iv)
such taxes, assessments and other similar charges as Mortgagee may at its option
pay, (v) other proper charges upon the Mortgaged Property or any part thereof
and (vi) the compensation, expenses and disbursements of the attorneys and
agents of Mortgagee, Mortgagee shall apply the remainder of the moneys and
proceeds so received first to the payment of the Mortgagee for the payment in
full of Indebtedness and satisfaction of the Secured Obligations, and second, if
there is any surplus, to Mortgagor, subject to the entitlement of others thereto
under applicable law.
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(d) Whenever, before any sale of the Mortgaged Property under
Section 2.06, all Secured Obligations which are then due shall have been paid
and all Events of Default fully cured, Mortgagee will surrender possession of
the Mortgaged Property back to Mortgagor, its successors or assigns. The same
right of taking possession shall, however, arise again if any subsequent Event
of Default shall occur and be continuing.
SECTION 2.04. RIGHT TO CURE MORTGAGOR'S FAILURE TO PERFORM. Prior to
the occurrence of an Event of Default upon five days' notice to Mortgagor
(except in the case of an emergency), or after the occurrence of an Event of
Default at any time and without notice, should Mortgagor fail in the payment,
performance or observance of any term, covenant or condition required by this
Mortgage, the Credit Agreement or the Tranche A Exchange Note Purchase
Agreements (with respect to the Mortgaged Property), Mortgagee may pay, perform
or observe the same, and all payments made or costs or expenses incurred by
Mortgagee in connection therewith shall be secured hereby and shall be, without
demand, immediately repaid by Mortgagor to Mortgagee with interest thereon at
the Default Rate. Mortgagee shall be the judge of the necessity for any such
actions and of the amounts to be paid. Subject to the notice provisions of the
first sentence of this paragraph 2.04, Mortgagee is hereby empowered to enter
and to authorize others to enter upon the Premises or the Improvements or any
part thereof for the purpose of performing or observing any such defaulted term,
covenant or condition without having any obligation to so perform or observe and
without thereby becoming liable to Mortgagor, to any person in possession
holding under Mortgagor or to any other person.
SECTION 2.05. RIGHT TO A RECEIVER. If an Event of Default shall
occur and be continuing, Mortgagee, upon application to a court of competent
jurisdiction, shall be entitled as a matter of right to the appointment of a
receiver to take possession of and to operate the Mortgaged Property and to
collect and apply the Rents. The receiver shall have all of the rights and
powers permitted under the laws of the state wherein the Mortgaged Property is
located. Mortgagor will pay to Mortgagee upon demand all expenses, including
receiver's fees, attorney's fees and disbursements, costs and agent's
compensation incurred pursuant to the provisions of this Section 2.05; and all
such expenses shall be secured by this Mortgage and shall be, without demand,
immediately repaid by Mortgagor to Mortgagee with interest thereon at the
Default Rate.
SECTION 2.06. FORECLOSURE AND SALE. (a) If an Event of Default shall
occur and be continuing, Mortgagee may elect to sell the Mortgaged Property or
any part of the Mortgaged Property by exercise of the power of foreclosure or of
sale granted to Mortgagee by applicable law or this Mortgage. In such case,
Mortgagee may commence a civil action to foreclose this Mortgage, or it may
proceed and sell the Mortgaged Property to satisfy any Secured Obligation.
Mortgagee or an officer appointed by a judgment of foreclosure to sell the
Mortgaged Property, may sell all or such parts of the Mortgaged Property as may
be chosen by Mortgagee at the time and place of sale fixed by it in a notice of
sale, either as a whole or in separate lots, parcels or items as Mortgagee shall
deem expedient, and in such order as it may determine, at public auction to the
highest bidder. Mortgagee or an officer appointed by a judgment of foreclosure
to sell the Mortgaged Property may postpone any foreclosure or other sale of all
or any portion of the Mortgaged Property by public announcement at such time and
place of sale, and
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from time to time thereafter may postpone such sale by public announcement or
subsequently noticed sale. Without further notice, Mortgagee or an officer
appointed to sell the Mortgaged Property may make such sale at the time fixed by
the last postponement, or may, in its discretion, give a new notice of sale. Any
person, including Mortgagor or Mortgagee or any designee or affiliate thereof,
may purchase at such sale.
(b) The Mortgaged Property may be sold subject to unpaid taxes and
Permitted Encumbrances, and after deducting all costs, fees and expenses of
Mortgagee, including costs of evidence of title in connection with the sale,
Mortgagee or an officer that makes any sale shall apply the proceeds of sale in
the manner set forth in Section 2.08.
(c) Any foreclosure or other sale of less than the whole of the
Mortgaged Property or any defective or irregular sale made hereunder shall not
exhaust the power of foreclosure provided for herein; and subsequent sales may
be made hereunder until the Secured Obligations have been satisfied, or the
entirety of the Mortgaged Property has been sold.
(d) Mortgagor waives, to the extent not prohibited by law, (1) the
benefit of all laws now existing or hereafter may be enacted providing for any
appraisement before sale of any portion of the Mortgaged Property, (2) the
benefit of all laws now existing or that may be hereafter enacted in any way
extending the time for the enforcement or the collection of amounts due under
any of the Secured Obligations or creating or extending a period of redemption
from any sale made in collecting said debt or any other amounts due Mortgagee,
(3) any right to at any time insist upon, plead, claim or take the benefit or
advantage of any law now or hereafter in force providing for any appraisement,
valuation, stay, extension or redemption, or sale of the Mortgaged Property as
separate tracts, units or estates or as a single parcel in the event of
foreclosure, and (4) all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of or each of
the Secured Obligations and marshalling in the event of foreclosure of this
Mortgage.
(e) To the extent not prohibited by law, the right of Mortgagee to
foreclose on and sell all or any part of the Mortgaged Property shall not be
affected or impaired by the cure of any Event of Default after the publication
of notice of or the commencement of any legal proceeding for such sale.
(f) If an Event of Default shall occur and be continuing, Mortgagee
may instead of, or in addition to, exercising the rights described in paragraph
2.06(a) above and either with or without entry or taking possession as herein
permitted, proceed by a suit or suits in law or in equity or by any other
appropriate proceeding or remedy (1) to specifically enforce payment of some or
all of the terms of the Loan Documents or the Tranche A Exchange Note Documents,
or the performance of any term, covenant, condition or agreement of this
Mortgage or any other right, or (2) to pursue any other remedy available to it,
all as Mortgagee shall determine most effectual for such purposes.
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SECTION 2.07. OTHER REMEDIES. (a) In case an Event of Default shall
occur and be continuing, Mortgagee may also exercise, to the extent not
prohibited by law, any or all of the remedies available to a secured party under
the uniform commercial code of the State wherein the Premises are located,
including, to the extent not prohibited by applicable law, the following:
(1) Either personally or by means of a court appointed receiver, to
take possession of all or any of the Personal Property and exclude
therefrom Mortgagor and all others claiming under Mortgagor, and
thereafter to hold, store, use, operate,
manage, maintain and control, make repairs, replacements, alterations,
additions and improvements to and exercise all rights and powers of
Mortgagor with respect to the Personal Property or any part thereof.
(2) To make such payments and do such acts as Mortgagee may deem
necessary to protect its security interest in the Personal Property
including paying, purchasing, contesting or compromising any encumbrance,
charge or lien which is prior or superior to the security interest granted
hereunder, and, in exercising any such powers or authority, paying all
expenses incurred in connection therewith.
(3) To assemble the Personal Property or any portion thereof at a
place designated by Mortgagee and reasonably convenient to both parties,
to demand prompt delivery of the Personal Property to Mortgagee or an
agent or representative designated by it, and to enter upon any or all of
the Premises or Improvements to exercise Mortgagee's rights hereunder.
(4) To sell or otherwise dispose of or purchase the Personal
Property at public sale, with or without having the Personal Property at
the place of sale, upon such terms and in such manner as Mortgagee may
determine, after Mortgagee shall have given Mortgagor at least ten days'
prior written notice of the time and place of any public sale or other
intended disposition of the Personal Property by mailing a copy to
Mortgagor at the address set forth in Section 3.02.
(b) In connection with a sale of the Mortgaged Property or any
Personal Property and the application of the proceeds of sale as provided in
Section 2.08 of this Mort gage, Mortgagee shall be entitled to enforce payment
of and to receive up to the principal amount of the Secured Obligations, plus
all other charges, payments and costs due under this Mortgage, and to recover a
deficiency judgment for any portion of the aggregate principal amount of the
Secured Obligations remaining unpaid, with interest.
SECTION 2.08. APPLICATION OF SALE PROCEEDS AND RENTS. After any
foreclosure sale of all or any of the Mortgaged Property, Mortgagee shall
receive the proceeds of sale, no purchaser shall be required to see to the
application of the proceeds and Mortgagee shall apply the
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proceeds of the sale together with any Rents that may have been collected and
any other sums which then may be held by Mortgagee under this Mortgage as
follows:
FIRST: to the payment of the costs and expenses of such sale,
including compensation to Mortgagee's attorneys and agents, and of any
judicial proceedings wherein the same may be made, and of all expenses,
liabilities and advances made or incurred by Mortgagee under this
Mortgage, together with interest at the Default Rate on all advances made
by Mortgagee, including all taxes or assessments (except any taxes,
assessments or other charges subject to which the Mortgaged Property shall
have been sold) and the cost of removing any Permitted Encumbrance (except
any Permitted Encumbrance subject to which the Mortgaged Property was
sold);
SECOND: to the Mortgagee for the payment in full of Indebtedness
and satisfaction of the Secured Obligations; and
THIRD: to the Mortgagor, its successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
The Mortgagee shall have absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Mortgage. Upon any
sale of the Mortgaged Property by the Mortgagee (including pursuant to a power
of sale granted by statute or under a judicial proceeding), the receipt of the
Mortgagee or of the officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Mortgaged Property so sold and such purchaser
or purchasers shall not be obligated to see to the application of any part of
the purchase money paid over to the Mortgagee or such officer or be answerable
in any way for the misapplication thereof.
SECTION 2.09. MORTGAGOR AS TENANT HOLDING OVER. If Mortgagor remains
in possession of any of the Mortgaged Property after any foreclosure sale by
Mortgagee, at Mortgagee's election Mortgagor shall be deemed a tenant holding
over and shall forthwith surrender possession to the purchaser or purchasers at
such sale or be summarily dispossessed or evicted according to provisions of law
applicable to tenants holding over.
SECTION 2.10. WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND
REDEMPTION LAWS. (a) Mortgagor will not object to any sale of the Mortgaged
Property in its entirety pursuant to Section 2.06, and for itself and all who
may claim under it, Mortgagor waives, to the extent that it lawfully may, all
right to have the Mortgaged Property marshalled or to have the Mortgaged
Property sold as separate estates, parcels, tracts or units in the event of any
foreclosure of this Mortgage.
(b) To the full extent permitted by the law of the state wherein the
Mortgaged Property is located or other applicable law, neither Mortgagor nor
anyone claiming through or under it shall or will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension, homestead-exemption
or redemption laws now or hereafter in force in order to prevent or hinder the
enforcement or foreclosure of this Mortgage, the absolute sale of the Mortgaged
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Property or the final and absolute putting of the purchasers into possession
thereof immediately after any sale; and Mortgagor, for itself and all who may at
any time claim through or under it, hereby waives to the full extent that it may
lawfully do so, the benefit of all such laws and any and all right to have the
assets covered by the security interest created hereby marshalled upon any
foreclosure of this Mortgage.
SECTION 2.11. DISCONTINUANCE OF PROCEEDINGS. In case Mortgagee
shall proceed to enforce any right, power or remedy under this Mortgage by
foreclosure, entry or otherwise, and such proceedings shall be discontinued or
abandoned for any reason, or shall be determined adversely to Mortgagee, then
and in every such case Mortgagor and Mortgagee shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of Mortgagee
shall continue as if no such proceeding had been taken.
SECTION 2.12. SUITS TO PROTECT THE MORTGAGED PROPERTY. Mortgagee
shall have power (a) to institute and maintain suits and proceedings to prevent
any impairment of the Mortgaged Property by any acts which may be unlawful or in
violation of this Mortgage, (b) to preserve or protect its interest in the
Mortgaged Property and in the Rents arising therefrom and (c) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with such enactment, rule or order would impair
the security or be prejudicial to the interest of Mortgagee hereunder.
SECTION 2.13. FILING PROOFS OF CLAIM. In case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Mortgagor, Mortgagee shall, to the extent permitted
by law, be entitled to file such proofs of claim and other documents as may be
necessary or advisable in order to have the claims of Mortgagee allowed in such
proceedings for the Secured Obligations secured by this Mortgage at the date of
the institution of such proceedings and for any interest accrued, late charges
and additional interest or other amounts due or which may become due and payable
hereunder after such date.
SECTION 2.14. POSSESSION BY MORTGAGEE. Notwithstanding the
appointment of any receiver, liquidator or trustee of Mortgagor, any of its
property or the Mortgaged Property, Mortgagee shall be entitled, to the extent
not prohibited by law, to remain in possession and control of all parts of the
Mortgaged Property now or hereafter granted under this Mortgage to Mortgagee in
accordance with the terms hereof and applicable law.
SECTION 2.15. WAIVER. (a) No delay or failure by Mortgagee to
exercise any right, power or remedy accruing upon any breach or Event of Default
shall exhaust or impair any such right, power or remedy or be construed to be a
waiver of any such breach or Event of Default or acquiescence therein; and every
right, power and remedy given by this Mortgage to Mortgagee may be exercised
from time to time and as often as may be deemed expedient by Mortgagee. No
consent or waiver by Mortgagee to or of any breach or default by Mortgagor in
the performance of the Secured Obligations shall be deemed or construed to be a
consent or waiver to or of any other breach or Event of Default in the
performance of the same or any other
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Secured Obligations by Mortgagor hereunder. No failure on the part of Mortgagee
to complain of any act or failure to act or to declare an Event of Default,
irrespective of how long such failure continues, shall constitute a waiver by
Mortgagee of its rights hereunder or impair any rights, powers or remedies
consequent on any future Event of Default by Mortgagor.
(b) Even if Mortgagee (1) grants some forbearance or an extension of
time for the payment of any sums secured hereby, (2) takes other or additional
security for the payment of any sums secured hereby, (3) waives or does not
exercise some right granted herein or under the Loan Documents or Tranche A
Exchange Note Documents, (4) releases a part of the Mortgaged Property from this
Mortgage, (5) agrees to change some of the terms, covenants, conditions or
agreements of any of the Loan Documents or Tranche A Exchange Note Documents,
(6) consents to the filing of a map, plat or replat affecting the Premises, (7)
consents to the granting of an easement or other right affecting the Premises or
(8) makes or consents to an agreement subordinating Mortgagee's lien on the
Mortgaged Property hereunder; no such act or omission shall preclude Mortgagee
from exercising any other right, power or privilege herein granted or intended
to be granted in the event of any breach or Event of Default then made or of any
subsequent default; nor, except as otherwise expressly provided in an instrument
executed by Mortgagee, shall this Mortgage be altered thereby. In the event of
the sale or transfer by operation of law or otherwise of all or part of the
Mortgaged Property, Mortgagee is hereby authorized and empowered to deal with
any vendee or transferee with reference to the Mortgaged Property secured
hereby, or with reference to any of the terms, covenants, conditions or
agreements hereof, as fully and to the same extent as it might deal with the
original parties hereto and without in any way releasing or discharging any
liabilities, obligations or undertakings.
SECTION 2.16. REMEDIES CUMULATIVE. No right, power or remedy
conferred upon or reserved to Mortgagee by this Mortgage is intended to be
exclusive of any other right, power or remedy, and each and every such right,
power and remedy shall be cumulative and concurrent and in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or
in equity or by statute.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. PARTIAL INVALIDITY. In the event any one or more of
the provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such validity, illegality or
unenforceability shall, at the option of Mortgagee, not affect any other
provision of this Mortgage, and this Mortgage shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein or
therein.
SECTION 3.02. NOTICES. All notices to be sent and all documents to
be delivered hereunder shall be in writing, shall be delivered by hand or
overnight courier service, mailed or sent by telex, graphic scanning or other
telegraphic communications equipment of the
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sending party and shall be deemed to have been given on the date of receipt if
delivered by hand or overnight courier service or sent by telex, telecopy or
other telegraphic communications equipment of the sender, or on the date five
Business Days after dispatch by certified or registered mail if mailed, in each
case delivered, sent or mailed (properly addressed) to any party hereto at the
address or addresses specified in Section 10.01 of the Credit Agreement or at
such other address or addresses of which it shall have notified the party giving
such notice in accordance with said Section 10.01.
SECTION 3.03. SUCCESSORS AND ASSIGNS. All of the grants, covenants,
terms, provisions and conditions herein shall run with the Premises and the
Improvements and shall apply to, bind and inure to, the benefit of the permitted
successors and assigns of Mortgagor and the successors and assigns of Mortgagee.
SECTION 3.04. COUNTERPARTS. This Mortgage may be executed in any
number of counterparts and all such counterparts shall together constitute but
one and the same mortgage.
SECTION 3.05. SATISFACTION AND CANCELATION. (a) The conveyance to
Mortgagee created and consummated by this Mortgage shall be null and void when
all the Obligations have been indefeasibly paid in full in accordance with the
terms of the Loan Documents and the Tranche A Exchange Note Documents and the
Lenders and the Swingline Lender have no further commitment to lend under the
Credit Agreement, no Letters of Credit are outstanding and the Fronting Bank has
no further obligation to issue Letters of Credit under the Credit Agreement.
(b) The lien of this conveyance shall be released from such portion
of the Mortgaged Property as is required by, pursuant to and in accordance with
the operative provisions of (i) Section 7.05 of the Credit Agreement and Section
7.05 of the Tranche A Exchange Note Purchase Agreements or (ii) Section 10 of
the Guarantee Agreement and Section 8.02 of the Tranche A Exchange Note Purchase
Agreements.
(c) In connection with any termination or release pursuant to
paragraph (a), the Mortgage shall be marked "satisfied" by the Mortgagee, and
this Mortgage may be canceled of record at the request and at the expense of the
Mortgagor. Mortgagee shall execute any documents reasonably requested by
Mortgagor to accomplish the foregoing or to accomplish any release contemplated
by paragraph (a) or (b) and Mortgagor will pay all costs and expenses, including
attorneys' fees and disbursements, incurred by Mortgagee in connection with the
preparation and execution of such documents.
SECTION 3.06. DEFINITIONS. As used in this Mortgage, the singular
shall include the plural as the context requires and the following words and
phrases shall have the following meanings: (a) "including" shall mean "including
but not limited to"; (b) "provisions" shall mean "provisions, terms, covenants
and/or conditions"; (c) "lien" shall mean "lien, charge, encumbrance, security
interest, mortgage or deed of trust"; (d) "obligation" shall mean "obligation,
duty, covenant and/or condition"; and (e) "any of the Mortgaged Property" shall
mean "the Mortgaged
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Property or any part thereof or interest therein". "Operating Lease" shall mean
each lease relating to the Truckstop hereafter entered into as permitted by
Section 7.08 of the Credit Agreement and Section 7.08 of the Tranche A Exchange
Note Purchase Agreements, as each such lease may be modified, supplemented,
amended and/or restated by the parties thereto. "Operator" shall mean each
operator who operates the Truckstop under an Operating Lease. Any act which
Mortgagee is permitted to perform hereunder may be performed at any time and
from time to time by Mortgagee or any person or entity designated by Mortgagee.
Any act which is prohibited to Mortgagor hereunder is also prohibited to all
lessees of any of the Mortgaged Property. Each appointment of Mortgagee as
attorney-in-fact for Mortgagor under the Mortgage is irrevocable, with power of
substitution and coupled with an interest. Subject to the applicable provisions
hereof, Mortgagee has the right to refuse to grant its consent, approval or
acceptance or to indicate its satisfaction, in its sole discretion, whenever
such consent, approval, acceptance or satisfaction is required hereunder.
SECTION 3.07. MULTISITE REAL ESTATE TRANSACTION. Mortgagor
acknowledges that this Mortgage is one of a number of Other Mortgages and
Security Documents which secure the Obligations. Mortgagor agrees that the lien
of this Mortgage shall be absolute and unconditional and shall not in any manner
be affected or impaired by any acts or omissions whatsoever of Mortgagee and
without limiting the generality of the foregoing, the lien hereof shall not be
impaired by any acceptance by the Mortgagee of any security for or guarantees of
any of the Secured Obligations hereby secured, or by any failure, neglect or
omission on the part of Mortgagee to realize upon or protect any Secured
Obligation or indebtedness hereby secured or any collateral security therefor
including the Other Mortgages and other Security Documents. The lien hereof
shall not in any manner be impaired or affected by any release (except as to the
property released), sale, pledge, surrender, compromise, settlement, renewal,
extension, indulgence, alteration, changing, modification or disposition of any
of the obligations secured or of any of the collateral security therefor,
including the Other Mortgages and other Security Documents or of any guarantee
thereof, and Mortgagee may at its discretion foreclose, exercise any power of
sale, or exercise any other remedy available to it under any or all of the Other
Mortgages and other Security Documents without first exercising or enforcing any
of its rights and remedies hereunder. Such exercise of Mortgagee's rights and
remedies under any or all of the Other Mortgages and other Security Documents
shall not in any manner impair the indebtedness hereby secured or the lien of
this Mortgage and any exercise of the rights or remedies of Mortgagee hereunder
shall not impair the lien of any of the Other Mortgages and other Security
Documents or any of Mortgagee's rights and remedies thereunder. The undersigned
specifically consents and agrees that Mortgagee may exercise its rights and
remedies hereunder and under the Other Mortgages and other Security Documents
separately or concurrently and in any order that it may deem appropriate and the
undersigned waives any rights of subrogation.
SECTION 3.08. REFERENCES TO CREDIT AGREEMENT. Upon the payment and
discharge in full of all outstanding Credit Agreement Obligations or Tranche A
Exchange Note Obligations (each such term as defined in the Intercreditor
Agreement), all references herein to the Credit Agreement or the Tranche A
Exchange Note Purchase Agreements, as the case may be, shall become null and
void (other than references for the purposes of incorporating herein
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definitions of terms used therein which terms will continue to have the meanings
assigned thereto immediately prior to such payment and discharge, subject to
subsequent amendment or modification in accordance with the terms hereof).
ARTICLE IV
PARTICULAR PROVISIONS
This Mortgage is subject to the following provisions relating to the
particular laws of the state wherein the Premises are located:
SECTION 4.01. APPLICABLE LAW; CERTAIN PARTICULAR PROVISIONS. This
Mortgage shall be governed by and construed in accordance with the internal law
of the State of New York; PROVIDED, HOWEVER, that the provisions of this
Mortgage relating to the creation, perfection and enforcement of the lien and
security interest created by this Mortgage in respect of the Mortgaged Property
and the exercise of each remedy provided hereby, including the power of
foreclosure or power of sale procedures set forth in this Mortgage, shall be
governed by and construed in accordance with the internal law of the state where
the Mortgaged Property is located, and Mortgagor and Mortgagee will submit to
jurisdiction and the laying of venue for any suit on this Mortgage in such
state. The terms and provisions set forth in Appendix A attached hereto are
hereby incorporated by reference as though fully set forth herein. In the event
of any conflict between the terms and provisions contained in the body of this
Mortgage and the terms and provisions set forth in Appendix A, the terms and
provisions set forth in Appendix A shall govern and control.
IN WITNESS WHEREOF, this Mortgage has been duly authorized and has
been executed and delivered to Mortgagee by Mortgagor on the date first written
above.
[MORTGAGOR], a Delaware corporation,
Witnesses:
By:
- --------------------------- ----------------------------------
Name:
Title:
- ---------------------------
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EXHIBIT J
PLEDGE AGREEMENT dated as of March 27, 1997, among
TRAVELCENTERS OF AMERICA, INC., a Delaware corporation (the
"BORROWER"), TA OPERATING CORPORATION, a Delaware corporation
("TA"), NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware corporation
("NATIONAL"), TA Franchise Systems Inc., a Delaware corporation
("TAFSI" and, together with the Borrower TA and National, the
"PLEDGORS"), and THE CHASE MANHATTAN BANK, a New York banking
corporation ("CHASE"), as collateral agent (in such capacity, the
"COLLATERAL AGENT") for the Secured Parties (as defined herein.)
Reference is made to (a) the Master Collateral and Intercreditor Agreement
dated as of March 27, 1997 (as amended or modified from time to time, the
"INTERCREDITOR AGREEMENt"), among the Participating Creditors (as defined
therein) and the Collateral Agent and countersigned by the Borrower and TA,
National and TAFSI (as defined therein); (b) the Credit Agreement dated as of
March 21, 1997 (as amended or modified from time to time, the "CREDIT
AGREEMENT"), among the Borrower, the financial institutions party thereto, as
lenders (the "LENDERS"), and Chase, as agent (in such capacity, the "AGENT"), as
fronting bank (in such capacity, the "FRONTING BANK"); and as swingline lender
(in such capacity, the "SWINGLINE LENDER"); (c) the Senior Secured Note Exchange
Agreements, each dated as of March 21, 1997 (as amended or modified from time to
time, the "TRANCHE A EXCHANGE NOTE PURCHASE AGREEMENTs"), among the Borrower and
the Tranche A Exchange Note Purchasers named therein.
The Lenders, the Fronting Bank and the Swingline Lender, respectively,
have agreed to make Loans to the Borrower to issue Letters of Credit for the
account of the Borrower and to make Swingline Loans to the Borrower pursuant to,
and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Tranche A Exchange Note Purchasers have agreed to accept
$35,500,000 aggregate principal amount of the Borrower's 8.94% Series I Senior
Secured Notes due 2002 (the "SERIES I TRANCHE A EXCHANGE NOTES") and $50,000,000
aggregate principal amount of the Borrower's Series II Senior Secured Notes due
2005 (the "SERIES II TRANCHE A EXCHANGE NOTES" and, together with the Series I
Tranche A Exchange Notes, the "TRANCHE A EXCHANGE NOTES") in exchange for (i)
$65,000,000 aggregate principal amount of the outstanding 8.76% Senior Secured
Notes due 2002 of National (the "NATIONAL SENIOR NOTES") and (ii) $20,500,000
aggregate principal amount of the outstanding 8.63% Senior Secured Notes due
2002 of TA (the "TA SENIOR NOTES" and, together with the National Senior Notes,
the "EXISTING SENIOR NOTES") held by them pursuant to, and upon the terms and
subject to the conditions specified in, the Tranche A Exchange Note Purchase
Agreements.
The obligations of the Lenders to make Loans, of the Fronting Bank to
issue Letters of Credit and of the Swingline Lender to make Swingline Loans
under the Credit Agreement and the obligations of the Tranche A Exchange Note
Purchasers to accept the Tranche A Exchange Notes in exchange for the Existing
Senior Notes held by them pursuant to the Tranche A Exchange Note Purchase
Agreements are conditioned upon, among other things, the execution and delivery
by the Pledgor of a pledge agreement in the form hereof to secure (a) the due
and punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, the Swingline Loans and the Tranche
A Exchange Notes, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (ii) each payment required to
be made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise,
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) of the Borrower to the Secured Parties
under the Credit Agreement, the Tranche A Exchange Note Purchase Agreements,
this Agreement and the other Credit Transaction Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement, the Tranche A
Exchange Note Purchase Agreements and the other Credit Transaction Documents,
(c) the due and punctual payment and performance of all the covenants,
agreements, obligations and liabilities of each Grantor under or pursuant to the
Credit Transaction Documents to which such Grantor is a party and (d) the due
and punctual payment and performance of all obligations of the Borrower,
monetary or otherwise, under each Rate Protection Agreement entered into with a
counterparty that was a Lender (or an Affiliate of a Lender) at the time such
Rate Protection Agreement was entered into (all the obligations referred to in
the preceding clauses (a) through (d) being referred to collectively as the
"OBLIGATIONS"). All capitalized terms used but not defined herein shall have the
meanings set forth in the other Transaction Documents.
<PAGE>
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself,
and each other Secured Party (and each of their successors or assigns), hereby
agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. DEFINITION OF CERTAIN TERMS USED HEREIN. As used herein, the
following terms shall have the following meanings:
"COLLATERAL" shall have the meaning assigned to such term in Section 2.01.
"CREDIT AGREEMENT" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"CREDIT TRANSACTION DOCUMENTS" shall mean the Loan Documents (as defined
in the Credit Agreement) and the Financing Documents (as defined in the Tranche
A Exchange Note Purchase Agreements).
"EVENT OF DEFAULT" shall mean any "Event of Default" as defined in the
Credit Agreement and any "Event of Default" as defined in the Tranche A Exchange
Note Purchase Agreements.
"FEDERAL SECURITIES LAWS" shall have the meaning assigned to such term in
Section 4.03.
"GUARANTORS" shall have the meaning assigned to such term in the Credit
Agreement.
"INDEMNITEE" shall mean any "Indemnitee" as defined in the Credit
Agreement and any "Indemnitee" as defined in the Tranche A Exchange Note
Purchase Agreements.
"OBLIGATIONS" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"PLEDGED DEBT SECURITIES" shall have the meaning assigned to such term in
Section 2.01.
"PLEDGED SECURITIES" shall mean the Pledged Stock, the Pledged Debt
Securities, all other shares of capital stock, debt securities and other
securities (including warrants, options and similar rights to acquire
securities) now or hereafter included in the Collateral and all stock
certificates, promissory notes and other instruments evidencing any such
securities.
"PLEDGED STOCK" shall have the meaning assigned to such term in Section
2.01.
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Fronting Bank, (c)
the Agent, (d) the Collateral Agent, (e) the Tranche A Exchange Note Purchasers,
(f) the Swingline Lender and (g) the successors and assigns of each of the
foregoing.
SECTION 1.02. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II. PLEDGE
SECTION 2.01. PLEDGE. As security for the payment or performance, as the
case may be, in full of the Obligations, the Pledgors hereby bargain, sell,
convey, assign, set over, mortgage, pledge, hypothecate and transfer to the
Collateral Agent, its successors and its assigns, for the benefit of the Secured
Parties, and hereby grant to the Collateral Agent, its successors and assigns,
for the benefit of the Secured Parties, a security interest in (a) the shares of
capital stock owned by the Pledgor and listed on Schedule I hereto and the
certificates representing or evidencing all such shares and (b)(i) in the case
of Guarantors, all of the interest of such Guarantor in any Permitted
Development Entity (as such term is defined in the Credit Agreement and the
Tranche A Exchange Note Purchase Agreements) and (ii) in the case of the
Guarantors and TAFSI, all of the interest of such Guarantor or TAFSI, as the
case may be, in any Permitted Joint Venture, including, in each case, (A) if
such entity is a corporation, all shares, certificates or the like evidencing of
such Guarantor's ownership therein, and (B) if such entity is a partnership, (I)
all of such Guarantor's rights as a partner in such entity, (II) all documents
and certificates representing or evidencing such Guarantor's partnership
interest in the
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entity, (III) all of such Guarantor's interest in and to the profits and losses
of the entity and the right of such Guarantor as a partner of the entity to
receive distributions from the entity in respect of interests therein, (IV) all
distributions, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of, or in exchange for, such
Guarantor's interest in the entity and (V) any other right, title, interest,
privilege, authority and power of such Guarantor Borrower in or relating to the
entity (the items referred to in this clause (b) and in the preceding clause (a)
being collectively called the "PLEDGED STOCK"), (c) the debt securities listed
on Schedule I hereto and the instruments representing or evidencing such
securities and any debt securities hereafter obtained in the future that are
payable to any Pledgor and the instruments representing or evidencing such
securities (other than debt securities or instruments representing investments,
loans or advances to employees and members of management of either Guarantor or
TAFSI pursuant to Section 7.04(d) or (e) of the Credit Agreement and Section
7.04(d) or (e) of the Tranche A Exchange Note Purchase Agreements) (the "PLEDGED
DEBT SECURITIES"), (d) all other property that may be delivered to and held by
the Collateral Agent pursuant to the terms hereof, (e) subject to Section 2.04,
all payments of principal or interest, dividends, cash, instruments, shares of
stock resulting from stock splits, warrants, options, non-cash dividends and
other property from time to time received, receivable or otherwise distributed,
in respect of, in exchange for or upon the conversion of the securities and
instruments referred to in clauses (a), (b), (c) and (d) above and (f) all
proceeds of any of the foregoing (the items referred to in clauses (a) through
(f) being collectively called the "COLLATERAL").
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and its assigns, for the benefit of
the Secured Parties, forever, SUBJECT, HOWEVER, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2.02. DELIVERY OF THE COLLATERAL. (a) Each Pledgor agrees to
promptly deliver or cause to be delivered to the Collateral Agent any and all
Pledged Securities, and any and all certificates or other instruments or
documents representing the Collateral.
(b) Upon delivery to the Collateral Agent, (i) the Pledged Securities
shall be accompanied by stock powers duly executed in blank or other instruments
of transfer satisfactory to the Collateral Agent and by such other instruments
and documents as the Collateral Agent may reasonably request and (ii) all other
property comprising part of the Collateral, including uncertificated Pledge
Securities, shall be accompanied by proper instruments of assignment duly
executed by the applicable Pledgor and such other instruments or documents as
the Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing the securities theretofore and
then being pledged hereunder, which schedule shall be attached hereto as
Schedule I and made a part hereof. Each schedule so delivered shall supersede
any prior schedules so delivered.
SECTION 2.03. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The Collateral
Agent shall have the right (in its sole and absolute discretion) to hold the
Pledged Securities in its own name as pledgee, the name of its nominee or the
name of the applicable Pledgor, endorsed or assigned in blank or in favor of the
Collateral Agent. Each Pledgor will promptly give to the Collateral Agent copies
of any notices or other communications received by it with respect to Pledged
Securities registered in the name of such Pledgor. The Collateral Agent shall at
all times have the right to exchange the certificates representing Pledged
Securities for certificates of smaller or larger denominations for any purpose
consistent with this Agreement.
SECTION 2.04. VOTING RIGHTS; DIVIDENDS AND INTEREST, ETC. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers accruing to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms
of this Agreement and the other Credit Transaction Documents; PROVIDED,
HOWEVER, that no such action shall be permitted (regardless of whether an
Event of Default has occurred and is continuing under the Credit Agreement
or the Tranche A Exchange Note Purchase Agreements) if such action would
materially and adversely affect the rights inuring to a holder of the
Pledged Securities or the rights and remedies of the Collateral Agent or
the other Secured Parties under this Agreement or any other Credit
Transaction Document or the ability of the Collateral Agent or the other
Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each Pledgor,
or cause to be executed and delivered to such Pledgor, all such proxies,
powers of attorney and other instruments as such Pledgor may reasonably
request for the purpose of enabling such Pledgor to exercise the voting
and/or consensual rights and powers that it is entitled to exercise
pursuant to subparagraph (i) above.
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(iii) Each Pledgor shall be entitled to receive and retain any and
all dividends, interest and prin cipal paid in cash on the Pledged
Securities pledged by it to the extent and only to the extent that such
cash dividends, interest and principal are permitted by, and otherwise
paid in accordance with, the terms and conditions of the Credit
Transaction Documents and applicable laws. Other than pursuant to the
first sentence of this paragraph (a)(iii), all principal, all noncash
dividends, interest and principal, and all dividends, interest and
principal paid or payable in cash or otherwise in connection with a
partial or total liquidation or dissolution, return of capital, capital
surplus or paid-in surplus, and all other distributions made on or in
respect of Pledged Securities, whether paid or payable in cash or
otherwise, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer of any
Pledged Securities or received in exchange for Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by a Pledgor, shall not be commingled by such
Pledgor with any of its other funds or property but shall be held separate
and apart therefrom, shall be held in trust for the benefit of the
Collateral Agent and shall be forthwith delivered to the Collateral Agent
in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to dividends, interest and principal payments that
such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividend, interest and principal payments. All divi dends,
interest and principal that are received by any Pledgor contrary to the
provisions of this Section 2.04 shall be received in trust for the benefit of
the Collateral Agent, shall be segregated from other property or funds of such
Pledgor and shall be forthwith delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement). Any and all money and
other property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the Collateral Agent in an
account to be established by the Collateral Agent upon receipt of such money or
other property and shall be applied in accordance with the provisions of Section
4.02. After all Events of Default under the Credit Agreement and the Tranche A
Exchange Note Purchase Agreements have been cured or waived, the Collateral
Agent shall, within five Business Days after all such Events of Default have
been cured or waived, repay to the Pledgors all cash dividends, interest or
principal that such Pledgors would otherwise be permitted to retain pursuant to
the terms of paragraph (a)(iii) above, but only to the extent such cash
dividends, interest or principal remain in such account.
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Pledgors to exercise the voting and consensual rights and
powers that they are entitled to exercise pursuant to paragraph (a)(i) of this
Section 2.04, and the obligations of the Collateral Agent under paragraph
(a)(ii) of this Section 2.04, shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers.
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS
The Pledgors jointly and severally represent, warrant and covenant to and
with the Collateral Agent and each other Secured Party that:
(a) the Pledged Stock set forth on Schedule I hereto represents all
the issued and outstanding shares of each class of the capital stock of
each Guarantor and TAFSI;
(b) the Pledged Securities have been duly and validly authorized and
issued by the issuers thereof and (i) in the case of Pledged Stock, are
fully paid and nonassessable and (ii) in the case of Pledged Debt
Securities, are legal, valid and binding obligations of the issuers
thereof;
(c) except for the security interest granted hereunder, each Pledgor
(i) is and will at all times continue to be the direct owner, beneficially
and of record, of the Pledged Securities indicated on Sched ule I to be
owned by such Pledgor, (ii) holds the same free and clear of all Liens,
(iii) will make no assign ment, pledge, hypothecation or transfer of, or
create any security interest in, the Collateral, other than pursuant
hereto and (iv) subject to Section 2.04, will cause any and all
Collateral, whether for value paid by either Pledgor or otherwise, to be
forthwith deposited with the Collateral Agent and pledged or assigned
hereunder;
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(d) except for restrictions and limitations imposed by securities
laws generally, the Collateral pledged hereunder is and will be freely
transferable and assignable, and no portion of such Collateral is or will
be subject to any option, right of first refusal, shareholders agreement,
charter or by-law provision or contractual restriction of any nature that
might prohibit, impair, delay or otherwise affect the pledge of such
Collateral hereunder, the sale or disposition of the Collateral pursuant
hereto after the occurrence of an Event of Default or the exercise by the
Collateral Agent of its rights and remedies hereunder;
(e) each Pledgor (i) has the power and authority to pledge the
Collateral pledged by it hereunder in the manner hereby done or
contemplated and (ii) will defend its and the Collateral Agent's title or
interest thereto or therein (and in the proceeds thereof) against any and
all Liens (other than the Lien of this Agreement), however arising, of all
persons whomsoever;
(f) no consent or approval of any Governmental Authority or any
securities exchange was or is necessary to the validity of the pledge
effected hereby;
(g) by virtue of the execution and delivery by the Pledgors of this
Agreement, when the Pledged Securities, certificates, instruments or other
documents representing or evidencing the Collateral are delivered to the
Collateral Agent in accordance with this Agreement, the Collateral Agent
will obtain a legal, valid and perfected first priority security interest
in the Pledged Securities and the proceeds thereof, as security for the
payment and performance of the Obligations; and
(h) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein.
ARTICLE IV. REMEDIES
SECTION 4.01. REMEDIES UPON DEFAULT. If an Event of Default shall have
occurred and be continuing, the Collateral Agent may exercise, to the extent
permitted by law, all the rights of a secured party under the Uniform Commercial
Code of the State of New York (whether or not the Code is in effect in the
jurisdiction where such rights are exercised) and, in addition, the Collateral
Agent may, without being required to give any notice, except as herein provided
or as may be required by mandatory provisions of law, sell the Collateral, or
any part thereof, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of either Pledgor, and each Pledgor hereby waives (to
the extent permitted by law) all rights of redemption, stay, valuation and
appraisal that such Pledgor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give each Pledgor at least 10 days' prior
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of Collateral owned by such Pledgor. Such
notice, in the case of a public sale, shall state the time and place for such
sale and, in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the day
on which the Collateral, or portion thereof, will first be offered for sale at
such board or exchange and, in the case of a private sale, shall state the time
after which any such sale is to be made. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places as
the Collateral Agent may fix and state in the notice of such sale. At any such
sale, the Collateral, or portion thereof, to be sold may be sold in one lot as
an entirety or in separate parcels, as the Collateral Agent may (in its sole and
absolute discretion) determine. The Collateral Agent shall not be obligated to
make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid in full by the purchaser or purchasers thereof, but the
Collateral Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the
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Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. Subject to the terms of the Intercreditor Agreement, at
any public sale made pursuant to this Section 4.01, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of either Pledgor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to it from any Pledgor
as a credit against the purchase price, and the Collateral Agent may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further account ability to any Pledgor therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such
sale pursuant to such agreement, and none of the Pledgors shall be entitled to
the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full; PROVIDED, HOWEVER, that in the event the Obligations
shall have been paid in full, the Pledgors shall be entitled to the return of
the proceeds of the sale of any such Collateral to the extent not applied to
payment of the Obligations. As an alternative to exercising the power of sale
herein conferred upon it, the Collateral Agent may proceed by a suit or suits at
law or in equity to foreclose this Agreement and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 4.01 shall be
deemed to conform to the commercially reasonable standards as provided in
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions.
SECTION 4.02. APPLICATION OF PROCEEDS OF SALE. The proceeds of any sale of
Collateral pursuant to Section 4.01, as well as any Collateral consisting of
cash, shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by the
Agent or the Collateral Agent (in its capacity as such hereunder or under
any other Credit Transaction Document) in connection with such sale or
otherwise in connection with this Agreement, any other Credit Transaction
Document or any of the Obligations, including all court costs and the
fees, other charges and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or under
any other Credit Transaction Document on behalf of either of the Pledgors
and any other costs or expenses incurred in connection with the exercise
of any right or remedy hereunder or under any other Credit Transaction
Document;
SECOND, subject to the provisions of the Intercreditor Agreement, to
the Collateral Agent for distribution to the Participating Creditors as
provided in Article IV of the Intercreditor Agreement for the payment in
full of Indebtedness and satisfaction of the Obligations owed to the
Participating Creditors; and
THIRD, to the Pledgors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
Subject to the terms of the Intercreditor Agreement, the Collateral Agent shall
have absolute discretion as to the time of application of any such proceeds,
moneys or balances in accordance with this Agreement. Upon any sale of the
Collateral by the Collateral Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such officer or
be answerable in any way for the misapplication thereof.
SECTION 4.03. SECURITIES ACT, ETC. In view of the position of the Pledgors
in relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. The Pledgors
understand that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. The Pledgors recognize that in light of the foregoing restrictions and
limitations the Collateral Agent may, with respect to any sale of Pledged
Securities, limit the purchasers to those
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who will agree, among other things, to acquire Pledged Securities for their own
account, for investment, and not with a view to the distribution or resale
thereof. The Pledgors acknowledge and agree that, in light of the foregoing
restrictions and limitations, the Collateral Agent, in its sole and absolute
discretion, (a) may proceed to make such a sale whether or not a registration
statement for the purpose of registering the Pledged Securities or part thereof
shall have been filed under the Federal Securities Laws and (b) may approach and
negotiate with a single possible purchaser to effect such sale. The Pledgors
acknowledge and agree that any such sale might result in prices and other terms
less favorable to the seller than if such sale were a public sale without such
restrictions. In the event of any such sale, the Collateral Agent shall incur no
responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this Section
4.03 will apply notwithstanding the existence of a public or private market upon
which the quotations or sales prices may exceed substantially the price at which
the Collateral Agent sells.
SECTION 4.04. REGISTRATION, ETC. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Securities at a public
sale, it will, at any time and from time to time, upon the written request of
the Collateral Agent, take or cause the issuer of such Pledged Securities to
take such action and prepare, distrib ute and/or file such documents, as are
required or advisable in the reasonable opinion of counsel for the Collateral
Agent, to permit the public sale of such Pledged Securities. Each Pledgor
jointly and severally agrees to (a) indemnify, defend and hold harmless the
Collateral Agent, the other Secured Parties and their respective officers,
directors, affiliates and controlling persons from and against all losses,
liabilities, expenses, costs (including the reasonable fees and expenses of
legal counsel to the Collateral Agent and the Agent) and claims (including the
costs of investigation) that they may incur insofar as any such loss, liability,
expense, cost or claim arises out of or is based upon any alleged untrue
statement of a material fact contained in any prospectus, offering circular or
similar document (or any amendment or supplement thereto), or arises out of or
is based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements in any thereof not
misleading, except insofar as the same may have been caused by any untrue
statement or omission based upon information furnished in writing to any Pledgor
or the issuer of such Pledged Securities by the Collateral Agent or any other
Secured Party expressly for use therein, and (b) enter into an indemnification
agreement with any underwriter of or placement agent for any Pledged Securities,
on its standard form, to substantially the same effect. Each Pledgor further
agrees to use all reasonable efforts to qualify, file or register, or cause the
issuer of such Pledged Securities to qualify, file or register, any of the
Pledged Securities under the Blue Sky or other securities laws of such states as
may be requested by the Collateral Agent and keep effective, or cause to be kept
effective, all such qualifications, filings or registrations. The Pledgors will
jointly and severally bear all costs and expenses of carrying out their
obligations under this Section 4.04. The Pledgors acknowledge that there is no
adequate remedy at law for failure by them to comply with the provisions of this
Section 4.04 and that such failure would not be
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adequately compensable in damages, and therefore agree that their agreements
contained in this Section 4.04 may be specifically enforced.
ARTICLE V. MISCELLANEOUS
SECTION 5.01. NOTICES. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 10.01 of the Credit Agreement and Section 16.06 of the
Tranche A Exchange Note Purchase Agreements. All communications and notices
hereunder to the Collateral Agent shall be given to it at the address set forth
in Schedule II hereto.
SECTION 5.02. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent hereunder, the security interests granted hereunder and all obligations of
the Pledgors hereunder shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of any Credit Transaction Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from any
Credit Transaction Document or any other agreement or instrument, (c) any
exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations or (d) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, any Pledgor in respect of the Obligations or in respect of this
Agreement (other than the indefeasible payment in full of all the Obligations by
any of the Pledgors).
SECTION 5.03. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Pledgor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Credit Transaction Document shall be
considered to have been relied upon by the Secured Parties and shall survive the
making by the Lenders of the Loans, the making by the Swingline Lender of the
Swingline Loans and the acceptance by the Tranche A Exchange Note Purchasers of
the Tranche A Exchange Notes, and the execution and delivery to the Tranche A
Exchange Note Purchasers of the Tranche A Exchange Notes, and the issuance by
the Fronting Bank of any Letter of Credit, regardless of any investigation made
by the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on, or any other fee
or amount payable under or in respect of any Loan, Swingline Loan, Tranche A
Exchange Note or Letter of Credit, or this Agreement or, without duplication of
the foregoing, under any of the other Credit Transaction Documents is
outstanding and unpaid and so long as the Commitments and the LC Commitment have
not been terminated.
SECTION 5.04. BINDING EFFECT; ASSIGNMENTS. This Agreement shall become
effective as to any Pledgor when a counterpart hereof executed on behalf of any
Pledgor shall have been delivered to the Collateral Agent and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Pledgor and the Collateral Agent and their
respective successors and assigns, and shall inure to the benefit of the parties
hereto, and their respective successors and assigns, except that the Pledgors
shall not have the right to assign their rights hereunder or any interest herein
or in the Collateral, or any part thereof (and any such attempted assignment
shall be void), or otherwise pledge, encumber or grant any option with respect
to the Collateral, or any part thereof, or any cash or property held by the
Collateral Agent as Collateral under this Agreement except as expressly
contemplated by this Agreement or the other Credit Transaction Documents.
SECTION 5.05. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Pledgor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 5.06. POWER OF ATTORNEY. The Collateral Agent is hereby appointed
by the Pledgors, as the true and lawful agent and attorney-in-fact of each
Pledgor, and in such capacity the Collateral Agent shall have the right, with
power of substitution for the Pledgors and in each Pledgor's name or otherwise,
for the use and benefit of the Collateral Agent and the other Secured Parties,
upon the occurrence and during the continuance of an Event of Default, (a) to
receive, endorse, assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment representing any interest or
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dividend or other distribution payable in respect of the Collateral or any part
thereof; (b) to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (c) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (d) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (e) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; PROVIDED,
HOWEVER, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent or any other Secured Party to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent or any other Secured Party, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken or omitted to be taken by the
Collateral Agent or any other Secured Party with respect to the Collateral or
any part thereof shall give rise to any defense, counterclaim or offset in favor
of any Pledgor or to any claim or action against the Collateral Agent or any
other Secured Party.
SECTION 5.07. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION. (a)
Each Pledgor jointly and severally agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts or agents, that the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from
or other realization upon any of the Collateral, (iii) the exercise, enforcement
or protection of any of the rights of the Collateral Agent hereunder or (iv) the
failure of the Pledgors to perform or observe any of the provisions hereof. If
the Pledgors shall fail to do any act or thing that they have covenanted to do
hereunder or any representation or warranty of the Pledgors hereunder shall be
breached, the Collateral Agent may (but shall not be obligated to) do the same
or cause it to be done or remedy any such breach and there shall be added to the
Obligations the cost or expense incurred by the Collateral Agent in so doing.
(b) Without limitation of their indemnification obligations under the
other Credit Transaction Documents, each Pledgor jointly and severally agrees to
indemnify the Collateral Agent and the other Indemnities against, and hold each
of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses, incurred by or
asserted against any of them arising out of, in any way connected with, or as a
result of, the execution, delivery or performance of this Agreement or any
claim, litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not any Indemnitee is a party thereto, PROVIDED that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 5.07 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Credit Transaction Document or any investigation made by or on behalf of
the Collateral Agent or any other Secured Party. All amounts due under this
Section shall be payable on written demand therefor and shall bear interest at
the Alternate Base Rate (as defined in the Credit Agreement) plus 2%.
SECTION 5.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 5.09. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent or any other Secured Party in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Collateral Agent hereunder and of the other Secured Parties under the other
Credit Transaction Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Credit
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Transaction Document or consent to any departure by any Pledgor therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on any Pledgor
in any case shall entitle such Pledgor or any other Pledgor to any other or
further notice or demand in similar or other circumstances.
(b) Subject to the provisions of the Intercreditor Agreement, neither this
Agreement nor any provision hereof may be waived, amended or modified except
pursuant to a written agreement entered into among the Pledgors and the
Collateral Agent, with the prior written consent of the Required Lenders and the
Required Holders; PROVIDED, HOWEVER, that except as provided herein or in the
other Credit Transaction Documents, no such agreement shall amend, modify, waive
or otherwise adversely affect a Secured Party's rights and interests in any
material amount of the Collateral without the prior written consent of such
Secured Party.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT
TRANSACTION DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT TRANSACTION
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 5.10.
SECTION 5.11. SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement or in any other Credit Transaction Document should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions, the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 5.12. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Credit Transaction Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Credit
Transaction Documents against any Pledgor or its properties in the courts of any
jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Credit Transaction
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 5.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
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<PAGE>
SECTION 5.13. TERMINATION. This Agreement and the security interests
granted hereby shall terminate when all the Obligations have been indefeasibly
paid in full and the Lenders and the Swingline Lender have no further commitment
to lend under the Credit Agreement, no Letters of Credit are outstanding and the
Fronting Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
SECTION 5.14. HEADINGS. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 5.15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 5.04.
SECTION 5.16. INTERCREDITOR AGREEMENT. (a) The Collateral Agent agrees,
for itself and for each other Secured Party, that it and each other Secured
Party shall be bound by the terms of the Intercreditor Agreement in connection
with the administration of this Agreement.
(b) Each Pledgor hereby acknowledges receipt of a copy of and agrees to be
bound by the terms of the Intercreditor Agreement.
SECTION 5.17. REFERENCES TO CREDIT AGREEMENT. Upon the payment and
discharge in full of all outstanding Credit Agreement Obligations or all
outstanding Tranche A Exchange Note Purchase Obligations, all references herein
to the terms of the Credit Agreement or the Tranche A Exchange Note Purchase
Agreements, as the case may be, shall become null and void (other than
references for the purposes of incorporating herein definitions of terms used
therein, which terms will continue to have the meanings assigned thereto
immediately prior to such payment and discharge, subject to subsequent amendment
or modifications in accordance with the terms hereof).
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
TRAVELCENTERS OF AMERICA, INC.
by
-----------------------------
Name:
Title:
TA OPERATING CORPORATION,
by
-----------------------------
Name:
Title:
NATIONAL AUTO/TRUCKSTOPS, INC.,
by
-----------------------------
Name:
Title:
TA FRANCHISE SYSTEMS INC.,
by
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by
-----------------------------
Name:
Title:
12
<PAGE>
EXHIBIT K
SECURITY AGREEMENT dated as of March 27, 1997, among
TRAVELCENTERS OF AMERICA, INC., a Delaware corporation (the
"BORROWER"), TA OPERATING CORPORATION, a Delaware corporation
("TA"), NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware corporation
("NATIONAL"), and TA FRANCHISE SYSTEMS, INC., a Delaware corporation
("TAFSI", and, together with TA, National and the Borrower, the
"GRANTORS"), and THE CHASE MANHATTAN BANK, a New York banking
corporation ("CHASE"), as collateral agent (in such capacity, the
"COLLATERAL AGENT") for the Secured Parties (as defined herein).
Reference is made to (a) the Master Collateral and Intercreditor Agreement
dated as of March 27, 1997 (as amended or modified from time to time, the
"INTERCREDITOR AGREEMENT"), among the Participating Creditors (as defined in the
Intercreditor Agreement) and the Collateral Agent and countersigned by the
Grantors; (b) the Credit Agreement dated as of March 21, 1997 (as amended or
modified from time to time, the "CREDIT AGREEMENT"), among the Borrower, the
financial institutions party thereto, as lenders (the "LENDERS"), and Chase, as
agent (in such capacity, the "AGENT"), and as fronting bank (in such capacity,
the "FRONTING BANK") and as swingline lender (in such capacity, the "SWINGLINE
LENDER"; and (c) the Senior Secured Note Exchange Agreements, each dated as of
March 21, 1997 (as amended or modified from time to time, the "TRANCHE A
EXCHANGE NOTE PURCHASE AGREEMENTS"), among the Borrower and the Tranche A
Exchange Note Purchasers named therein.
The Lenders, the Fronting Bank and the Swingline Lender, respectively,
have agreed to make Loans to the Borrower, to issue Letters of Credit for the
account of the Borrower and to make Swingline Loans to the Borrower pursuant to,
and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Tranche A Exchange Note Purchasers have agreed to accept
$35,500,000 aggregate principal amount of the Borrower's 8.94% Series I Senior
Secured Notes due 2002 (the "SERIES I TRANCHE A EXCHANGE NOTES") and $50,000,000
aggregate principal amount of the Borrower's Series II Senior Secured Notes due
2005 (the "SERIES II TRANCHE A EXCHANGE NOTES" and, together with the Series I
Tranche A Exchange Notes, the "TRANCHE A EXCHANGE NOTES") in exchange for (i)
$65,000,000 aggregate principal amount of the outstanding 8.76% Senior Secured
Notes due 2002 of National (the "NATIONAL SENIOR NOTES") and (ii) $20,500,000
aggregate principal amount of the outstanding 8.63% Senior Secured Notes due
2002 of TA (the "TA SENIOR NOTES" and, together with the National Senior Notes,
the "EXISTING SENIOR NOTES") held by them pursuant to, and upon the terms and
conditions specified in, the Tranche A Exchange Note Purchase Agreements.
The obligations of the Lenders to make Loans, of the Fronting Bank to
issue Letters of Credit and of the Swingline Lender to make Swingline Loans
under the Credit Agreement and the obligations of the Tranche A Exchange Note
Purchasers to accept the Tranche A Exchange Notes in exchange for the Existing
Senior Notes held by them pursuant to the Tranche A Exchange Note Purchase
Agreements are conditioned upon, among other things, the execution and delivery
by the Grantors of a security agreement in the form hereof to secure (a) the due
and punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, the Swingline Loans and the Tranche
A Exchange Notes, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (ii) each payment required to
be made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise,
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) of the Borrower to the Secured Parties
under the Credit Agreement, the Tranche A Exchange Note Purchase Agreements,
this Agreement and the other Credit Transaction Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement, the Tranche A
Exchange Note Purchase Agreements and the other Credit Transaction Documents,
(c) the due and punctual payment and performance of all the covenants,
agreements, obligations and liabilities of each Grantor under or pursuant to the
Credit Transaction Documents to which such Grantor is a party and (d) the due
and punctual payment and performance of all obligations of the Borrower,
monetary or otherwise, under each Rate Protection Agreement entered into with a
counterparty that was a Lender (or an Affiliate of a Lender) at the time such
Rate Protection Agreement was entered into (all the obligations referred to in
the preceding clauses (a) through (d) being referred to collectively as the
"OBLIGATIONS"). All capitalized terms used but not defined herein shall have the
meanings set forth in the other Transaction Documents.
<PAGE>
Accordingly, the Grantors and the Collateral Agent, on behalf of itself,
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITION OF CERTAIN TERMS USED HEREIN. As used herein, the
following terms shall have the following meanings:
"ACCOUNT DEBTOR" shall mean any person who is or who may become obligated
to the Grantors under, with respect to or on account of an Account.
"ACCOUNTS" shall mean, with respect to the Grantors, any and all right,
title and interest of any Grantor to payment for goods and services sold or
leased (exclusive of any liabilities of the Grantors with respect thereto),
including any such right evidenced by chattel paper, whether due or to become
due, whether or not it has been earned by performance, and whether now or
hereafter acquired or arising in the future, including, without limitation,
accounts receivable from Affiliates of the Grantors.
"ACCOUNTS RECEIVABLE" shall mean, with respect to the Grantors, all right,
title and interest of any Grantor to Accounts and all of any Grantor's right,
title and interest in any returned goods, together with all rights, titles,
securities and guaranties with respect thereto, including any rights to stoppage
in transit, replevin, reclamation and resales, and all related security
interests, liens and pledges, whether voluntary or involuntary and any and all
right, title and interest of any Grantor (i) to all payments arising out of the
Franchise Agreements and (ii) to rents receivable arising out of the operating
leases entered into between Network Operators and any Grantor pursuant to
Section 7.08 of the Credit Agreement and Section 7.8 of the Tranche A Exchange
Note Purchase Agreements, whether due or to become due, whether now or hereafter
arising in the future.
"ASSIGNED CONTRACTS" shall have the meaning assigned to such term in the
Collateral Assignment.
"COLLATERAL" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment (including, without limitation, Fixtures), (d) General Intangibles,
(e) Inventory, (f) Proceeds and (g) Collection Deposit Accounts and all other
cash and cash accounts.
"COLLATERAL ASSIGNMENT" shall have the meaning assigned to such term in
the Credit Agreement.
"COLLECTION DEPOSIT ACCOUNT" shall mean a lockbox account of any Grantor
maintained for the benefit of the Secured Parties with the Collateral Agent
pursuant to Article V or with a Sub-Agent pursuant to a Lockbox Agreement.
"CREDIT AGREEMENT" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"CREDIT TRANSACTION DOCUMENTS" shall mean the Loan Documents (as defined
in the Credit Agreement) and the Financing Documents (as defined in the Tranche
A Exchange Note Purchase Agreements).
"DEFAULT" shall mean any "Default" as defined in the Credit Agreement and
any "Default" as defined in the Tranche A Exchange Note Purchase Agreements.
"DOCUMENTS" shall mean all instruments, files, records, ledger sheets and
documents covering or relating to any of the Collateral.
"EQUIPMENT" shall mean all equipment, furniture and furnishings, storage
and handling equipment, automotive equipment, motor vehicles, trucks, trailers,
and parts thereof and all tangible personal property similar to any of the
foregoing, including tools, parts and supplies of every kind and description,
and all improvements, accessions or appurtenances thereto, that are now or
hereafter owned by any Grantor. The term "Equipment" shall include Fixtures.
2
<PAGE>
"EVENT OF DEFAULT" shall mean any "Event of Default" as defined in the
Credit Agreement and any "Event of Default" as defined in the Tranche A Exchange
Note Purchase Agreement.
"FIXTURES" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"FRANCHISE AGREEMENTS" shall have the meaning assigned to such term in the
Credit Agreement and the Tranche A Exchange Note Purchase Agreements.
"GENERAL INTANGIBLES" shall mean all choses in action and causes of action
and all other assignable intangible personal property of any Grantor of every
kind and nature (other than Accounts Receivable) now owned or hereafter acquired
by any Grantor, including corporate or other business records, indemnification
claims, contract rights (including rights under leases, whether entered into as
lessor or lessee, Rate Protection Agreements, the Assigned Contracts and other
agreements (including the right to deliver any notice required under the
Subordinated Note Intercreditor Agreement in the event that the Borrower fails
to do so), but excluding rights under any agreement (other than the Assigned
Contracts and the Rate Protection Agreements) in existence on the date hereof as
to which the granting of the securing interest granted hereby would constitute a
breach), Intellectual Property, goodwill, registrations, franchises, tax refund
claims and any letter of credit, guarantee, claim, security interest or other
security held by or granted to any Grantor to secure payment by an account
debtor of any of the Accounts Receivable.
"INDEMNITEE" shall mean any "Indemnitee" as defined in the Credit
Agreement and any "Indemnitee" as defined in the Tranche A Exchange Note
Purchase Agreements.
"INVENTORY" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"INTELLECTUAL PROPERTY" shall mean all intellectual and similar property
of any Grantor of every kind and nature now owned or hereafter acquired by any
Grantor, including inventions, designs, patents, patent applications,
copyrights, copyright registrations, applications to register copyrights,
Licenses, trademarks (including service marks), trademark or service mark
applications, trade names, trade secrets, confidential or proprietary technical
and business information, know-how, show-how or other data or information,
software and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements and
accessions to, and books and records describing or used in connection with, any
of the foregoing.
"LICENSE" shall mean any patent license, copyright license or other
license or sublicense to which any Grantor is or becomes a party, including
those listed on Schedule I (other than those license agreements in existence as
of the date hereof and listed on Schedule I, and those license agreements
entered into after the date hereof, that by their terms prohibit assignment or a
grant of a security interest by such Grantor as licensee thereun der).
"LOCKBOX AGREEMENTS" shall mean the lockbox agreements among any Grantor,
the Collateral Agent and a Sub-Agent (as defined in each Lockbox Agreement),
substantially in the form of Annex 1 hereto or in such other form as the
Collateral Agent may specify.
"NETWORK OPERATORS" shall have the meaning assigned thereto in the Credit
Agreement and the Tranche A Exchange Note Purchase Agreements.
"OBLIGATIONS" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"PERFECTION CERTIFICATE" shall mean the Perfection Certificate
substantially in the form of Annex 2 hereto, prepared by the Grantors.
3
<PAGE>
"PROCEEDS" shall mean any consideration received from the sale, exchange,
license, lease or other disposition of any asset or property that constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property that constitutes
Collateral, and shall include (a) all cash and negotiable instruments received
or held on behalf of the Collateral Agent pursuant to the Lockbox Agreements or
any other lockbox or similar arrangement relating to the payment of Accounts
Receivable and Inventory and (b) any claim of any Grantor against any third
party for (and the right to sue and recover for and the rights to damages or
profits due or accrued arising out of or in connection with) (i) past, current
or future infringement of any patent now or hereafter owned by any Grantor or
licensed under a patent license, (ii) past, current or future breach of any
License, (iii) past, current or future infringement of any copyright now or
hereafter owned by any Grantor or licensed under a copyright license and (iv)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"REQUIRED HOLDERS" shall have the meaning set forth in the Tranche A
Exchange Note Purchase Agreements.
"REQUIRED LENDERS" shall have the meaning set forth in the Credit
Agreement.
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Fronting Bank, (c)
the Agent, (d) the Collateral Agent, (e) the Tranche A Exchange Note Purchasers,
(f) the Swingline Lender and (g) the successors and assigns of each of the
foregoing.
"SECURITY INTEREST" shall have the meaning assigned to such term in
Section 2.01.
"SUB-AGENT" shall mean a financial institution that shall have delivered
to the Collateral Agent an executed Lockbox Agreement.
SECTION 1.02. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
SECURITY INTEREST
SECTION 2.01. SECURITY INTEREST. As security for the payment or
performance, as the case may be, of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and its assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, a
security interest in, all of such Grantor's right, title and interest in, to and
under the Collateral (the "SECURITY INTEREST"). Without limiting the foregoing,
the Collateral Agent is hereby authorized to file one or more financing
statements (including fixture filings), continuation statements, filings with
the United States Patent and Trademark Office or United States Copyright Office
(or any successor office or any similar office in any other country) or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by each Grantor, without the signature
of any Grantor, naming any Grantor or the Grantors as debtors and the Collateral
Agent as secured party.
Each Grantor agrees at all times to keep accurate and complete accounting
records with respect to the Collateral, including a record of all payments and
Proceeds received in respect thereof.
SECTION 2.02. NO ASSUMPTION OF LIABILITY. The Security Interest is granted
as security only and shall not subject the Collateral Agent or any other Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of any of the Collateral.
4
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantors jointly and severally represent and warrant to and with the
Collateral Agent and each other Secured Party that:
SECTION 3.01. TITLE AND AUTHORITY. Each Grantor has good and valid rights
in and title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval that has been obtained.
SECTION 3.02. FILINGS. The Perfection Certificate has been duly prepared,
completed and executed and the information set forth therein is correct and
complete. Fully executed Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations containing a description of the Collateral have been delivered to
the Collateral Agent for filing in each governmental, municipal or other office
specified in Schedule 6 to the Perfection Certificate, which are all the
filings, recordings and registrations that are necessary to publish notice of
and protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the benefit of the
Secured Parties) in respect of all Collateral in which the Security Interest may
be perfected by filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.
SECTION 3.03. VALIDITY OF SECURITY INTEREST. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations and (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions.
The Security Interest is and shall be prior to any other Lien on any of the
Collateral, other than Liens expressly permitted to be prior to the Security
Interest pursuant to Section 7.02 of the Credit Agreement and Section 7.2 of the
Tranche A Exchange Note Purchase Agreements.
SECTION 3.04. ABSENCE OF OTHER LIENS. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 7.02 of the Credit Agreement and Section 7.2 of the Tranche
A Exchange Note Purchase Agreements. Other than as contemplated hereby or by the
Trademark Security Agreement, no Grantor has filed or consented to the filing of
(a) any financing statement or analogous document under the Uniform Commercial
Code or any other applicable laws covering any Collateral, (b) any assignment in
which any Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with the United States Patent and Trademark
Office or the United States Copyright Office nor (c) any assignment in which any
Grantor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with any foreign governmental, municipal or other
office.
ARTICLE IV
COVENANTS
SECTION 4.01. CHANGE OF NAME; LOCATION OF COLLATERAL; RECORDS; PLACE OF
BUSINESS. (a) Each Grantor agrees promptly to notify the Collateral Agent of any
change (i) in its corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral owned by it is located (including
the establishment of any such new office or facility) or (iii) in its identity
or corporate structure. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected security interest in all the Collateral. Each Grantor agrees
promptly to notify the Collateral Agent if any material portion of the
Collateral is damaged or destroyed.
5
<PAGE>
(b) Each Grantor agrees to maintain, at its own cost and expense, complete
and accurate records with respect to the Collateral owned by it and, at such
time or times as the Collateral Agent may request, promptly to prepare and
deliver to the Collateral Agent a duly certified schedule or schedules in form
and detail satisfactory to the Collateral Agent showing the identity, amount and
location of any and all Collateral.
SECTION 4.02. PERIODIC CERTIFICATION. Each year, at the time of delivery
of annual financial statements with respect to the preceding fiscal year
pursuant to Section 6.04 of the Credit Agreement and Section 6.4 of the Tranche
A Exchange Note Purchase Agreements, each Grantor shall deliver to the
Collateral Agent a certificate executed by a Financial Officer and the chief
legal officer of such Grantor (a) setting forth the information required
pursuant to Section 2 of the Perfection Certificate, (b) certifying that all
Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations, including
all refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (a) above
to the extent necessary to protect and perfect the Security Interest for a
period of not less than 18 months after the date of such certificate, (c)
setting forth, with respect to each filing, recording or registration (including
each refiling, rerecording or reregistration) made since the date of the
Perfection Certificate or the most recent certificate delivered pursuant to this
Section 4.02, the filing office, date and file number thereof and (d) attaching
true, correct and complete acknowledgement copies of each such filing, recording
or registration not theretofore delivered to the Collateral Agent.
SECTION 4.03. PROTECTION OF SECURITY. Each Grantor shall, at its own cost
and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted under the Credit Agreement and the Tranche A Exchange Note
Purchase Agreements.
SECTION 4.04. FURTHER ASSURANCES. Each Grantor agrees, at its expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collat eral Agent or
any of the other Secured Parties may from time to time request to better assure,
preserve, protect and perfect the Security Interest and the rights and remedies
created hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting of
the Security Interest and the filing of any financing statements (including
fixture filings) or other documents in connection herewith. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any promissory note or other instrument, such note or instrument
shall (to the extent not previously pledged and delivered pursuant to the Pledge
Agreement) be immediately pledged and delivered to the Collateral Agent, duly
endorsed in a manner satisfactory to the Collateral Agent.
SECTION 4.05. INSPECTION AND VERIFICATION. The Collateral Agent and such
persons as the Collateral Agent may reasonably designate shall have the right,
at any reasonable time or times and at the Grantor's own cost and expense, to
inspect the Collateral, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Collateral is
located, to discuss any of the Grantors' affairs with the officers of such
Grantor and its independent accountants and to verify under reasonable
procedures the validity, amount, quality, quantity, value, condition and status
of or any other matter relating to, the Collateral, including, in the case of
Accounts or Collateral in the possession of any third party, by contacting
Account Debtors or the third party possessing such Collateral for the purpose of
making such a verification. The Collateral Agent shall have the absolute right
to share any information it gains from such inspection or verification with any
other Secured Party.
SECTION 4.06. TAXES; ENCUMBRANCES. At its option, the Collateral Agent may
discharge past due taxes, assessments, charges, fees, liens, security interests
or other encumbrances at any time levied or placed on the Collateral and not
permitted under the Credit Transaction Documents, and may pay for the
maintenance and preservation of the Collateral to the extent any Grantor fails
to do so as required by this Agreement or the other Credit Transaction
Documents, and such Grantor agrees to reimburse the Collateral Agent on demand
for any payment made or any expense incurred by the Collateral Agent pursuant to
the foregoing authorization; PROVIDED, HOWEVER, that nothing in this Section
4.06 shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on, the Collateral Agent or any other Secured Party to
cure or perform, any covenants or other promises of the Grantors with respect to
taxes, assessments, charges, fees, liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Credit
Transaction Documents.
SECTION 4.07. ASSIGNMENT OF SECURITY INTEREST. If at any time any Grantor
shall take and perfect a secu rity interest in any property of an Account Debtor
or any other person to secure payment and performance of an Account, such
Grantor shall promptly assign such security interest to the Collateral Agent.
Such assignment need
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not be filed of public record unless necessary to continue the perfected status
of the security interest against creditors of and transferees from the Account
Debtor or other person granting the security interest.
SECTION 4.08. CONTINUING OBLIGATIONS OF THE GRANTORS. The Grantors shall
remain liable to, at their own cost and expense, duly and punctually, observe
and perform all the conditions and obligations to be observed and performed by
them under each contract, agreement or instrument relating to the Collateral,
all in accordance with the terms and conditions thereof, and each Grantor agrees
to indemnify and hold harmless the Collateral Agent and the other Secured
Parties from and against any and all liability for such performance.
SECTION 4.09. USE AND DISPOSITION OF COLLATERAL. The Grantors may use but
not dispose of the Collateral in any lawful manner not inconsistent with the
provisions of this Agreement, the Credit Agreement, the Tranche A Exchange Note
Purchase Agreements or any other Credit Transaction Document, except that the
Grantors may dispose of Collateral to the extent expressly permitted by
provisions of the Credit Transaction Documents. Without limiting the generality
of the foregoing, each Grantor agrees that it shall not permit any Inventory to
be in the possession or control of any warehouseman, bailee, agent or processor
at any time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in a writing in form and
substance reasonably satisfactory to the Collateral Agent to hold the Inventory
subject to the Security Interest and the instructions of the Collateral Agent
and to waive and release any Lien held by it with respect to such Inventory,
whether arising by operation of law or otherwise.
SECTION 4.10. LIMITATION ON MODIFICATION OF ACCOUNTS. No Grantor will,
without the Collateral Agent's prior written consent, grant any extension of the
time of payment of any of the Accounts Receivable, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof or allow any credit or
discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business.
After a Default or an Event of Default shall have occurred and during the
continuance thereof, the Collateral Agent may notify the Grantors not to grant
or make any such extension, credit, discount, compromise, or settlement under
any circumstances without its prior written consent.
ARTICLE V
COLLECTIONS
SECTION 5.01. COLLECTION DEPOSIT ACCOUNTS. (a) On and after the Closing
Date, each Grantor agrees to establish and maintain one or more Collection
Deposit Accounts with the Collateral Agent or with any financial institution
that (i) is satisfactory to the Collateral Agent and (ii) enters into a Lockbox
Agreement.
(b) Unless and until the Collection Deposit Accounts are converted to
closed lockbox accounts pursuant to paragraph (c) below, each Grantor may at any
time withdraw any of the funds contained in a Collection Deposit Account of such
Grantor for use, subject to the provisions of the Credit Transaction Documents,
for general corporate purposes.
(c) Effective upon notice to the Grantors from the Collateral Agent after
the occurrence and during the continuance of an Event of Default (which notice
may be given by telephone if promptly confirmed in writing), each Collection
Deposit Account will, without any further action on the part of any Grantor, the
Collateral Agent or any Sub-Agent, convert into a closed lockbox account under
the exclusive dominion and control of the Collateral Agent in which funds are
held subject to the rights of the Collateral Agent hereunder. No Grantor shall
thereafter have any right or power to withdraw any funds from any Collection
Deposit Account without the prior written consent of the Collateral Agent until
all Events of Default are cured or waived. The Grantors irrevocably authorize
the Collateral Agent to notify each Sub-Agent (i) of the occurrence of an Event
of Default and (ii) of the matters referred to in this paragraph (c). Following
the occurrence of an Event of Default, the Collateral Agent may instruct each
Sub-Agent to transfer immediately all funds held in each Collection Deposit
Account to an account maintained with the Collateral Agent.
SECTION 5.02. COLLECTIONS. (a) From and after the Closing Date, each
Grantor agrees to notify and direct promptly each Account Debtor and every other
person obligated to make payments with respect to the Accounts Receivable,
Inventory and Assigned Contracts to make all such payments to a Collection
Deposit Account established by it. Each Grantor shall use all reasonable efforts
to cause each Account Debtor and every other person
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identified in the preceding sentence to make all payments with respect to the
Accounts Receivable, Inventory and Assigned Contracts directly to such
Collection Deposit Account.
(b) In the event that any Grantor directly receives any remittances on
Accounts Receivable, Inventory, or with respect to the Assigned Contracts,
notwithstanding the arrangements for payment directly into the Collection
Deposit Accounts, such remittances shall be held in trust for the benefit of the
Collateral Agent and the other Secured Parties and shall be segregated from
other funds of such Grantor, subject to the Security Interest granted hereby,
and such Grantor shall cause such remittances and payments to be deposited into
the applicable Collection Deposit Account as soon as practicable after such
Grantor's receipt thereof.
SECTION 5.03. POWER OF ATTORNEY. The Collateral Agent is hereby appointed
by the Grantors as the true and lawful agent and attorney-in-fact of each
Grantor, and in such capacity the Collateral Agent shall have the right, with
power of substitution for the Grantors and in each Grantor's name or otherwise,
for the use and benefit of the Collateral Agent and the other Secured Parties,
upon the occurrence and during the continuance of an Event of Default, (a) to
receive, endorse, assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to the Collateral or
any part thereof; (b) to demand, collect, receive payment of, give receipt for
and give discharges and releases of all or any of the Collateral; (c) to sign
the name of any Grantor on any invoice or bill of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to any Account
Debtor; (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (f) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the Collateral; (g)
to notify, or to require the Grantors to notify, Account Debtors to make payment
directly to the Collateral Agent; and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; PROVIDED,
HOWEVER, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent or any other Secured Party to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent or any other Secured Party, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken or omitted to be taken by the
Collateral Agent or any other Secured Party with respect to the Collateral or
any part thereof shall give rise to any defense, counterclaim or offset in favor
of any Grantor or to any claim or action against the Collateral Agent or any
other Secured Party. It is understood and agreed that the appointment of the
Collateral Agent as the agent and attorney-in-fact of the Grantors for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Section 5.03 shall in no event relieve any Grantor of any of
its obligations hereunder or under the other Credit Transaction Documents with
respect to the Collateral or any part thereof or impose any obligation on the
Collateral Agent or any other Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any other Secured Party of any other or
further right that it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Credit Transaction Document, by law or
otherwise. Any sale pursuant to the provisions of this Section 5.03 shall be
deemed to conform to the commercially reasonable standards as provided in
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions.
ARTICLE VI
REMEDIES
SECTION 6.01. REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right (subject to applicable law) to take any of
or all the following actions at the same or different times: (a) with respect to
any Collateral consisting of Intellectual Property, on demand, to cause the
Security Interest to become an assignment, transfer and conveyance of any of or
all such Collateral by such Grantor to the Collateral Agent, or to license or,
to the extent permitted by applicable law, sublicense, whether general, special
or otherwise, and whether on an exclusive or non-exclusive basis, any such
Collateral throughout the world on such terms and conditions and in such manner
as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent that waivers cannot be
obtained), and (b) with or without legal process and with or without previous
notice or demand for performance, to take possession of the Collateral (and
temporary possession of any non-Collateral in connection with any such
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repossession, with the right to store, at the Grantors' expense and risk, such
non-Collateral) and without liability for trespass to enter any premises where
the Collateral may be located for the purpose of taking possession of or
removing the Collateral and, generally, to exercise any and all rights afforded
to a secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of such Grantors, and each Grantor hereby waives (to
the fullest extent permitted by applicable law) all rights of redemption, stay
and appraisal that such Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reason able notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public sale made pursuant to this Section 6.01, any Secured Party
may bid for or purchase, free (to the fullest extent permitted by applicable
law) from any right of redemption, stay, valuation or appraisal on the part of
any Grantor (all said rights being also hereby waived and released to the extent
permitted by law), the Collateral or any part thereof offered for sale and may
make payment on account thereof by using any claim then due and payable to such
Secured Party from any Grantor as a credit against the purchase price, and such
Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to such Grantor
therefor. For purposes hereof, a written agreement to purchase the Collateral or
any portion thereof shall be treated as a sale thereof; the Collateral Agent
shall be free to carry out such sale pursuant to such agreement and no Grantor
shall be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Obligations paid in full; PROVIDED, HOWEVER, that in the event the
obligations shall have been paid in full, the Grantors shall be entitled to the
return of the proceeds of the sale of any such Collateral to the extent not
applied to payment of the Obligations. As an alternative to exercising the power
of sale herein conferred upon it, the Collateral Agent may proceed by a suit or
suits at law or in equity to foreclose this Agreement and to sell the Collateral
or any portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 6.01 shall be
deemed to conform to the commercially reasonable standards as provided in
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions.
SECTION 6.02. APPLICATION OF PROCEEDS. The Collateral Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Agent or the Collateral Agent (in its capacity as such hereunder or under
any other Credit Transaction Document) in connection with such collection
or sale or otherwise in connection with this Agreement or any of the
Obligations, includ ing all court costs and the fees, other charges and
expenses of its agents and legal counsel, the repayment
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of all advances made by the Collateral Agent hereunder or under any other
Credit Transaction Document on behalf of the Grantors and any other costs
or expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Credit Transaction Document;
SECOND, subject to the provisions of the Intercreditor Agreement, to
the Collateral Agent for distribution to the Participating Creditors (as
defined in the Intercreditor Agreement) as provided in Article IV of the
Intercreditor Agreement for the payment in full of Indebtedness and
satisfaction of the Obligations owed to the Participating Creditors; and
THIRD, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
Subject to the terms of the Intercreditor Agreement, the Collateral Agent shall
have absolute discretion as to the time of application of any such proceeds,
moneys or balances in accordance with this Agreement. Upon any sale of the
Collateral by the Collateral Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt by the
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such officer or
be answerable in any way for the misapplication thereof.
SECTION 6.03. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Section 6.03 at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to use, license or
sub-license any of the Collateral consisting of Intellectual Property now owned
or hereafter acquired by such Grantor, and wherever the same may be located, and
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof. The use of such license
by the Collateral Agent shall be exercised, at the option of the Collateral
Agent, upon the occurrence and during the continuation of an Event of Default,
provided that any license, sub-license or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 10.01 of the Credit Agreement and Section 16.6 of the
Tranche A Exchange Note Purchase Agreements. All communications and notices
hereunder to the Collateral Agent shall be given to it at its address set forth
in Schedule II hereto.
SECTION 7.02. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of any Credit Transaction Document, any agreement
with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations or any other
amendment or waiver of or any consent to any departure from any Credit
Transaction Document or any other agreement or instrument, (c) any exchange,
release or non-perfection of any Lien on other Collateral, or any release or
amendment or waiver of or consent under or departure from any Guarantee,
securing or guaranteeing all or any of the Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or in respect of this
Agreement (other than the indefeasible payment in full of all the Obligations by
such Grantor).
SECTION 7.03. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Credit Transaction Document shall be
considered to have been relied upon by the Secured Parties and shall survive the
making by the Lenders of the Loans, the making by the Swingline Lender of the
Swingline Loans and the acceptance by the Tranche A Exchange Note Purchasers of
the Tranche A Exchange Notes, the execution and delivery to the Tranche A
Exchange Note Purchasers of the Tranche A
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Exchange Notes, and the issuance by the Fronting Bank of any Letter of Credit,
regardless of any investigation made by the Secured Parties or on their behalf,
and shall continue in full force and effect as long as the principal of or any
accrued interest on, or any other fee or amount payable under or in respect of,
any Loan, Swingline Loan, Tranche A Exchange Note or Letter of Credit, or this
Agreement or, without duplication of the foregoing, under any of the other
Credit Transaction Documents is outstanding and unpaid and so long as the
Commitments and the LC Commitment have not been terminated.
SECTION 7.04. BINDING EFFECT; ASSIGNMENTS. This Agreement shall become
effective as to any Grantor when a counterpart hereof executed on behalf of such
Grantor shall have been delivered to the Collateral Agent and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Grantor and the Collateral Agent and their
respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign
its rights hereunder or any interest herein or in the Collateral (and any such
attempted assignment shall be void) except as expressly contemplated by this
Agreement or the other Credit Transaction Documents.
SECTION 7.05. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION. (a)
Each Grantor jointly and severally agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts or agents, that the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from
or other realization upon any of the Collateral, (iii) the exercise, enforcement
or protection of any of the rights of the Collateral Agent hereunder or (iv) the
failure of the Grantors to perform or observe any of the provisions hereof. If
any Grantor shall fail to do any act or thing that it has covenanted to do
hereunder or any representation or warranty of any Grantor hereunder shall be
breached, the Collateral Agent may (but shall not be obligated to) do the same
or cause it to be done or remedy any such breach and there shall be added to the
Obligations the cost or expense incurred by the Collateral Agent in so doing.
(b) Without limitation of its indemnification obligations under the other
Credit Transaction Documents, each Grantor jointly and severally agrees to
indemnify the Collateral Agent and the other Indemnitees against, and hold each
of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses, incurred by or
asserted against any of them arising out of, in any way connected with, or as a
result of, the execution, delivery or performance of this Agreement or any
claim, litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Credit Transaction Document or any investigation made by or on behalf of
the Collateral Agent or any other Secured Party. All amounts due under this
Section 7.06 shall be payable on written demand therefor and shall bear interest
at the Alternate Base Rate (as defined in the Credit Agreement) plus 2%.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent or any other Secured Party in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Collateral Agent hereunder and of the other Secured Parties under the other
Credit Transaction Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Credit Transaction Document or consent to any departure
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by the Grantors therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Grantor in any case shall entitle such Grantor or the
any other Grantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into by the Grantors
and the Collateral Agent, with the prior written consent of the Required Lenders
and the Required Holders; PROVIDED, HOWEVER, that except as provided herein or
in the other Credit Transaction Documents, no such agreement shall amend,
modify, waive or otherwise adversely affect a Secured Party's rights and
interests in any material amount of the Collateral without the prior written
consent of such Secured Party.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT
TRANSACTION DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT TRANSACTION
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement or in any other Credit Transaction Document should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions, the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.11. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Credit Transaction Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Credit
Transaction Documents against any Grantor or its properties in the courts of any
jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Credit Transaction
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 7.12. TERMINATION OR RELEASE. (a) This Agreement and the Security
Interest shall terminate when all the Obligations have been indefeasibly paid in
full and the Lenders and the Swingline Lender have no further commitment to lend
under the Credit Agreement, no Letters of Credit are outstanding and the
Fronting Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
12
<PAGE>
(b) Upon any sale by any Grantor of any Collateral that is permitted under
the Credit Agreement and the Tranche A Exchange Note Purchase Agreements
(including releases in connection with any disposition of Collateral pursuant to
Sections 7.03 and 7.05 of the Credit Agreement, Sections 9 and 10 of the
Guarantee Agreement and Sections 7.3 and 7.5 of the Tranche A Exchange Note
Purchase Agreements), or, subject to the terms of the Intercreditor Agreement,
upon the effectiveness of any written consent to the release of the Security
Interest in any Collateral pursuant to Section 10.08 of the Credit Agreement and
Section 13 of the Tranche A Exchange Note Purchase Agreements, the Security
Interest in such Collateral shall be automatically released.
(c) In connection with any termination or release pursuant to paragraphs
(a) and (b), the Collateral Agent shall execute and deliver to such Grantor, at
such Grantor's expense, all Uniform Commercial Code termination statements and
similar documents that such Grantor shall reasonably request to evidence such
termination or release. Any execution and delivery of termination statements or
documents pursuant to this Section 7.12 shall be without recourse to or warranty
by the Collateral Agent.
SECTION 7.13. HEADINGS. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective as
provided in Section 7.04.
SECTION 7.15. INTERCREDITOR AGREEMENT. (a) The Collateral Agent agrees,
for itself and for each other Secured Party, that it and each other Secured
Party shall be bound by the terms of the Intercreditor Agreement in connection
with the administration of this Agreement.
(b) Each Grantor hereby acknowledges receipt of a copy of and agrees to be
bound by the terms of the Intercreditor Agreement.
SECTION 7.16. REFERENCES TO CREDIT AGREEMENT. Upon the payment and
discharge in full of all outstanding Credit Agreement Obligations or all
outstanding Tranche A Exchange Note Obligations, all references herein to the
terms of the Credit Agreement or the Tranche A Exchange Note Purchase
Agreements, as the case may be, shall become null and void (other than
references for the purpose of incorporating herein definitions of terms used
therein, which terms will continue to have the meanings assigned thereto
immediately prior to such payment and discharge, subject to subsequent amendment
or modifications in accordance with the terms hereof).
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
TRAVELCENTERS OF AMERICA, INC.,
by
---------------------------------------
Name:
Title:
TA OPERATING CORPORATION,
by
---------------------------------------
Name:
Title:
NATIONAL AUTO/TRUCKSTOPS, INC.,
by
---------------------------------------
Name:
Title:
TA FRANCHISE SYSTEMS INC.,
by
---------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by
---------------------------------------
Name:
Title:
14
<PAGE>
EXHIBIT L
TRADEMARK SECURITY AGREEMENT dated as of March 27, 1997,
among TRAVELCENTERS OF AMERICA, INC., a Delaware corporation
(the "BORROWER"), TA OPERATING CORPORATION, a Delaware
corporation ("TA"), NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware
corporation ("NATIONAL"), TA FRANCHISE SYSTEMS, INC., a
Delaware corporation ("TAFSI", and, together with the
Borrower, TA and National, the "GRANTORS"), and THE CHASE
MANHATTAN BANK, a New York banking corporation ("CHASE"), as
collateral agent (in such capacity, the ("COLLATERAL AGENT")
for the Secured Parties (as defined herein).
Reference is made to (a) the Master Collateral and Intercreditor
Agreement dated as of March 27, 1997 (as amended or modified from time to time,
the "INTERCREDITOR AGREEMENT"), among the Participating Creditors (as defined
therein) and the Collateral Agent and countersigned by the Grantors; (b) the
Credit Agreement dated as of March 21, 1997 (as amended or modified from time to
time, the "CREDIT AGREEMENT"), among the Borrower, the financial institutions
party thereto, as lenders (the "LENDERS") and Chase, as agent (in such capacity,
the "AGENT"), as fronting bank (in such capacity the "FRONTING BANK"), as
swingline lender (in such capacity, the "SWINGLINE LENDER"); and (c) the Senior
Secured Note Exchange Agreements, each dated as of March 21, 1997 (as amended or
modified from time to time, the "TRANCHE A EXCHANGE NOTE PURCHASE AGREEMENTS"),
among the Borrower and the Tranche A Exchange Note Purchasers named therein.
The Lenders, the Fronting Bank and the Swingline Lender,
respectively, have agreed to make Loans to the Borrower, to issue Letters of
Credit for the account of the Borrower and to make Swingline Loans to the
Borrower pursuant to, and upon the terms and subject to the conditions specified
in, the Credit Agreement. The Tranche A Exchange Note Purchasers have agreed to
accept $35,500,000 aggregate principal amount of the Borrower's 8.94% Series I
Senior Secured Notes due 2002 (the "SERIES I TRANCHE A EXCHANGE NOTES") and
$50,000,000 aggregate principal amount of the Borrower's Series II Senior
Secured Notes due 2005 (the "SERIES II TRANCHE A EXCHANGE NOTES" and, together
with the Series I Tranche A Exchange Notes, the "TRANCHE A EXCHANGE NOTES") in
exchange for (i) $65,000,000 aggregate principal amount of the outstanding 8.76%
Senior Secured Notes due 2002 of National (the "NATIONAL SENIOR NOTES") and (ii)
$20,500,000 aggregate principal amount of the outstanding 8.63% Senior Secured
Notes due 2002 of TA (the "TA SENIOR NOTES" and, together with the National
Senior Notes, the "EXISTING SENIOR NOTES") held by them pursuant to, and upon
the terms and subject to the conditions specified in, the Tranche A Exchange
Note Purchase Agreements.
The obligations of the Lenders to make Loans, of the Fronting Bank to
issue Letters of Credit and of the Swingline Lender to make Swingline Loans
under the Credit Agreement and the obligations of the Tranche A Exchange Note
Purchasers to accept the Tranche A Exchange Notes in exchange for the Existing
Senior Notes held by them pursuant to the Tranche A Exchange Note Purchase
Agreements are conditioned upon, among other things, the execution and delivery
by the Grantors of a security agreement in the form hereof to secure (a) the due
and punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, the Swingline Loans and the Tranche
A Exchange Notes, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (ii) each payment required to
be made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise,
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) of the Borrower to the Secured Parties
under the Credit Agreement, the Tranche A Exchange Note Purchase Agreements,
this Agreement and the other Credit Transaction Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement, the Tranche A
Exchange Note Purchase Agreements and the other Credit Transaction Documents,
(c) the due and punctual payment and performance of all the covenants,
agreements, obligations and liabilities of each Grantor under or pursuant to the
Credit Transaction Documents to which such Grantor is a party and (d) the due
and punctual payment and performance of all obligations of the Borrower,
monetary or otherwise, under each Rate Protection Agreement entered into with a
counterparty that was a Lender (or an Affiliate of a Lender) at the time such
Rate Protection Agreement was entered into (all the obligations referred to in
the preceding clauses (a) through (d) being referred to collectively as the
"OBLIGATIONS"). All capitalized terms used but not defined herein shall have the
meanings set forth in the other Credit Transaction Documents.
<PAGE>
2
Accordingly, the Grantors and the Collateral Agent, on behalf of
itself, and each other Secured Party (and each of their successors or assigns),
hereby agree as follows:
SECTION 1. DEFINITION OF CERTAIN TERMS USED HEREIN. As used herein,
the following terms shall have the following meanings:
"COLLATERAL" shall mean all the following, whether now owned or
hereafter acquired by any Grantor: (a) Trademark Licenses, (b) Trademarks,
including registrations, recordings and applications listed on Schedule I
attached hereto and (c) all products and Proceeds (including insurance proceeds)
of, and additions, improvements and accessions to, and books and records
describing or used in connection with, any and all the property described above.
"CREDIT TRANSACTION DOCUMENTS" shall mean the Loan Documents (as
defined in the Credit Agreement) and the Financing Documents (as defined in the
Tranche A Exchange Note Purchase Agreements).
"EVENT OF DEFAULT" shall mean any "Event of Default" as defined in
the Credit Agreement and any "Event of Default" as defined in the Tranche A
Exchange Note Purchase Agreements.
"INDEMNITEE" shall mean any "Indemnitee" as defined in the Credit
Agreement and any "INDEMNITEE" as defined in the Tranche A Exchange Note
Purchase Agreements.
"PROCEEDS" shall mean any consideration received from the sale,
exchange or other disposition of any asset or property that constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property that constitutes
Collateral, any claims of any Grantor against third parties for past, current or
future infringement or dilution of any Trademark or Trademark License or for
injury to the goodwill associated with any Trademark or Trademark licensed under
any Trademark License and any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"SECURED PARTIES" shall mean (a) the Lenders, (b) the Fronting Bank,
(c) the Agent, (d) the Collateral Agent, (e) the Tranche A Exchange Note
Purchasers, (f) the Swingline Lender and (g) the successors and assigns of each
of the foregoing.
"TRADEMARK LICENSES" shall mean any written agreement granting to
any third party any right to use any Trademark now or hereafter owned by any
Grantor, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party.
"TRADEMARKS" shall mean all of the following now or hereafter owned:
(a) all trademarks, service marks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature, now existing
or hereafter adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademark Office, any State of
the United States or any other country or any political subdivision thereof, (b)
all goodwill of the business symbolized by and/or associated therewith and (c)
all extensions or renewals thereof.
SECTION 2. RULE OF INTERPRETATION. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 3. SECURITY INTEREST. As security for the payment or
performance, as the case may be, of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and its assigns, for the
benefit of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest in, all of such Grantor's right, title and interest in, to and under
the Collateral (the "SECURITY INTEREST"). Without limiting the foregoing, the
Collateral Agent is hereby authorized to file one or more financing statements,
continuation statements, filings with the United States Patent and Trademark
Office, or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest without the signature
of any Grantor, naming any Grantor or the Grantors as debtors and the Collateral
Agent as secured party.
<PAGE>
3
Each Grantor at all times to keep accurate and complete accounting
records with respect to the Collateral, including a record of all payments and
proceeds received in respect thereof.
SECTION 4. FURTHER ASSURANCES. Each Grantor agrees, at its expense,
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent or
the other Secured Parties may from time to time reasonably request for the
better assuring and preserving of the Security Interest and the rights and
remedies created hereby, including the payment of any fees and taxes required in
connection with the execution and delivery of this Agreement, the granting of
the Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest created hereby
and the filing of any financing statements or other documents (including filings
with the United States Patent and Trademark Office) in connection herewith, and
the execution and delivery of any document required to supplement this Agreement
with respect to any Trademarks acquired, registered or issued after the date
hereof. If any amount payable under or in connection with any of the Collateral
shall be or become evidenced by any promissory note or other instrument, such
note or instrument shall (to the extent not previously pledged and delivered
pursuant to the Pledge Agreement) be immediately pledged and delivered to the
Collateral Agent, duly endorsed in a manner reasonably satisfactory to the
Collateral Agent.
SECTION 5. INSPECTION AND VERIFICATION. The Collateral Agent and
such persons as the Collateral Agent may reasonably designate shall have the
right, at any reasonable time or times, to inspect the Collateral, all records
related thereto (and to make extracts and copies from such records) and the
premises upon which any of the Collateral is located, to discuss any Grantor's
affairs with the officers of such Grantor and its independent accountants and to
verify under reasonable procedures the validity, amount, quality, quantity,
value, conditions and status of, or any other matter relating to, the
Collateral, including, in the case of Collateral in the possession of any third
party, by contacting such person possessing such Collateral for the purpose of
making such a verification. The Collateral Agent shall have the absolute right
to share any information it gains from such inspection or verification with any
other Secured Party.
SECTION 6. TAXES; ENCUMBRANCES. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, liens, security
interests or other encumbrances at any time levied or
<PAGE>
4
placed on the Collateral and not permitted under the Credit Transaction
Documents, and may pay for the maintenance and preservation of the Collateral to
the extent any Grantor fails to do so as required by this Agreement or the other
Credit Transaction Documents, and such Grantor agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by it
pursuant to the foregoing authorization; PROVIDED, HOWEVER, that nothing in this
Section 6 shall be interpreted as excusing any Grantor from the performance of,
or imposing any obligation on, the Collateral Agent or any other Secured Party
to cure or perform, any covenants or other promises of any Grantor with respect
to taxes, assessments, charges, fees, liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Credit
Transaction Documents.
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Grantors jointly and
severally represent, warrant and covenant to and with the Collateral Agent and
each other Secured Party that:
(a) TITLE AND AUTHORITY. Each Grantor has rights in such Collateral
and good title to the United States registrations of the Trademarks shown
on Schedule I with respect to which it has purported to grant the Security
Interest hereunder and has full corporate power and authority to grant to
the Collateral Agent the Security Interest in such Collateral pursuant
hereto and to execute, deliver and perform its obligations in accordance
with the terms of this Agreement, without the consent or approval of any
other person other than any consent or approval that has been obtained.
(b) FILINGS. Fully executed Uniform Commercial Code financing
statements containing a description of the Collateral have been delivered
to the Collateral Agent for filing in every governmental, municipal or
other office in every jurisdiction in which any portion of the Collateral
is located necessary to establish a valid, legal and perfected security
interest in favor of the Collateral Agent in respect of the Collateral in
which a security interest may be perfected by filing in the United States
and its territories and possessions, and, except for the filing of this
Agreement with the United States Patent and Trademark Office, no further
or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided
under applicable law with respect to the filing of continuation statements
and except to record notice of the Security Interest with the United
States Patent and Trademark Office with respect to applications for
registration and registrations of such Trademarks that are filed or
acquired after the date hereof.
(c) VALIDITY OF SECURITY INTEREST. The Security Interest constitutes
a valid, legal and, upon the filing of the Uniform Commercial Code
financing statements and the filing in the United States Patent and
Trademark Office referred to in paragraph (b) above, perfected security
interest in all the Collateral for payment and performance of the
Obligations. Such Security Interest constitutes a valid, legal and (upon
filing financing statements and filings with the United States Patent and
Trademark Office and appropriate state offices with respect to state
registered trademarks) perfected first priority security interest in all
such Collateral in which a security interest may be perfected by filing in
the United States and its territories and possession.
(d) INFORMATION REGARDING NAMES AND LOCATIONS. Each Grantor has
disclosed in writing to the Collateral Agent on Schedule II the material
trade names used to identify it in its business or in the ownership of its
properties.
(e) ABSENCE OF OTHER LIENS. Such Collateral is owned by the Grantors
free and clear of any Lien of any nature whatsoever (except for Liens
expressly permitted by Section 7.02 of the Credit Agreement, Section 7.2
of the Tranche A Exchange Note Purchase Agreements or hereby and any liens
or licenses listed on Schedule III). No Grantor has filed a financing
statement under the Uniform Commercial Code covering any such Collateral
used in the United States, nor has any Grantor filed any assignment in
which it assigns such Collateral, any security agreement or any similar
instrument
<PAGE>
5
covering such Collateral with the United States Patent and Trademark
Office, other than as contemplated hereby.
(f) LICENSES. To each Grantor's best knowledge, on the date hereof,
there is no default by any Licensee under the Trademark Licenses listed on
Schedule III hereto.
SECTION 8. COVENANTS REGARDING TRADEMARK COLLATERAL. (a) Each
Grantor (either itself or through licensees) will, for each Trademark material
to the conduct of such Grantor's business, (i) to the extent consistent with
past practice, continue to use such Trademark currently in use on each and every
trademark class of goods applicable to its current line of products and/or
services as currently reflected in order to maintain such Trademark in full
force free from any claim of abandonment for nonuse, provided that such Grantor
may modify or abandon its logos, change advertising campaign slogan and
discontinue or abandon the use of any Trademark, in each case consistent with
its ordinary business practice, (ii) maintain as in the past (or as future
business requirements may dictate) the quality of products and services offered
under such Trademark, (iii) with respect to Trademarks used in the United States
or as otherwise required by law, employ such Trademark with the notice of
application or Federal registration as the case may be, except where the failure
to do so would not materially impair such Grantor's rights to or in such
Trademark, (iv) not knowingly use such Trademark in violation of any third party
rights (which shall not be construed to include any of the liens listed on
Schedule III or expressly permitted by Section 7.02 of the Credit Agreement and
Section 7.2 of the Tranche A Exchange Note Purchase Agreements), (v) not (and
not knowingly permit any licensee or sub-licensee thereof to) do any act or omit
to do any act whereby such Trademark may become or be deemed to have been
abandoned or invalidated except as provided in the proviso to clause (i) above
and (vi) comply with all terms and conditions of the Trademark Assignment.
(b) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Trademark material to the conduct of its
business may become abandoned or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office or any court) regarding the Grantor's ownership of any such
material Trademark, its right to register the same, or to keep and maintain the
same.
(c) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for any Trademark
material to the conduct of its business with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, unless it promptly informs the Collateral Agent
and, upon request of the Collateral Agent, executes and delivers to the
Collateral Agent any and all agreements, instruments, documents and papers as
the Collateral Agent may reasonably request to evidence and, in the case of
applications for Trademarks with the United States Patent and Trademark Office,
perfect the Collateral Agent's security interest in such Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby.
(d) Each Grantor will take all necessary steps (except as provided
in Section 8(a)(i)) that are consistent with the practice in any proceeding
before the United States Patent and Trademark Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each material application relating to the Trademarks material to the
conduct of its business (and to obtain the relevant grant or registration) and
to maintain each material registration of the Trademarks that is material to the
conduct of such Grantor's business, including, filing of applications for
renewal, affidavits of use, affidavits of incontestability and maintenance fees,
and, if consistent with good business judgment of such Grantor, to initiate
opposition, interference and cancellation proceedings against third parties.
(e) In the event that any Collateral consisting of a Trademark
material to the conduct of such Grantor's business is believed by such Grantor
to have been infringed, misappropriated or diluted by a third
<PAGE>
6
party in a manner that materially impairs such Grantor's rights in and to the
Trademarks, such Grantor shall notify the Collateral Agent within 15 days after
it learns thereof and shall, if consistent with good business judgment or, if
reasonably requested by the Collateral Agent, promptly sue for infringement,
misappropriate or dilution and to cover any and all damages for such
infringement, misappropriation or dilution, or take such other actions as are
appropriate under the circumstances to protect such Collateral.
SECTION 9. PROTECTION OF SECURITY. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral which is material to the conduct of its business against all persons
and to defend the Security Interest of the Collateral Agent in the Collateral
and the priority thereof, against any adverse Lien not permitted under the
Credit Agreement and the Tranche A Exchange Note Purchase Agreement.
SECTION 10. CONTINUING OBLIGATIONS OF THE GRANTORS. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement, interest or
obligation relating to the Collateral, all in accordance with the terms and
conditions thereof, and shall indemnify and hold harmless the Collateral Agent
and the other Secured Parties and each of them severally, from any and all such
liabilities.
SECTION 11. GRANT OF LICENSE TO USE TRADEMARK COLLATERAL. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
Sections 13 and 14 hereof at such time as the Collateral Agent, without regard
to this Section 11, shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Collateral Agent an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Grantor), upon the occurrence and during the continuance of
any Event of Default, to use, license or sub-license any Trademark now owned or
hereafter acquired by such Grantor to the extent of the interest of such Grantor
therein at such time, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licenses items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The Collateral Agent agrees to apply the net
proceeds received from any license towards payment of the Obligations as set
forth in Section 14.
SECTION 12. POWER OF ATTORNEY. The Collateral Agent is hereby
appointed by the Grantors as the true and lawful agent and attorney in fact of
each Grantor, and in such capacity the Collateral Agent shall have the right,
with power of substitution for each Grantor and in each Grantor's name or
otherwise, for the use and benefit of the Collateral Agent and the other Secured
Parties, upon the occurrence and during the continuance of an Event of Default:
(a) to receive, endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; (b) to demand, collect, receive payment of, give
receipt for and give discharges and releases of all or any of the Collateral;
(c) to sign the name of any Grantor on any invoice or bill of lading relating to
any of the Collateral; (d) to commence and prosecute any and all suits, actions
or proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Collateral or to enforce any
rights in respect of any Collateral; (e) to settle, compromise, compound, adjust
or defend any actions, suits or proceedings relating to or pertaining to all or
any of the Collateral; and (f) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; PROVIDED, HOWEVER, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent or any other Secured Party to make any commitment or to make
any inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent or any other Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent or
any other Secured Party with respect to the Collateral or any part thereof shall
give rise to any defense, counterclaim or
<PAGE>
7
offset in favor of the Grantors, or to any claim or action against the
Collateral Agent or any other Secured Party. It is understood and agreed that
the appointment of the Collateral Agent as the agent of each Grantor for the
purposes set forth above in this Section 12 is coupled with an interest and is
irrevocable. The provisions of this Section 12 shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Credit
Transaction Document with respect to the Collateral or any part thereof or
impose any obligation on the Collateral Agent or any other Secured Party to
proceed in any particular manner with respect to the Collateral or any part
thereof, or in any way limit the exercise by the Collateral Agent or any other
Secured Party of any other or further right that it may have on the date of this
Agreement or hereafter, whether hereunder, under any other Credit Transaction
Document, by-law or otherwise. Any sale pursuant to the provisions of this
Section 12 shall be deemed to conform to the commercially reasonable standards
as provided in Section 9-504(3) of the Uniform Commercial Code as in effect in
the State of New York as its equivalent in other jurisdictions.
SECTION 13. REMEDIES UPON DEFAULT. Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each item
of Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any or all of the following
actions at the same or different times; with or without legal process and with
or without previous notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purposes of taking possession of or removing
the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and such Grantor hereby waives
(to the fullest extent permitted by applicable law) all rights of redemption,
stay and appraisal which such Grantor now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' prior written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public sale made pursuant to this
Section 13, the
<PAGE>
8
Collateral Agent or, subject to the Intercreditor Agreement, any other Secured
Party may bid for or purchase, free from any right of redemption, stay,
valuation or appraisal on the part of any Grantor (all said rights being also
hereby waived and released to the fullest extent permitted by applicable law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to such Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement, and no Grantor shall be entitled to
the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Collateral Agent may proceed by a suit or suits at
law or in equity to foreclose this Agreement and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 13 shall be deemed
to conform to the commercially reasonable standards as provided in Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions.
SECTION 14. APPLICATION OF PROCEEDS OF SALE. The proceeds of any
sale of Collateral pursuant to this Section 14, as well as any Collateral
consisting of cash, shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by the
Agent or the Collateral Agent (in its capacity as such hereunder or under
any other Credit Transaction Document) in connection with such sale or
otherwise in connection with this Agreement, any other Credit Transaction
Document or any of the Obligations, including all court costs and the
fees, other charges and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or under
any other Credit Transaction Document on behalf of any Grantor and any
other costs or expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Credit Transaction Document;
SECOND, subject to the provisions of the Intercreditor Agreement as
shall be in force and in effect, to the Collateral Agent for distribution
to the Participating Creditors as provided in Article IV of the
Intercreditor Agreement for the payment in full of Indebtedness and
satisfaction of the Obligations owed to the Participating Creditors; and
THIRD, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
Subject to the terms of the Intercreditor Agreement, the Collateral Agent shall
have absolute discretion as to the time of application of any such proceeds,
moneys or balances in accordance with this Agreement. Upon any sale of the
Collateral by the Collateral Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such officer or
be answerable in any way for the misapplication thereof.
SECTION 15. LOCATIONS OF COLLATERAL; PLACE OF BUSINESS. (a) Each
Grantor agrees, at such time or times as the Collateral Agent may reasonably
request, promptly to prepare and deliver to the Collateral Agent a duly
certified schedule or schedules in form reasonably satisfactory to the
Collateral Agent, showing the identity, amount and location of any and all
material Collateral.
<PAGE>
9
(b) Each Grantor agrees not to change, or permit to be changed, the
location of its chief executive office or the name or names used to identify it
in its business or in the ownership of its properties unless all filings under
the Uniform Commercial Code or otherwise that are required by the Credit
Agreement to be made have been made and the Collateral Agent has a valid, legal
and perfected security interest in the Collateral subject to no Liens, other
than Liens permitted by Section 7.02 of the Credit Agreement and Section 7.02 of
the Tranche A Exchange Note Purchase Agreements and any liens or licenses listed
on Schedule III.
SECTION 16. NOTICES. All communications and notices hereunder shall
be in writing and given as provided in Section 10.01 of the Credit Agreement and
Section 16.06 of the Tranche A Exchange Note Purchase Agreements. All
communications and notices hereunder to the Collateral Agent shall be given to
them at the address set forth on Schedule IV hereto.
SECTION 17. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent hereunder, the security interests granted hereunder and all obligations of
the Grantors hereunder shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of the Credit Agreement, the Tranche A
Exchange Note Purchase Agreements or any other Credit Transaction Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Credit Transaction Document or any other agreement
or instrument, (c) any exchange, release or non-perfection of any Lien on other
Collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations of this Agreement.
SECTION 18. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Credit Transaction Document shall be
considered to have been relied upon by the Secured Parties and shall survive the
making by the Lenders of the Loans, the making by the Swingline Lender of the
Swingline Loans and the acceptance by the Tranche A Exchange Note Purchasers of
the Tranche A Exchange Notes, and the execution and delivery to the Tranche A
Exchange Note Purchasers of the Tranche A Exchange Notes, and the issuance by
the Fronting Bank of any Letter of Credit, regardless of any investigation made
by the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on, or any other fee
or amount payable under or in respect of, any Loan, Swingline Loan, any Tranche
A Exchange Note or any Letter of Credit, or this Agreement or, without
duplication of the foregoing, under any of the other Credit Transaction
Documents is outstanding and unpaid and so long as the Commitments and the LC
Commitment have not been terminated.
SECTION 19. BINDING AGREEMENT; ASSIGNMENTS. This Agreement shall
become effective as to the Grantors when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantors, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Grantor shall have the right
to assign its rights hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void), except as expressly contemplated
by this Agreement or the other Credit Transaction Documents.
SECTION 20. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all
<PAGE>
10
covenants, promises and agreements by or on behalf of any Grantor or the
Collateral Agent that are contained in this Agreement shall bind and inure to
the benefit of their respective successors and assigns.
SECTION 21. COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses and its fully
allocated internal costs, including the reasonable fees and expenses of its
counsel and of any experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from or other realization upon any
of the Collateral, (iii) the exercise, enforcement or protection of any of the
rights of the Collateral Agent hereunder or (iv) the failure of any Grantor to
perform or observe any of the provisions hereof. If the Grantors shall fail to
do any act or thing that they have covenanted to do hereunder or any
representation or warranty of the Grantors hereunder shall be breached, the
Collateral Agent may (but shall not be obligated to) do the same or cause it to
be done or remedy any such breach and there shall be added to the Obligations
the cost or expense incurred by the Collateral Agent in so doing.
(b) Without limitation of their indemnification obligations under
the other Credit Transaction Documents, each Grantor jointly and severally
agrees to indemnify the Collateral Agent and the Indemnitees against, and hold
each of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses, incurred by or
asserted against any of them arising out of, in any way connected with, or as a
result of, of the execution, delivery or performance of this Agreement or any
claim, litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 21 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Credit Transaction Document or any investigation made by or on behalf of
the Collateral Agent or any other Secured Party. All amounts due under this
Section 21 shall be payable on written demand therefor and shall bear interest
at the Alternate Base Rate (as defined in the Credit Agreement) plus 2%.
SECTION 22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT FEDERAL LAW OR LAWS OF ANOTHER STATE MAY APPLY TO THE TRADEMARKS.
SECTION 23. WAIVERS; AMENDMENT. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Credit Transaction Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or any other
Credit Transaction Document or consent to any departure by any Grantor therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
any Grantor in any case shall entitle such Grantor to any other or further
notice or demand in similar or other circumstances.
<PAGE>
11
(b) Subject to the provisions of the Intercreditor Agreement,
neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to a written agreement entered into between any Grantor
and the Collateral Agent, with the prior written consent of the Required Lenders
and the Required Holders; PROVIDED, HOWEVER, that except as provided herein or
in the other Credit Transaction Documents, no such agreement shall amend,
modify, waive or otherwise adversely affect a Secured Party's rights and
interests in any material amount of the Collateral without the prior written
consent of such Secured Party.
SECTION 24. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT
TRANSACTION DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT TRANSACTION
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS THE MUTUAL WAIVERS AND
CERTIFICATIONS OF THIS SECTION 24.
SECTION 25. SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Credit Transaction
Document should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 26. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Credit Transaction Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Credit
Transaction Documents against any Grantor or its properties in the courts of any
jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Credit
Transaction Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
<PAGE>
12
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 16. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 27. TERMINATION; RELEASE. (a) This Agreement and the
security interests granted hereby shall terminate when all the Obligations have
been indefeasibly paid in full and the Lenders and the Swingline Lender have no
further commitment to lend under the Credit Agreement, no Letters of Credit are
outstanding and the Fronting Bank has no further obligation to issue Letters of
Credit under the Credit Agreement.
(b) Upon any sale by any Grantor of any Collateral that is permitted
under the Credit Agreement and the Tranche A Exchange Note Purchase Agreements
(including releases in connection with any disposition of Collateral pursuant to
Sections 7.03 and 7.05 of the Credit Agreement, Sections 9 and 10 of the
Guarantee Agreement and Sections 7.3 and 7.5 of the Tranche A Exchange Note
Purchase Agreements), or, subject to the terms of the Intercreditor Agreement,
upon the effectiveness of any written consent to the release of the Security
Interest in any Collateral pursuant to Section 10.08 of the Credit Agreement and
Section 12 of the Tranche A Exchange Note Purchase Agreements, the Security
Interest in such Collateral shall be automatically released.
(c) In connection with any termination or release pursuant to
paragraphs (a) and (b), the Collateral Agent shall execute and deliver to such
Grantor, at such Grantor's expense, all Uniform Commercial Code termination
statements, documents in order to terminate any United States Patent and
Trademark Office filings and similar documents that such Grantor shall
reasonably request to evidence such termination or release. Any execution and
delivery of termination statements or documents pursuant to this Section 27
shall be without recourse to or warranty by the Collateral Agent.
SECTION 28. HEADINGS. Article and Section headings used herein are
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 29. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective as provided in Section 19.
SECTION 30. INTERCREDITOR AGREEMENT. (a) The Collateral Agent
agrees, for itself and for each of the other Secured Parties, that it and each
other Secured Party shall be bound by the terms of the Intercreditor Agreement
in connection with the administration of this Agreement.
(b) Each Grantor hereby acknowledges receipt of a copy of and agrees
to be bound by the terms of the Intercreditor Agreement.
SECTION 31. REFERENCES TO CREDIT AGREEMENT. Upon the payment and
discharge in full of all outstanding Credit Agreement Obligations or all
outstanding Tranche A Exchange Note Obligations, all references herein to the
terms of the Credit Agreement or the Tranche A Exchange Note Purchase
Agreements, as the case may be, shall become null and void (other than
references for the purposes of incorporating herein definitions of terms used
therein, which terms will continue to have the meanings assigned thereto
immediately
<PAGE>
13
prior to such payment and discharge, subject to subsequent amendment or
modifications in accordance with the terms hereof).
IN WITNESS WHEREOF, the parties hereto have duly executed this
Trademark Security Agreement as of the day and year first above written.
TRAVELCENTERS OF AMERICA, INC.,
by /s/ James W. George
----------------------------------
Name: James W. George
Title: Senior Vice President and
Assistant Secretary
THE CHASE MANHATTAN BANK,
by /s/ Peter C. Eckstein
----------------------------------
Name: Peter C. Eckstein
Title: Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE,
by /s/ David Bouhl
----------------------------------
Name: David Bouhl
Title: Head of Corporate Banking
Chicago
KEYPORT LIFE INSURANCE COMPANY,
by /s/ Daniel T. H. Yin
----------------------------------
Name: Daniel T. H. Yin
Title: Assistant Vice President
<PAGE>
CRESCENT/MACH I PARTNERS, L.P.,
By TCW Asset Management Company
its Investment Manager
by /s/ Mark L. Gold
----------------------------------
Name: Mark L. Gold
Title: Managing Director
TCW Asset Management Company,
as Attorney-in-Fact for
Integon Life Insurance Corporation
by /s/ Mark L. Gold
----------------------------------
Name: Mark L. Gold
Title: Managing Director
TCW Asset Management Company,
as Attorney-in-Fact for
United Companies Life Insurance Company
by /s/ Mark L. Gold
----------------------------------
Name: Mark L. Gold
Title: Managing Director
<PAGE>
KZH HOLDING CORPORATION,
by /s/ Robert Goodwin
----------------------------------
Name: Robert Goodwin
Title: Authorized Agent
THE LONG-TERM CREDIT BANK OF JAPAN
LIMITED, New York Branch
by /s/ Shuichi Tajima
----------------------------------
Name: Shuichi Tajima
Title: Deputy General Manager
MANUFACTURERS AND TRADERS TRUST
COMPANY,
by /s/ C. Gregory Vogelsang
----------------------------------
Name: C. Gregory Vogelsang
Title: Banking Officer
NATIONAL CITY BANK,
by /s/ Stanley J. Gregorin, Jr.
----------------------------------
Name: Stanley J. Gregorin, Jr.
Title: Vice President
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST,
by /s/ Thomas C. Hunt
----------------------------------
Name: Thomas C. Hunt
Title: Portfolio Analyst
PROTECTIVE LIFE INSURANCE COMPANY,
by /s/ James Dondero
----------------------------------
Name: James Dondero
Title: Authorized Signator
SOCIETE GENERALE,
by /s/ Joseph A. Philbin
----------------------------------
Name: Joseph A. Philbin
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
by /s/ Jeffrey W. Maillet
----------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
<PAGE>
OAK HILL SECURITIES FUND, L.P.,
by Oak Hill Securities GenPar., L.P.,
its General Partner
by Oak Hill Securities MGP, Inc.,
its General Partner
by /s/ Scott D. Krase
----------------------------------
Name: Scott D. Krase
Title: Vice President
SENIOR FLOATING RATE FUND, INC.,
by /s/ Anne McCarthy
----------------------------------
Name: Anne McCarthy
Title: Authorized Signatory
Exhibit 10.26
================================================================================
TRAVELCENTERS OF AMERICA, INC.
(formerly National Auto/Truckstops Holdings Corporation)
-----------------------
SENIOR SECURED NOTE EXCHANGE AGREEMENT
-----------------------
Dated as of March 21, 1997
8.94% Series I Senior Secured Notes due 2002
Series II Senior Secured Notes due 2005
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. THE ORIGINAL NOTES AND THE RECAPITALIZATION; EXCHANGE OF NOTES; REPRESENTATIONS OF NOTEHOLDER..................1
1.1. The Original Notes..................................................................................1
1.2. The Recapitalization................................................................................2
1.3. Authorization of Exchange Notes.....................................................................2
1.4. Interest Rates on the Notes; Reset Procedures for Floating Rate Notes...............................3
1.5. Security for the Notes..............................................................................6
1.6. Representation of the Noteholder....................................................................6
2. EXCHANGE OF NOTES; THE CLOSING.................................................................................7
3. CONDITIONS OF CLOSING..........................................................................................7
3.1. Proceedings Satisfactory............................................................................7
3.2. Representations True, Etc.; Officer's Certificates..................................................8
3.3. Opinions of Counsel.................................................................................8
3.4. Recapitalization....................................................................................9
3.5. Subordinated Notes..................................................................................9
3.6. Credit Facilities...................................................................................9
3.7. Intercreditor Agreement.............................................................................9
3.8. Guarantee Agreement; Indemnity and Subrogation Agreement...........................................10
3.9. Existing Indebtedness; Redeemed Notes..............................................................10
3.10. No Liabilities....................................................................................10
3.11. Solvency..........................................................................................10
3.12. Pledge Agreement..................................................................................10
3.13. Security Documents................................................................................11
3.14. Mortgaged Properties; Mortgages and Leasehold Mortgages...........................................11
3.15. [Intentionally Omitted]...........................................................................12
3.16. Other Arrangements................................................................................12
3.17. Appraisals........................................................................................12
3.18. Legal, Tax and Accounting Matters.................................................................13
3.19. Certain Liabilities...............................................................................13
3.20. Floating Rate Note Facility Fee...................................................................13
3.21. Approvals.........................................................................................13
3.22. No Litigation.....................................................................................13
3.23. Deposit...........................................................................................14
3.24. Other Exchanges; Cancellation of Original Notes...................................................14
3.25. Legality..........................................................................................14
3.26. Private Placement Numbers.........................................................................14
4. REPRESENTATIONS AND WARRANTIES................................................................................14
4.1. Organization; Powers...............................................................................14
4.2. Authorization; Compliance with Laws, Instruments...................................................15
4.3. Enforceability.....................................................................................15
4.4. Governmental Approvals.............................................................................16
4.5. Financial Statements...............................................................................16
<PAGE>
4.6. No Default or Material Adverse Change..............................................................17
4.7. Title to Properties; Possession Under Leases.......................................................17
4.8. Subsidiaries.......................................................................................18
4.9. Litigation; Compliance with Laws...................................................................18
4.10. Burdensome Agreements, Etc........................................................................18
4.11. Federal Reserve Regulations.......................................................................18
4.12. Investment Company Act; Public Utility Holding Company Act........................................19
4.13. Tax Returns.......................................................................................19
4.14. No Material Misstatements.........................................................................19
4.15. Employee Benefit Plans............................................................................20
4.16. Environmental and Safety Matters..................................................................20
4.17. Solvency..........................................................................................22
4.18. Employment and Management Agreements..............................................................22
4.19. Capitalization....................................................................................22
4.20. Security Documents................................................................................24
4.21. Labor Matters.....................................................................................25
4.22. Location of Real Property and Leased Premises.....................................................25
4.23. Insurance.........................................................................................26
4.24. Delivery of Documents; Representations and Warranties.............................................26
4.25. Fees and Expenses.................................................................................27
4.26. Offering of the Notes.............................................................................27
4.27. Other Agreements..................................................................................27
5. PREPAYMENT OF NOTES...........................................................................................27
5.1. Required Prepayment................................................................................28
5.2. Optional Prepayments...............................................................................28
5.3. Prepayments in Connection with Available Proceeds..................................................29
5.4. Prepayment in Connection with a Change in Control..................................................31
5.5. Obligation to Prepay after Notice; Make-Whole Computation..........................................33
5.6. Application of Prepayments.........................................................................33
5.7. Note Purchase Prohibition..........................................................................33
6. AFFIRMATIVE COVENANTS.........................................................................................34
6.1. Existence; Businesses and Properties; Keep Books...................................................34
6.2. Insurance..........................................................................................34
6.3. Obligations and Taxes..............................................................................37
6.4. Financial Statements, Reports, Etc.................................................................37
6.5. Litigation and Other Notices.......................................................................39
6.6. ERISA. 40
6.7. Access to Properties and Inspections...............................................................41
6.8. [Intentionally Omitted]............................................................................41
6.9. Fiscal Year........................................................................................41
6.10. Further Assurances................................................................................41
6.11. Rate Protection Agreements........................................................................42
6.12. Environmental and Safety Laws.....................................................................42
6.13. Material Contracts................................................................................43
6.14. Certificates of Occupancy, Permits and Zoning.....................................................44
7. NEGATIVE COVENANTS............................................................................................45
7.1. Indebtedness.......................................................................................45
7.2. Liens. ............................................................................................48
(ii)
<PAGE>
7.3. Sale and Leaseback Transactions....................................................................51
7.4. Investments, Loans and Advances....................................................................51
7.5. Mergers, Consolidations, Sales of Assets and Acquisitions..........................................53
7.6. Dividends and Distributions........................................................................54
7.7. Transactions with Affiliates.......................................................................55
7.8. Business of Company, the Guarantor and TAFSI.......................................................55
7.9. Limitations on Debt Prepayments....................................................................59
7.10. Amendment of Certain Documents and Subordinated Notes.............................................60
7.11. Limitation on Leases..............................................................................60
7.12. Subsidiaries......................................................................................61
7.13. Capital Expenditures..............................................................................61
7.14. Consolidated Net Worth............................................................................62
7.15. Current Ratio.....................................................................................62
7.16. Interest Expense Coverage Ratio...................................................................62
7.17. Leverage Ratio....................................................................................63
8. INVESTMENT OF CERTAIN ESCROWED AMOUNTS........................................................................63
9. DEFINITIONS...................................................................................................64
9.1. Definitions........................................................................................64
9.2. Terms Generally....................................................................................88
10. EVENTS OF DEFAULT; REMEDIES..................................................................................89
10.1. Events of Default; Acceleration of Maturity.......................................................89
10.2. Suits for Enforcement.............................................................................94
10.3. Remedies Cumulative...............................................................................95
10.4. Remedies Not Waived...............................................................................95
11. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.................................................................95
12. LOST, ETC., NOTES............................................................................................96
13. AMENDMENT AND WAIVER.........................................................................................96
14. HOME OFFICE PAYMENT..........................................................................................97
15. LIABILITIES OF THE PURCHASER.................................................................................98
16. MISCELLANEOUS................................................................................................98
16.1. Expenses..........................................................................................98
16.2. Taxes. 99
16.3. Successors and Assigns............................................................................99
16.4. Indemnification..................................................................................100
16.5. Reliance on and Survival of Representations......................................................100
16.6. Notices..........................................................................................100
16.7. Severability.....................................................................................101
16.8. Jurisdiction and Process.........................................................................101
16.9. Governing Law....................................................................................102
16.10. Headings........................................................................................102
16.11. Counterparts....................................................................................102
(iii)
<PAGE>
SCHEDULE I - Names and Addresses of Noteholders
Schedule 1.1(a) - Mortgaged Properties
Schedule 1.1(b) - Mortgage Filing Offices
Schedule 4.7(b) - Title to Properties
Schedule 4.7(c) - Notices of Condemnation
Schedule 4.9 - Litigation
Schedule 4.18 - Employment and Management Agreements
Schedule 4.19(a)(i) - Company's Shareholders
Schedule 4.19(a)(ii) - Voting Trust Certificateholders
Schedule 4.19(e) - Agreements re: Capital Stock, etc.
Schedule 4.20 - UCC Filings Offices
Schedule 4.22(a) - Real Property Owned by the Guarantors
Schedule 4.22(b) - Real Property Leased by the Company
Schedule 5.2(b) - Local Counsel
Schedule 6.2(e) - Certain Phase II Environmental Consultant
Insurance
Schedule 6.14 - Certain Mortgaged Properties
Schedule 7.1 - Indebtedness
Schedule 7.2 - Liens
Schedule 7.3 - Sale and Leaseback Transactions
Schedule 7.5(g) - Sale of Assets
Schedule 7.7 - Transactions with Affiliates
Schedule 7.11(a) - Limitation on Leases
EXHIBIT A-1 - Form of Fixed Rate Note
EXHIBIT A-2 - Form of Floating Rate Note
EXHIBIT B - Guarantee Agreement
EXHIBIT C - Form of Mortgage and Deed of Trust and form of
Assignments of Leases and Rents
EXHIBIT D - Security Agreement
EXHIBIT E - Pledge Agreement
EXHIBIT F - Collateral Assignment
EXHIBIT G - Trademark Security Agreement
EXHIBIT H - Intercreditor Agreement
EXHIBIT I-1 - Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
EXHIBIT I-2 - Opinion of General Counsel of the Company
EXHIBIT I-3 - Form of Opinion of Local Counsel
EXHIBIT J - Collateral Account Agreement
EXHIBIT K - Indemnity and Subrogation Agreement
</TABLE>
(iv)
<PAGE>
TRAVELCENTERS OF AMERICA, INC.
(formerly National Auto/Truckstops Holdings Corporation)
SENIOR SECURED NOTE EXCHANGE AGREEMENT
8.94% Series I Senior Secured Notes due 2002
Series II Senior Secured Notes due 2005
New York, New York
as of March 21, 1997
To the Noteholder whose Name
Appears in the Acceptance
Form at the End Hereof
Ladies and Gentlemen:
The undersigned, TRAVELCENTERS OF AMERICA, INC., a Delaware
corporation (the "COMPANY"), hereby agrees with you (the "NOTEHOLDER") as
follows:
1. THE ORIGINAL NOTES AND THE RECAPITALIZATION; EXCHANGE OF
NOTES; REPRESENTATIONS OF NOTEHOLDER.
1.1. THE ORIGINAL NOTES.
National Auto/Truckstops, Inc., a Delaware corporation ("NATIONAL"),
is a wholly-owned Subsidiary of the Company. In order to provide the financing
for the ac quisition of a truckstop network (the "NATIONAL NETWORK"), Na tional
issued $65,000,000 aggregate principal amount of its 8.76% Senior Secured Notes
due 2002 (the "NATIONAL NOTES") pursuant to the several Senior Note Purchase
Agreements dated as of April 13, 1993, as heretofore amended (as so amended, the
"NATIONAL PURCHASE AGREEMENTS"), between National and the Company and the in
stitutional investors named in Schedule I thereto. TA Operating Corporation, a
Delaware corporation ("TA"), is a wholly-owned Subsidiary of TA Holdings
Corporation, a Delaware corporation ("TA HOLDINGS"), which is a wholly-owned
Subsidiary of the Company. In order to provide the financing for the acquisition
of another truckstop network (the "TA NETWORK" and, together with the National
Network, the "NETWORK"), TA issued $25,000,000 aggregate principal amount of its
Senior Secured Notes due 2002 (the "TA NOTES" and, together with the National
Notes, the "ORIGINAL NOTES") pursuant to the several Senior Note Purchase
Agreements dated as of December 9, 1993, as heretofore amended (as so amended,
the "TA PURCHASE AGREEMENTS" and, together with the National Purchase
Agreements, the "PURCHASE AGREEMENTS"), between TA and TA Holdings and the
institutional investors named in Schedule I thereto.
As of the date of this Agreement, $65,000,000 aggregate
principal amount of the National Notes and $25,000,000 aggregate principal
amount of the TA Notes are outstanding.
<PAGE>
2
1.2. THE RECAPITALIZATION.
On or before the Closing Date the Company will be recapitalized and
restructured pursuant to a series of transactions in which (a) TA will become a
direct wholly-owned Subsidiary of the Company, (b) TA Holdings will be merged
with and into the Company, (c) TA Franchise Systems Inc., a Delaware corporation
("TAFSI"), currently indirectly wholly-owned by the Company through TA Holdings
and TA, will become a direct wholly-owned Subsidiary of the Company, (d)
National will repay in full all outstanding Indebtedness under the Credit
Agreement and the Subordinated Note Purchase Agreement respectively referred to
in the National Purchase Agreements (the "EXISTING NATIONAL INDEBTEDNESS"), (e)
TA will pay in full all outstanding Indebtedness under the Credit Agreement and
the Subordinated Note Purchase Agreement respectively referred to in the TA
Purchase Agreements (the "EXISTING TA INDEBTEDNESS" and, together with the
Existing National Indebtedness, the "EXISTING INDEBTEDNESS"), and (f) the
obligations of National in respect of the National Notes and TA in respect of
the TA Notes shall be discharged. The transactions described in the preceding
sentence are sometimes collectively referred to as the "RECAPITALIZATION".
In order to finance the Recapitalization (i) the Company will
issue up to $125,000,000 aggregate principal amount of its Senior Subordinated
Notes due 2007 (the "SUBORDINATED NOTES"), (ii) the Company will purchase, or
shall cause TA to repay or purchase, in either case for cancellation, $4,500,000
unpaid principal amount of TA Notes (the "REDEEMED NOTES") the holder of which
is not one of the Noteholders, (iii) the Company will issue its senior secured
notes in exchange for all other Original Notes as herein provided, (iv) the
Company will enter into the Credit Agreement as defined below and (v) the
Company will make capital contributions or advances to National and TA
(including without limitation contributions of their respective Original Notes
for cancellation) in amounts sufficient to enable National and TA to discharge
their respective Existing Indebtedness and to pay accrued interest on the
Original Notes, transaction costs and other related expenses.
1.3. AUTHORIZATION OF EXCHANGE NOTES .
The Company has duly authorized an issue of its 8.94% Series I Senior
Secured Notes due 2002 in an aggregate principal amount of $35,500,000 (the
"FIXED RATE NOTES") and its Series II Senior Secured Notes due 2005 in an
aggregate principal amount of $50,000,000 (the "FLOATING RATE NOTES" and,
together with the Fixed Rate Notes, the "NOTES"), each such note to mature, bear
interest and otherwise be substantially in the respective forms of Exhibits A-1
and A-2 hereto. As used herein, the term "NOTES" shall include all notes
(irrespective of series unless otherwise specified) originally issued in
exchange for Original Notes pursuant to this Agreement and the other agreements
referred to in Section 4.27 and all notes delivered in substitution or exchange
for any of said notes and, where applicable, shall include the singular number
as well as the plural.
<PAGE>
3
1.4. INTEREST RATES ON THE NOTES; RESET PROCEDURES FOR
FLOATING RATE NOTES.
(a) FIXED RATE NOTES. Each Fixed Rate Note shall bear interest
from the date of issue at the rate of 8.94% per annum (computed on the basis
of a 360-day year of twelve 30-day months), payable semiannually on each
Interest Payment Date in each year until the principal thereof shall become
due and payable and shall bear interest on demand on any overdue principal
or premium, if any, and on any overdue installment of interest at the
Default Rate specified therein.
(b) FLOATING RATE NOTES. Each Floating Rate Note shall bear interest
from the date of issue, payable semiannually on each Interest Payment Date in
each year, at a rate per annum (computed on the basis of actual days
elapsed and a year of 360 days) equal to the Adjusted LIBOR Rate as in effect
from time to time for the applicable Interest Period until the principal thereof
shall become due and payable and shall bear interest on demand on any overdue
principal or overdue Break Funding Cost, if any, and on any overdue installment
of interest at the Default Rate specified therein. If you are exchanging your
Original Notes for Floating Rate Notes under this Agreement, at least one
Business Day before the Closing Date, the Company will give notice to you,
specifying the LIBOR Rate for the Initial Interest Period, which shall be
determined with respect to the Closing Date as if that date were a Reset Date,
and the resulting applicable Adjusted LIBOR Rate on the Floating Rate Notes for
the Initial Interest Period.
On each Reset Date the Company shall determine the LIBOR Rate for the
Interest Period then commencing and will give notice (by telephone or facsimile
to such person as the Calculation Holder may from time to time specify for such
purpose), together with a copy of the appropriate page on Telerate Access
Service or other display as specified in the definition of "LIBOR Rate" below,
to the Calculation Holder specifying the LIBOR Rate as so determined. If for any
reason the Calculation Holder, by notice to the Company (which notice shall be
given within one Business Day after the Reset Date), objects to such
determination, the LIBOR Rate as determined by the Calculation Holder shall be
final and binding upon the Company absent manifest error. Forthwith and in any
event within two Business Days after each Reset Date the Company will give
written notice to the holders of the Floating Rate Notes specifying the LIBOR
Rate and the resulting Adjusted LIBOR Rate on the Floating Rate Notes for the
Interest Period commencing on that Reset Date and stating whether the
Calculation Holder determined (or confirmed the Company's determination of) the
LIBOR Rate for that Interest Period. If for any reason the Company and the
Calculation Holder fail to determine the LIBOR Rate for any Interest Period,
<PAGE>
4
the determination of the LIBOR Rate by any other institutional investor
holder of a Floating Rate Note (acting in place of the Calculation Holder if
necessary) and specified in a written notice to the Company shall be final and
binding upon the Company and the holders of the Floating Rate Notes absent
manifest error, provided that in case more than one such institutional investor
holder gives such a written notice and the LIBOR Rate in such notices is not the
same rate, the LIBOR Rate shall be the rate agreed upon by such other
institutional investor holders as specified in a subsequent notice to the
Company (delivered not later than one Business Day from the date of the later of
the notices referred to above), which rate shall be final and binding as
aforesaid.
(c) CERTAIN DEFINED TERMS AND PROCEDURES. For purposes of
determining the applicable interest rate on the Floating Rate Notes, the
following terms have the following meanings (and certain matters will be
determined in accordance with procedures as specified below):
"ADJUSTED LIBOR RATE" means with respect to any Interest Period
a rate per annum equal to the LIBOR Rate for such Interest Period plus
the LIBOR Spread in effect from time to time during such Interest Period.
"CALCULATION HOLDER" means the institutional investor holding
the highest unpaid principal amount of Floating Rate Notes at the time
outstanding and willing to serve in such capacity. John Hancock Mutual
Life Insurance Company shall act as the Calculation Holder, until the
Company receives written notice to the contrary.
"DESIGNATED MATURITY" means for any Reset Date a period of six
months corresponding to the Interest Period commencing on such Reset Date.
"INITIAL INTEREST PERIOD" means the period commencing on and
including the Closing Date and ending on (but excluding) September 30,
1997.
"INTEREST PERIOD" means the Initial Interest Period and
thereafter a period commencing on and including a Reset Date and ending on
(but excluding) the next succeeding Interest Payment Date. Notwithstanding
the foregoing, if any Interest Payment Date is not a London Banking Day,
such Interest Period shall be extended to the next day that is a London
Banking Day and if there is no numerically corresponding date in the
appropriate month, such Interest Period shall end on the last London
Banking Day of such month.
"LIBOR RATE" means for the Initial Interest Period the rate
specified in the notice from the Company given pursuant to Section 1.4(b);
and means for any Reset Date the rate (rounded upwards, if necessary, to
<PAGE>
5
the next 1/16 of 1%) for deposits in U.S. Dollars for a period of the
Designated Maturity and in a Representative Amount which appears on the
display designated as "Page 3750" on Telerate Access Service (or such
other display as may replace Page 3750 on Telerate Access Service) as of
11:00 a.m., London time, on the date that is two London Banking Days
preceding that Reset Date; and if such rate does not appear on Telerate
Page 3750 (or such other display), the rate for that Reset Date will be
the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which
deposits in U.S. dollars are offered (i) to the principal London office of
the Agent (as defined in the Credit Agreement) in immediately available
funds in the London interbank market so long as there is an Agent, or
(ii) in accordance with the procedures described below, by the Reference
Banks to prime banks in the London interbank market, in each case, at
approximately 11:00 a.m., London time, on the day that is two London
Banking Days preceding that Reset Date for a period of the Designated
Maturity commencing on that Reset Date and in a Representative Amount. The
Company will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such quotations
are provided, the rate for that Reset Date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested,
the rate for that Reset Date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Calculation
Holder, at approximately 11:00 a.m., New York City time, on that Reset
Date for loans in U.S. dollars to leading European banks for a period of
the Designated Maturity commencing on that Reset Date and in a
Representative Amount.
"LIBOR SPREAD" means 3.00%; provided that so long as no
Default or Event of Default shall have occurred and be continuing, the
LIBOR Spread on any date after the termination of the Interest Period
immediately following the Initial Interest Period shall be reduced by
0.25% at any time that the Facilities (as defined in the Credit Agreement)
or the Floating Rate Notes, as the case may be, are rated at least Ba2 by
Moody's or BB by Standard & Poor's so long as the Facilities or Floating
Rate Notes, as the case may be, are rated at least Ba3 by Moody's and BB-
by Standard & Poor's.
"LONDON BANKING DAY" means any day other than Saturday or
Sunday or a day on which commercial banks are required or authorized by
law to be closed in London, England.
"REFERENCE BANKS" means four major banks in the
London interbank market.
<PAGE>
6
"REPRESENTATIVE AMOUNT" means an amount that is comparable to
the unpaid principal amount of the Floating Rate Notes at the relevant
time.
"RESET DATE" means the last day of the immediately
preceding Interest Period.
1.5. SECURITY FOR THE NOTES.
The Notes will be unconditionally guaranteed by National and TA
(individually, a "GUARANTOR" and collectively, the "GUARANTORS"), pursuant
to a guarantee agreement, substantially in the form of Exhibit B hereto (the
"GUARANTEE AGREEMENT"), between the Guarantors and the Collateral Agent. The
Notes will be secured, equally and ratably with the Term Facility and the
Revolving Facility (including the Swingline Loans and the Letters of Credit)
respectively provided pursuant to the Credit Agreement, by the Security
Documents, including, INTER ALIA, (a) mortgages, leasehold mortgages, deeds of
trust and assignments of leases and rents, each substantially in the form of
Exhibit C hereto, from National or TA to the Collateral Agent covering the
Mortgaged Properties (collectively the "MORTGAGES"), (b) a security agreement,
substantially in the form of Exhibit D hereto, between the Company, the
Guarantors and TAFSI and the Collateral Agent (the "SECURITY AGREEMENT"), (c) a
pledge agreement, substantially in the form of Exhibit E hereto, between the
Company, the Guarantors and TAFSI and the Collateral Agent (the "PLEDGE
AGREEMENT"), (d) a collateral assignment, substantially in the form of Exhibit F
hereto, from the Company, the Guarantors and TAFSI to the Collateral Agent
providing for the assignment to the Collateral Agent of the Environmental
Agreements, the Ancillary Agreements, the Franchise Agreements, the Rate
Protection Agreements and certain other agreements specified in such Collateral
Assignment (the "COLLATERAL ASSIGNMENT"), (e) one or more lockbox agreements
between the Company, the Guarantors and TAFSI and the Collateral Agent (and a
sub-agent as appropriate), in the form provided for in the Security Agreement
(collectively the "LOCKBOX AGREEMENTS"), (f) a trademark security agreement,
substantially in the form of Exhibit G hereto, between the Company, the
Guarantors and TAFSI and the Collateral Agent (the "TRADEMARK SECURITY
AGREEMENT") and (g) a Collateral Account Agreement. The respective rights of the
holders of the Notes and the Lenders party to the Credit Agreement with respect
to the Collateral and other matters shall be governed by a master collateral and
intercreditor agreement, substantially in the form of Exhibit H hereto, among
the Noteholders, such Lenders and the Collateral Agent (the "INTERCREDITOR
AGREEMENT").
1.6. REPRESENTATION OF THE NOTEHOLDER.
The Noteholder represents to the Company that: (a) it is, or it has
the authority to act on behalf of, the beneficial owner of Original Notes of
the issuer or issuers in the aggregate principal amount or amounts set forth
<PAGE>
7
below its name in the acceptance form of this Agreement, (b) it is
exchanging on the Closing Date the Original Notes owned by it for Notes without
a view to any distribution of such Notes, subject, however, to the disposition
of its property being at all times within its control and (c) that the
representation made by it with respect to the source of funds used by it to
purchase the Original Notes in Section 1.04(b) of the National Purchase
Agreements or Section 1.04(b) of the TA Purchase Agreements, as the case may be,
was true and correct as of the date such representation was made.
2. EXCHANGE OF NOTES; THE CLOSING.
Subject to the terms of this Agreement, the Company hereby agrees
to issue to the Noteholder, and the Noteholder hereby agrees to surrender
Original Notes to the Company in exchange for, Notes of the series and in the
aggregate principal amount set opposite its name in Schedule I hereto.
The closing of the exchange of Notes under this Agreement shall be
held at the office of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue
of the Americas, New York, NY 10019, at 10:00 A.M., New York City time,
on March 27, 1997, or such later date as shall be mutually satisfactory to the
Company and the Noteholder (the "CLOSING DATE"). On the Closing Date the Company
will (i) pay all accrued interest on the Original Notes held by the Noteholder,
in the manner required by the Purchase Agreements in respect of such Original
Notes and (ii) deliver to the Noteholder one or more Notes in exchange for all
Original Notes held by the Noteholder, registered in its name or the name of its
nominee, in any denominations (integral multiples of $500,000), and in the
series and aggregate principal amount to be acquired by the Noteholder, all as
the Noteholder may specify by timely notice to the Company (or, in the absence
of such notice, one Note of the series to be acquired, registered in the
Noteholder's name), duly executed and dated the Closing Date, against surrender
of such Original Notes.
3. CONDITIONS OF CLOSING.
The obligation of the Noteholder to surrender Original Notes in
exchange for the Notes to be acquired by it hereunder shall be subject to
the satisfaction on or before the Closing Date of the conditions hereinafter
set forth.
3.1. PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the issue of the Notes and
the consummation of the transactions contemplated hereby and by the other
Transaction Documents and all documents and papers relating thereto shall be
satisfactory to the Noteholder and its special counsel, and the Noteholder
and its special counsel shall have received copies of such documents and
papers, all in form and substance satisfactory to the Noteholder and its special
counsel, as the Noteholder or such counsel may reasonably request in connection
therewith.
<PAGE>
8
3.2. REPRESENTATIONS TRUE, ETC.; OFFICER'S CERTIFICATES.
All representations and warranties of the Company contained in
Section 4 shall (except as expressly affected by the transactions
contemplated hereby) be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date; each of the Company and the Guarantors shall
have performed all material agreements on its or their respective parts required
to be performed under this Agreement and the other Transaction Documents on or
prior to the Closing Date; the Company shall not have consolidated with, merged
into, or sold, leased, transferred or otherwise disposed of its properties as an
entirety or substantially as an entirety to, any Person (whether or not the same
would have been permitted by Section 7.5); no Default or Event of Default shall
have occurred and be continuing under this Agreement, the Credit Agreement or
the Subordinated Note Indenture; and the Noteholder shall have received a
certificate or certificates duly executed by the President or the chief
financial officer of the Company and dated the Closing Date, certifying to the
effect specified in this Section 3.2.
3.3. OPINIONS OF COUNSEL.
The Noteholder shall have received opinions of counsel, each dated
the Closing Date and addressed to it, from
(a) Willkie Farr & Gallagher, who are acting as its special
counsel in connection with this transaction, in form and substance
satisfactory to the Noteholder,
(b) Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the
Company, the Guarantors and TAFSI, substantially in the form of
Exhibit I-1 hereto,
(c) James F. Blackstock, General Counsel of the Company,
substantially in the form of Exhibit I-2 hereto, and
(d) each firm listed on Schedule 5.2(b) hereto, substantially in
the form of Exhibit I-3 hereto (with appropriate variations
for each state, as contemplated by said Exhibit),
and each such opinion shall cover such other matters incident to this
transaction as the Noteholder may reasonably request. The Company hereby
instructs each such counsel referred to in clauses (b), (c) and (d) above to
deliver its opinion to the Noteholder.
<PAGE>
9
3.4. RECAPITALIZATION.
The Recapitalization and the other Transactions shall have been
consummated or shall be consummated simultaneously with the closing
contemplated by this Agreement in accordance with documentation reasonably
satisfactory to the Noteholder and applicable law, and the Noteholder shall
(i) be satisfied with the capitalization, structure and equity ownership of the
Company and its subsidiaries after giving effect to the Recapitalization and the
other Transactions, (ii) be satisfied with all voting and other governance
arrangements under the certificate of incorporation, by-laws, voting trust
agreement, stockholders agreement and all related documents and (iii) be
satisfied that, in connection with the Recapitalization and the other
Transactions, the aggregate amount of fees and expenses shall not exceed
$16,500,000.
3.5. SUBORDINATED NOTES.
The Company shall have received not less than $125,000,000 in gross
cash proceeds from the issuance of the Subordinated Notes in a public
offering or Rule 144A or other private placement to subordinated note purchasers
reasonably satisfactory to the Noteholder, which Subordinated Notes shall (i)
bear interest at a rate not greater than the then-current market rate of
interest as determined in good faith by the Company at the time of issuance of
the Subordinated Notes, (ii) mature not earlier than the tenth anniversary of
the Closing Date, and not be subject to any sinking fund requirements or other
amortization, (iii) be subordinated to the Notes on terms reasonably
satisfactory to the Noteholder and (iv) otherwise have terms and conditions
reasonably satisfactory in all respects to the Noteholder (including but not
limited to terms relating to fees, covenants, events of default and remedies).
3.6. CREDIT FACILITIES.
The Company shall have entered into the Credit Agreement in form
and substance reasonably satisfactory to the Noteholder; and the Company
shall have borrowed under the Term Facility upon satisfaction of the conditions
precedent thereto. The Noteholder shall have received true and complete copies
of each certificate, opinion or other writing then or theretofore delivered to
any party to the Credit Agreement in respect of the satisfaction of such
conditions precedent (without duplication as to conditions specifically set
forth in this Section 3), and in the case of opinions of counsel or other
experts not addressed to the Noteholder, an appropriate reliance letter
addressed to the Noteholder.
3.7. INTERCREDITOR AGREEMENT.
The Intercreditor Agreement shall have been duly executed and
delivered in the form hereinabove recited and shall be in full force and
effect and the Noteholder shall have received a counterpart thereof executed by
the Collateral Agent.
<PAGE>
10
3.8. GUARANTEE AGREEMENT; INDEMNITY AND SUBROGATION
AGREEMENT.
The Guarantee Agreement shall have been duly executed and delivered
by the Guarantors in the form hereinabove recited and shall be in full
force and effect, and the Noteholder shall have received an executed counterpart
thereof. The Indemnity and Subrogation Agreement shall have been duly executed
by the Company, each Guarantor and the Collateral Agent in the form hereinabove
recited and shall be in full force and effect, and the Noteholder shall have
received an executed counterpart thereof.
3.9. EXISTING INDEBTEDNESS; REDEEMED NOTES.
The Existing Indebtedness shall have been repaid in full, all
commitments to lend thereunder shall have been permanently terminated and
all obligations thereunder and security interests relating thereto shall have
been discharged, and the Noteholder shall have received reasonably satisfactory
evidence of such repayments, termination and discharge. The Company shall have
purchased for cancellation, or shall have caused TA to repay or purchase for
cancellation, the Redeemed Notes (such Redeemed Notes being all Original Notes
not being exchanged for Notes pursuant to this Agreement and the other
agreements referred to in Section 4.27).
3.10. NO LIABILITIES.
After giving effect to the Recapitalization and the other
Transactions, the Guarantors, TAFSI and the Company shall have no
liabilities other than (i) the Notes, (ii) the Loans, the Swingline Loans and
the Letters of Credit, (iii) the Guarantee Agreement, (iv) the Subordinated
Notes and the Subordinated Note Guarantees and (v) other liabilities
satisfactory to the Noteholder and Indebtedness permitted under Section 7.1.
3.11. SOLVENCY.
The Noteholder shall have received a solvency letter, in form and
substance reasonably satisfactory to the Noteholder, from Valuation
Research Corp. together with such other evidence reasonably requested by the
Noteholder of the solvency of (i) the Guarantors, TAFSI and the Company, on a
consolidated basis, and (ii) the Guarantors, in each case after giving effect to
the Recapitalization and the other Transactions.
3.12. PLEDGE AGREEMENT.
Each of the following shall have occurred:
<PAGE>
11
(a) the Pledge Agreement shall have been duly executed and
delivered in the form hereinabove recited and shall be in full force
and effect;
(b) certificates representing the Pledged Securities (as such term
is defined in the Pledge Agreement), together with undated stock powers for
such certificates executed in blank, shall have been delivered to the Collateral
Agent or its designee;
(c) such other certificates, instruments or documents constituting
Collateral pledged thereunder shall have been delivered to the Collateral
Agent; and
(d) the Noteholder shall have received evidence that all action
necessary or, in the opinion of the Noteholder, desirable to create a
perfected first priority Lien on the Collateral pledged thereunder shall have
been taken.
3.13. SECURITY DOCUMENTS.
Each of the following shall have occurred:
(a) the Security Agreement, the Collateral Account Agreement,
the Trademark Security Agreement, the Collateral Assignment and any Lockbox
Agreement required by the Noteholder or the Collateral Agent to be executed and
delivered shall have been duly executed and delivered in the respective forms
hereinabove recited and shall be in full force and effect;
(b) proper Financing Statements (Form UCC-1 or any other form that
may be required by any jurisdiction) shall have been duly filed under the
Uniform Commercial Code of all jurisdictions as may be necessary or, in the
opinion of the Noteholder, desirable to perfect the Liens created by such
Security Documents;
(c) the Noteholder shall have received certified copies of
requests for information or copies (Form UCC-11), or equivalent reports,
listing all effective financing statements that name the Company, National, TA
or TAFSI as debtor and that are filed in the jurisdictions referred to in
subsection (b) above, together with copies of such financing statements (none
of which shall cover the Collateral purported to be covered by the Security
Documents, except as shall be terminated on the Closing Date); and
(d) the Noteholder shall have received evidence
satisfactory to it that the insurance required by Section 6.2 is in full
force and effect.
3.14. MORTGAGED PROPERTIES; MORTGAGES AND LEASEHOLD MORTGAGES.
Each of the following shall have occurred:
<PAGE>
12
(a) the Noteholder shall have received (i) a Mortgage or Leasehold
Mortgage, as the case may be, with respect to each of the Mortgaged
Properties, in recordable form satisfactory to the Noteholder, duly executed,
acknowledged and delivered by the Guarantors, (ii) title insurance policies for
each Mortgaged Property issued to the Collateral Agent in such forms and amounts
as are acceptable to the Noteholder, insuring that each Mortgage and Leasehold
Mortgage is a valid first priority lien on the respective Mortgaged Property, as
the case may be, subject to only such exceptions to title as shall be acceptable
to the Noteholder in its sole discretion and containing such endorsements and
affirmative insurance as the Noteholder may require and as are obtainable in the
applicable jurisdiction and (iii) either (A) a satisfactory certificate from a
Responsible Officer of the applicable Guarantor certifying that the surveys
relating to the Mortgaged Properties of such Guarantor delivered to the
purchasers of Original Notes in connection with the TA Purchase Agreements and
the National Purchase Agreements are true and correct in all material respects
as of the Closing Date or (B) a current ALTA survey and surveyor's
certification, in form and substance reasonably acceptable to the Noteholder, of
such Mortgaged Property; and
(b) the Noteholder shall have received a satisfactory certificate from
a Responsible Officer of the applicable Guarantor certifying that, to the best
of his or her knowledge, all New Improvements (as defined in Section 6.14)
located upon each Mortgaged Property set forth on Schedule 6.14 have been
completed in accordance with applicable laws, rules, regulations and statutes
(including any zoning, building, Environmental and Safety Laws, ordinance, code
or approval or any building permits) and all restrictions of record and all
material agreements affecting the Mortgaged Property and all decrees or orders
of any Governmental Authority with jurisdiction with respect thereto.
3.15. [INTENTIONALLY OMITTED]
3.16. OTHER ARRANGEMENTS.
The Noteholder shall be reasonably satisfied in all material respects
with all arrangements among the Company, the Operators that are stockholders of
the Company and the Resellers that are stockholders of the Company, including
all franchise, lease and fuel supply agreements.
3.17. APPRAISALS.
The Noteholder shall have received appraisals, reasonably satisfactory
in form and substance to the Noteholder, from an appraiser reasonably
satisfactory to the Noteholder, of the real property, personal property and
other assets of the Company and its Subsidiaries after giving effect to the
Transactions and the other transactions contemplated hereby.
<PAGE>
13
3.18. LEGAL, TAX AND ACCOUNTING MATTERS.
The Noteholder shall be satisfied with all legal, tax and accounting
matters relating to the Transactions, the financing therefor and all other
transactions contemplated hereby.
3.19. CERTAIN LIABILITIES.
The Noteholder shall be satisfied in all respects with the tax and
ERISA positions and the contingent tax and other liabilities of each Guarantor,
TAFSI and the Company and the plans of such Guarantor and the Company with
respect thereto.
3.20. FLOATING RATE NOTE FACILITY FEE.
If the Noteholder is acquiring Floating Rate Notes, the Noteholder
shall have received a facility fee in an amount set forth below its name in the
acceptance form of this Agreement.
3.21. APPROVALS.
All requisite Governmental Authorities and third parties shall have
approved or consented to the Recapitalization and the other Transactions to the
extent required, all applicable appeal periods shall have expired and there
shall be no governmental or judicial action, actual or threatened, that has or
would have a reasonable likelihood of restraining, preventing or imposing
burdensome conditions on the transactions contemplated hereby.
3.22. NO LITIGATION.
There shall be no litigation or administrative proceedings or other
legal or regulatory developments, actual or threatened, that, in the judgment of
the Noteholder, involve a reasonable possibility of a material adverse effect on
the business, assets, operations, properties, financial condition, contingent
liabilities, prospects or material agreements of the Guarantors, TAFSI and the
Company, taken as a whole, or the ability of the Guarantors, TAFSI and the
Company, taken as a whole, to perform their obligations under the Financing
Documents, or the ability of the parties to consummate the Recapitalization or
the other Transactions or the validity or enforceability of any of the Financing
Documents or the rights, remedies and benefits available to the Collateral Agent
and the Noteholder under the Financing Documents, or which would be materially
inconsistent with the assumptions underlying the projections set forth in the
Confidential Information Memorandum.
<PAGE>
14
3.23. DEPOSIT.
The Company shall have deposited directly into the Collateral Account
proceeds from the Term Loans in an amount not less than $45,000,000.
3.24. OTHER EXCHANGES; CANCELLATION OF ORIGINAL NOTES.
The other Noteholders shall have surrendered the respective aggregate
principal amounts of Original Notes held by them in exchange for the Notes to be
acquired by them under the other agreements referred to in Section 4.27; and the
Redeemed Notes and all other Original Notes shall have been cancelled or
arrangements satisfactory to the Noteholder for the prompt cancellation of such
Original Notes shall have been made.
3.25. LEGALITY.
On the Closing Date the Notes shall be a legal investment for the
Noteholder under the laws of each jurisdiction to which it may be subject,
without resort to any basket provisions of such laws such as New York Insurance
Law Section 1405(a)(8), and the Noteholder shall have received such certificates
or other evidence as it may reasonably request demonstrating such legality. In
addition, the exchange of Original Notes for Notes by the Noteholder shall not
subject the Noteholder to any penalty or, in the reasonable judgment of the
Noteholder, other onerous condition under or pursuant to any applicable law or
governmental regulation not in effect at the date of this Agreement.
3.26. PRIVATE PLACEMENT NUMBERS.
A private placement number shall have been obtained with respect to
the Notes of each series from Standard & Poor's CUSIP Service Bureau.
4. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Noteholder that:
4.1. ORGANIZATION; POWERS.
Each of the Company, TAFSI and the Guarantors (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, (b) has all requisite power and authority to own its property
and assets and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business and is in good standing in every
jurisdiction where such qualification is required (after giving effect to the
Recapitalization), except where the failure so to qualify or be in good standing
would not result in a Material Adverse Effect, and (d) has the corporate power
<PAGE>
15
and authority to execute, deliver and perform its obligations under each of the
Transaction Documents and each other agreement or instrument contemplated
thereby to which it is or will be a party and, in the case of Company, to issue
the Notes.
4.2. AUTHORIZATION; COMPLIANCE WITH LAWS, INSTRUMENTS.
The execution, delivery and performance by the Company, each Guarantor
and TAFSI, as applicable, of each of the Transaction Documents to which it is a
party, borrowings under the Credit Agreement, the issuance of the Notes in
exchange for Original Notes, the creation of the Liens contemplated by the
Security Documents and the other transactions contemplated by the Transaction
Documents (including (x) the Recapitalization, (y) the agreements executed and
delivered in connection with the offering of and the issuance by the Company of
the Notes and the Subordinated Notes and (z) the Company's capital contributions
or advances to National and TA in amounts sufficient to enable National and TA
to discharge their respective Existing Indebtedness and to pay accrued interest
on the Original Notes, transaction costs and other related expenses) (all the
foregoing, collectively, the "TRANSACTIONS") (a) have been duly authorized by
all requisite corporate and, if required, stockholder action on the part of the
Company, each Guarantor and TAFSI and (b) will not (i) violate (A) any provision
of any law, statute, rule or regulation, other than any law, statute, rule or
regulation, the violation of which will not result in a Material Adverse Effect
or of the certificate of incorporation or other constitutive documents or
by-laws of the Company, the Guarantors or TAFSI, (B) any order of any
Governmental Authority or (C) any provision of any material indenture, agreement
or other instrument to which the Company, either Guarantor or TAFSI is a party
or by which any of them or any of their property (including the Mortgaged
Property) or assets is or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument or (iii) result
in the creation or imposition of any Lien (other than any Lien created under the
Security Documents) upon or with respect to any property or assets now owned or
hereafter acquired by the Company, either Guarantor or TAFSI.
4.3. ENFORCEABILITY.
This Agreement has been duly executed and delivered by the Company and
constitutes, and each other Transaction Document to which the Company, a
Guarantor or TAFSI is a party when respectively executed and delivered by it
will constitute, a legal, valid and binding obligation of the Company, such
Guarantor or TAFSI, as the case may be, enforceable against it in accordance
with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
<PAGE>
16
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
4.4. GOVERNMENTAL APPROVALS.
No action, consent or approval of, registration or filing with or any
other action by any Governmental Authority by the Company, either Guarantor or
TAFSI is or will be required in connection with the Transactions, except such as
have been made or obtained and are in full force and effect and other than
filings, recordings and approvals (i) to record deeds and leases with respect to
real properties, (ii) to record and/or perfect the Liens created by the Security
Documents, (iii) to record a leasehold memorandum, if currently unrecorded, in
respect of any leasehold interest to which a Leasehold Mortgage relates, and
(iv) that are not material to the Company, either Guarantor or TAFSI,
individually or in the aggregate.
4.5. FINANCIAL STATEMENTS.
(a) The unaudited pro forma consolidated balance sheet of the Company
and its Subsidiaries as of December 31, 1996 (including the notes thereto) (the
"PRO FORMA BALANCE SHEET"), a copy of which has heretofore been furnished to the
Noteholder, has been prepared giving effect (as if such events had occurred on
such date) to (i) the Transactions and (ii) the payment of fees and expenses in
connection with the foregoing. The Pro Forma Balance Sheet (i) has been prepared
based on the assumptions used to prepare the pro forma financial information
contained in the Confidential Information Memorandum, (ii) is based on the best
information available to the Company as of the date of delivery thereof and
(iii) presents fairly on a pro forma basis the estimated consolidated financial
position of the Company and its Subsidiaries as of December 31, 1996, assuming
that the events specified in the preceding sentence had actually occurred at
December 31, 1996.
(b) The Company has heretofore furnished to the Noteholder the
consolidated and consolidating balance sheets of the Company and its
consolidated Subsidiaries and the related statements of operations,
stockholders' equity and cash flows as of and for the fiscal years ended
December 31, 1996, 1995 and 1994, audited by and accompanied by the opinion of
Price Waterhouse, independent public accountants, accompanied by a certificate
of a Financial Officer of the Company. Such financial statements present fairly
the financial condition and results of operations of the Company and its
consolidated Subsidiaries as of such dates and for such periods. Such financial
statements and the notes thereto disclose all material liabilities required
under GAAP to be disclosed, direct or contingent, of the Company and its
consolidated Subsidiaries as of the dates thereof. Such financial statements
were prepared in accordance with GAAP applied on a consistent basis.
<PAGE>
17
4.6. NO DEFAULT OR MATERIAL ADVERSE CHANGE.
Except as set forth in a letter from the Company delivered to the
Noteholder prior to the date hereof, no Default or Event of Default (as such
terms are respectively defined in the National Purchase Agreements and the TA
Purchase Agreements) has occurred and is continuing. Neither the Company, nor a
Guarantor nor TAFSI is in default (whether or not waived) in the performance or
observance of any of the terms, covenants or conditions contained in any
instrument evidencing any Indebtedness of such person that could reasonably be
expected to result in a Material Adverse Effect and no event has occurred or is
continuing which, with notice or lapse of time or both, would become such a
default. There has been no material adverse change in the business, assets,
operations, properties, financial condition, contingent liabilities, prospects
or material agreements of the Company and its Subsidiaries taken as a whole or
the Network since December 31, 1996.
4.7. TITLE TO PROPERTIES; POSSESSION UNDER LEASES.
(a) After giving effect to the consummation of the Transactions on the
Closing Date: each of the Company, TAFSI and each Guarantor will have good and
marketable title to, or valid leasehold interests in, all its material
properties and assets (including, in the case of the Guarantors, all Mortgaged
Property); all such material properties and assets shall be free and clear of
Liens, other than Liens expressly permitted by Section 7.2; and except for
leases of Mortgaged Property set forth on Schedule 7.2, no material portion of
any Mortgaged Property will be subject to any lease, license, sublease or other
agreement granting to any Person any right to use, occupy or enjoy the same.
(b) Except as set forth on Schedule 4.7(b), after giving effect to the
consummation of the Transactions on the Closing Date, each Guarantor shall have
complied with all material obligations under all material leases to which such
Guarantor shall then be a party, and all such leases shall be in full force and
effect; each Guarantor shall enjoy peaceful and undisturbed possession under all
such material leases under which it is tenant. Neither the Company nor TAFSI is
a party to any lease.
(c) Except as set forth in Schedule 4.7(c), neither the Company nor a
Guarantor has received any notice of, or has any knowledge of, any pending or
contemplated condemnation proceeding affecting the Mortgaged Properties, or any
sale or disposition thereof in lieu of condemnation.
(d) Neither the Company nor any Guarantor is obligated under any right
of first refusal, option or other contractual right to sell, assign or otherwise
dispose of any Mortgaged Property or any interest therein.
<PAGE>
18
4.8. SUBSIDIARIES.
As of the Closing Date and after giving effect to the Recapitalization
(a) the Company has no Subsidiaries other than the Guarantors and TAFSI and (b)
none of the Guarantors or TAFSI has any Subsidiaries.
4.9. LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as set forth on Schedule 4.9, there are no actions, suits
or proceedings at law or in equity or by or before any Governmental Authority
now pending or, to the knowledge of the Company, threatened against or affecting
the Company, the Guarantors or TAFSI or any business, property (including the
Network), assets or rights of any such person (i) that involve any Transaction
Document or the Transactions or (ii) as to which there is a reasonable
possibility of an adverse determination and which, if adversely determined,
could, individually or in the aggregate, result in a Material Adverse Effect.
(b) None of the Company, the Guarantors or TAFSI, nor any of their
respective material properties or assets, are in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate any material law, rule, regulation or statute (including any
zoning, building, Environmental and Safety Laws, ordinance, code or approval or
any building permits) or any restrictions of record or agreements affecting the
Mortgaged Property or are in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect.
(c) Certificates of occupancy and permits are in effect for 80% of the
aggregate value of the Mortgaged Properties, as currently constructed.
4.10. BURDENSOME AGREEMENTS, ETC.
After giving effect to the Recapitalization and the Transactions, none
of the Company, the Guarantors or TAFSI is in default in any manner under any
provision of any indenture or other agreement or instrument evidencing
Indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound,
where such default could reasonably be expected to result in a Material Adverse
Effect.
4.11. FEDERAL RESERVE REGULATIONS.
(a) None of the Company, the Guarantors or TAFSI is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.
<PAGE>
19
(b) No part of the proceeds of the sale of the Original Notes was used
by the Company, any Guarantor or TAFSI, whether directly or indirectly, and
whether immediately, incidentally or ultimately, (i) to buy or carry Margin
Stock or to extend credit to others for the purpose of buying or carrying Margin
Stock or to refund indebtedness originally incurred for such purpose or (ii) for
any purpose that entails a violation of, or is inconsistent with, the provisions
of the Regulations of the Federal Reserve Board, including Regulations G, T and
X.
4.12. INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT.
None of the Company, the Guarantors or TAFSI (a) is an "INVESTMENT
COMPANY" as defined in, or is subject to regulation under, the Investment
Company Act of 1940 or (b) is a "HOLDING COMPANY" as defined in, or is subject
to regulation under, the Public Utility Holding Company Act of 1935.
4.13. TAX RETURNS.
Each of the Company, each Guarantor and TAFSI has filed or caused to
be filed all material Federal, state and local tax returns required to have been
filed by it or with respect to it and has paid or caused to be paid all taxes
shown to be due and payable on such returns or on any assessments received by it
or with respect to it, except taxes that are being contested in good faith by
appropriate proceedings and for which the Company, such Guarantor or TAFSI shall
have set aside on its books adequate reserves in accordance with GAAP. Each of
the Company, each Guarantor and TAFSI has filed or made adequate provision on
its books in accordance with GAAP for any material taxes payable by it in
connection with the Transactions.
4.14. NO MATERIAL MISSTATEMENTS.
The information provided by or on behalf of the Company and contained
in the Confidential Information Memorandum (including all attachments and
exhibits thereto), as supplemented, and as supplemented further by information
heretofore provided in writing by or on behalf of the Company (including the
Offering Memorandum) to the Noteholder, when taken as a whole, was, as of the
date of such Confidential Information Memorandum, the dates otherwise specified
therein or the dates upon which such information was provided in writing,
accurate in all material respects and does not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading, provided that (a) the statements therein
describing documents and agreements are summaries only and as such are qualified
in their entirety by reference to such documents and agreements, (b) to the
extent any such information therein was based upon or constitutes a forecast or
projection, the Company represents only that it acted in good faith and utilized
reasonable assumptions, due and careful consideration and the best information
<PAGE>
20
known to it at the time in the preparation of such information and (c) as to the
information that is specified as having been supplied by third parties other
than Affiliates of the Company, the Company represents only that it is not aware
of any material misstatement therein or omission therefrom.
4.15. EMPLOYEE BENEFIT PLANS.
Each of the Company, the Guarantors and TAFSI and their ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the regulations and published interpretations
thereunder. No Reportable Event has occurred, been waived or exists as to which
the Company, either Guarantor, TAFSI or any ERISA Affiliate was or is required
to file a report with the PBGC, and the present value of all benefit liabilities
under each Plan (based on those assumptions used to fund such Plan) did not, as
of the last annual valuation date applicable thereto, exceed by more than
$2,000,000 the value of the assets of such Plan. None of the Company, the
Guarantors, TAFSI or any ERISA Affiliate has incurred any Withdrawal Liability
that could result in a Material Adverse Effect. None of the Company, the
Guarantors, TAFSI or any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization or has been terminated within the
meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected
to be in reorganization or to be terminated where such reorganization or
termination has resulted or could reasonably be expected to result, through
increases in the contributions required to be made to such Plan or otherwise, in
a Material Adverse Effect.
4.16. ENVIRONMENTAL AND SAFETY MATTERS.
(a) After giving effect to the Transactions, on the Closing Date each
of the Company, the Guarantors and TAFSI will be in compliance with all
Environmental and Safety Laws, with the exception of instances that will not
individually or in the aggregate result in any material liability on the part of
the Company, the applicable Guarantor or TAFSI, individually or collectively.
(b) (i) None of the Company, the Guarantors or TAFSI has received
notice of any failure to comply with, nor has any such notice been issued that
has not been fully satisfied so as to bring any property of the Company, the
Guarantors or TAFSI into full compliance with, all Environmental and Safety
Laws, except where such noncompliance, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, (ii) after giving
effect to the Transactions, the Company's and its Subsidiaries' Truckstops,
properties, plants and facilities do not use, manage, treat, store or dispose of
any Hazardous Substances in violation of any Environmental and Safety Laws,
except where such violations, individually or in the aggregate, could not
<PAGE>
21
reasonably be expected to have a Material Adverse Effect, (iii) all licenses,
permits or registrations (or any extensions thereof) required under any
Environmental and Safety Laws for the business of the Company and its
Subsidiaries as proposed to be conducted have been obtained and each of the
Company and its Subsidiaries is in compliance therewith, except for the failure
to obtain such licenses, permits or registrations or to comply therewith which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect and (iv) neither the Company nor any of its Subsidiaries
is in noncompliance with, breach of or default under any applicable writ, order,
judgment, injunction or decree where such noncompliance, breach or default would
materially and adversely affect the ability of the Company or any of its
Subsidiaries, as applicable, to operate the Mortgaged Property or any other real
property owned or leased by it, and no event has occurred and is continuing
that, with the passage of time or the giving of notice or both, would constitute
such noncompliance, breach or default thereunder.
(c) No Hazardous Substance has been Released (and no oral or written
notification of such Release has been filed) or is present (whether or not in a
reportable or threshold planning quantity) at, on or under any property owned or
leased by the Company or any of its Subsidiaries during the period of the
Company's or such Subsidiary's ownership or lease of such property, or to the
knowledge of the Company or either Guarantor at any time previous to such
ownership or lease, under conditions that require remedial action under
applicable Environmental and Safety Laws, except where such remedial action,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; the Company has not at any property now or previously
owned or leased by the Company or any of its Subsidiaries, directly or
indirectly, transported or arranged for the transportation of any Hazardous
Substances to any site listed, or proposed for listing, on the National
Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar Federal, state or foreign list of sites requiring
investigation or cleanup except where any liability for such transportation or
arrangement for transportation, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries is aware of any event, condition or circumstance
involving environmental pollution or contamination, or employee safety or health
relating to the use or handling of, or exposure to, Hazardous Substances that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
(d) The Company and its Subsidiaries are conducting and will continue
to conduct their respective businesses and operations in an environmentally
responsible manner, and the Company and its Subsidiaries, taken as a whole are
not and have no reason to believe that they will be subject to any requirement
of Environmental and Safety Laws that will result in cash expenditures related
to environmental, health or safety matters which, individually or in the
aggregate, could have a Material Adverse Effect.
<PAGE>
22
4.17. SOLVENCY.
After giving effect to the consummation of the Transactions to occur
on the Closing Date, (a) the fair salable value of the assets of each of (i) the
Company, the Guarantors and TAFSI, on a consolidated basis and (ii) the
Guarantors will exceed the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including contingent
liabilities) of the Company, the Guarantors, TAFSI, on a consolidated basis, and
the Guarantors, respectively, as they mature, (b) the assets of (i) the Company,
the Guarantors and TAFSI, on a consolidated basis and (ii) the Guarantors will
not constitute unreasonably small capital to carry out their businesses as
conducted or as proposed to be conducted, including the capital needs of the
Company, the Guarantors and TAFSI, on a consolidated basis or the Company,
respectively (taking into account, in each case, the particular capital
requirements of the businesses conducted by such entities and the projected
capital requirements and capital availability of such businesses), and (c) none
of the Company, either Guarantor or TAFSI intends to, nor do they believe that
they will, incur debts beyond their ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be received by them and
the amounts to be payable on or in respect of their obligations).
4.18. EMPLOYMENT AND MANAGEMENT AGREEMENTS.
Except as disclosed on Schedule 4.18, as of the Closing Date there are
no (a) employment agreements covering management employees of the Company, the
Guarantors or TAFSI or other material agreements relating to the compensation of
management employees (including the issuance of securities of the Company to
management employees), (b) agreements for management or consulting services to
which the Company, the Guarantors or TAFSI is a party or by which either of them
is bound or (c) collective bargaining agreements or other labor agreements
covering any of the employees of the Company, the Guarantors or TAFSI.
4.19. CAPITALIZATION.
(a) As of the Closing Date and after giving effect to the consummation
of the Transactions: the authorized capital stock of the Company will consist of
(i) 30,000,000 shares of common stock, par value $.01 per share (the "COMMON
STOCK"), of which 1,276,672 shares will be issued and outstanding and (ii)
20,000,000 shares of preferred stock, par value $.01 per share, of which (w)
6,000,000 shares have been designated Convertible Preferred Stock, Series I (the
"SERIES I PREFERRED STOCK"), of which 2,594,876 shares will be issued and
outstanding, (x) 2,500,000 shares have been designated Convertible Preferred
<PAGE>
23
Stock, Series II (the "SERIES II PREFERRED STOCK"), of which 1,237,374 shares
will be issued and outstanding, (y) 3,000,000 shares have been designated Senior
Convertible Participating Preferred Stock, Series I (the "SERIES I SENIOR
PREFERRED STOCK"), of which 2,680,656 shares will be issued and outstanding and
(z) 1,000,000 shares have been designated Senior Convertible Participating
Preferred Stock, Series II (the "SERIES II SENIOR PREFERRED STOCK"), of which
934,344 shares will be issued and outstanding; all such outstanding shares of
capital stock of the Company will be fully paid and nonassessable; and 1,086,250
shares of Common Stock will be owned of record by the Voting Trust in accordance
with the terms of the Voting Trust Agreement. Set forth on Schedule 4.20(a)(i)
is a list of every Person that, as of the Closing Date, will own beneficially
(as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934
or any successor thereto) and of record shares of any class of capital stock of
the Company, together with the number of shares of such class so owned. Set
forth on Schedule 4.20(a)(ii) is a list of every Person that, to the best of the
Company's knowledge based on information provided to it by the Voting Trustee
(as such term is defined in the Voting Trust Agreement) under the Voting Trust
Agreement, as of the Closing Date, will own beneficially and of record Voting
Trust Certificates, together with the number of shares represented by such
certificates so owned.
(b) The authorized capital stock of TA consists (and at all times
after the Closing Date will consist) of 1,000 shares of common stock, par value
$.01 per share, of which 100 shares are (and at all times after the Closing Date
will be) issued and outstanding. All such outstanding shares of capital stock of
TA are fully paid and nonassessable and, after giving effect to the
Recapitalization, are owned beneficially and of record by the Company.
(c) The authorized capital stock of National consists (and at all
times after the Closing Date will consist) of 1,000 shares of common stock, par
value $.01 per share, of which 10 shares are (and at all times after the Closing
Date will be) issued and outstanding. All such outstanding shares of capital
stock of National are fully paid and nonassessable and are owned beneficially
and of record by the Company.
(d) The authorized capital stock of TAFSI consists (and at all times
after the Closing Date will consist) of 1,000 shares of common stock, par value
$1 per share, of which 100 shares are (and at all times after the Closing Date
will be) issued and outstanding. All such outstanding shares of capital stock of
TAFSI are fully paid and nonassessable and, after giving effect to the
Recapitalization, are owned beneficially and of record by the Company.
<PAGE>
24
(e) Except as set forth on Schedule 4.19(e), there are no (and at all
times following the Closing Date there will be no) outstanding subscriptions,
options, warrants, calls, rights (including preemptive rights) or other
agreements or commitments (including pursuant to management or employee stock
plan or similar plan) of any nature relating to any capital stock of the
Company, either Guarantor or TAFSI.
4.20. SECURITY DOCUMENTS.
(a) The Pledge Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Pledge
Agreement) and proceeds thereof and, when the Collateral is delivered to the
Collateral Agent, the Pledge Agreement shall constitute a fully perfected first
priority Lien on, and security interest in, all right, title and interest of the
Company, each Guarantor or TAFSI, as applicable, in such Collateral and the
proceeds thereof, in each case prior and superior in right to any other Person.
(b) The Security Agreement and the Collateral Account Agreement are
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined, respectively, in the Security Agreement and the
Collateral Account Agreement) and proceeds thereof, and when financing
statements in appropriate form are filed in the offices specified on Schedule
4.20 (or, in the case of TAFSI, in the offices of the Secretary of State of the
State of Ohio) and, in the case of cash included in the Collateral under the
Collateral Account Agreement, when such cash is deposited in the Collateral
Account, each of the Security Agreement and the Collateral Account Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Company, each Guarantor or TAFSI, as applicable, in
such Collateral and the proceeds thereof, in each case prior and superior in
right to any other Person, other than with respect to Liens expressly permitted
by Section 7.2.
(c) The Mortgages are effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of each Guarantor's right, title and interest in and to
the Mortgaged Properties thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 1.1(b), the Mortgages
shall constitute fully perfected Liens on, and security interests in, all right,
title and interest of such Guarantor in such Mortgaged Properties and the
proceeds thereof, in each case prior and superior in right to any other Person,
other than with respect to the rights of Persons pursuant to Liens expressly
permitted by Section 7.2.
<PAGE>
25
(d) The Trademark Security Agreement is effective to create in favor
of the Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral (as defined in
the Trademark Security Agreement) and the proceeds thereof, and upon the filing
of assignment statements with the United States Patent and Trademark Office,
together with financing statements in appropriate form filed in the offices
specified on Schedule 4.20, the Trademark Security Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Company, the Guarantors and TAFSI in such Collateral and the proceeds
thereof, in each case prior and superior in right to any other person, other
than with respect to Liens expressly permitted by Section 7.2.
(e) The Collateral Assignment is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable assignment of, transfer of all right, title and interest of the
Company, each Guarantor or TAFSI as applicable, in, and security interest in,
the Assigned Contracts (as defined in the Collateral Assignment) and proceeds
thereof, and when financing statements in appropriate form are filed in the
offices specified on Schedule 4.20, the Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Company, such Guarantor or TAFSI, as applicable, in such Assigned
Contracts and the proceeds thereof, in each case prior and superior in right to
any other Person, other than with respect to Liens expressly permitted by
Section 7.2.
4.21. LABOR MATTERS.
There are no strikes, lockouts or slowdowns against the Company or any
of its Subsidiaries pending or, to the Company's knowledge, threatened. The
hours worked by and payment made to employees of the Company and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters,
where such violations could reasonably be expected to result in a Material
Adverse Effect. The consummation of the Transactions will not give rise to a
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound on the Closing Date.
4.22. LOCATION OF REAL PROPERTY AND LEASED PREMISES.
(a) Schedule 4.22(a) lists completely and correctly as of the Closing
Date all real property owned by the Guarantors and the addresses thereof. Each
Guarantor owns in fee all the real property set forth on Schedule 4.22(a) with
respect to such Guarantor.
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26
(b) Schedule 4.22(b) lists completely and correctly as of the Closing
Date all real property leased or subleased by the Guarantors and the addresses
thereof. Each Guarantor will have a valid lease or sublease in all the real
property set forth on Schedule 4.22(b) with respect to such Guarantor.
(c) Neither the Company nor TAFSI owns nor leases any real property.
4.23. INSURANCE.
The Company and each Guarantor maintains (after giving effect to
insurance it has caused each Network Operator, if any, to maintain) with
financially sound insurance companies insurance on all its properties in at
least such amounts and against at least such risks (but, including in any event,
all-risk casualty, public liability and product liability) as are usually
insured against in the same general geographic area by companies engaged in the
same or similar business. The Company has been named as an additional insured
party on each insurance policy that it has caused each Guarantor and each
Network Operator, if any, to maintain.
4.24. DELIVERY OF DOCUMENTS; REPRESENTATIONS AND WARRANTIES.
(a) The Company has previously made available, and has caused the
Guarantor to make available, to the Noteholder true, correct and complete copies
of all real property leases or subleases, easement agreements, option agreements
and other agreements, instruments and documents (whether or not recorded) that
encumber or otherwise affect the real property listed on Schedules 4.22(a) and
4.22(b).
(b) The Noteholder has been furnished with complete certified copies
(as certified to by, as applicable, the Secretary of the Company, the applicable
Guarantor or TAFSI) of the Environmental Agreements, the Credit Agreement, the
Subordinated Note Documents, the TA Stockholders Agreement and the Stockholders
Agreement, including all exhibits, schedules and disclosure letters referred to
therein or delivered pursuant thereto (if any), and all amendments thereto,
waivers relating thereto and other side letters or agreements affecting the
terms thereof. None of such documents and agreements has been amended,
supplemented or otherwise modified, nor have any of the provisions thereof been
waived, in each case in any manner that, in the reasonable judgment of the
Noteholder, is adverse in any material respect to the Noteholder, except
pursuant to a written agreement or instrument that has heretofore been consented
to by the Noteholder.
(c) Each of the Franchise Agreements, the Credit Agreement, the
Subordinated Note Documents, the Stockholder Agreements, the TA Stockholders
Agreement and the Environmental Agreements has been duly executed and delivered
<PAGE>
27
by the Company, TAFSI or the applicable Guarantor as applicable and, to the
Company's knowledge, by each other party thereto and each of the material terms
and provisions thereof is in full force and effect.
4.25. FEES AND EXPENSES.
Except for facility fees to be paid in connection with the exchange of
Floating Rate Notes, as contemplated by Section 3.20, neither the Company nor a
Guarantor or TAFSI has, directly or indirectly, paid or caused to be paid any
consideration (as supplemental or additional interest, a fee or otherwise) to
any holder of Original Notes in order to induce such holder to enter into this
Agreement or one of the other agreements referred to in Section 4.27, nor has
the Company or either Guarantor or TAFSI, directly or indirectly, agreed to make
any such payment. The aggregate amount of fees and expenses incurred in
connection with the Transactions by the Company, TAFSI and the Guarantors has
not and will not exceed $16,500,000.
4.26. OFFERING OF THE NOTES.
None of the Company, the Guarantors or TAFSI nor anyone acting on
their behalf has offered the Notes or the Guarantee Agreement or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Noteholder and the other holders of the Original Notes. None of the
Company, the Guarantors or TAFSI nor anyone acting on their behalf has taken, or
will take, any action which would subject the issuance of the Notes or the
execution and delivery of the Guarantee Agreement to Section 5 of the Securities
Act of 1933, as amended.
4.27. OTHER AGREEMENTS.
Simultaneously with the execution of this Agreement, the Company is
entering into other agreements that are identical in all respects with this
Agreement (except for the series and respective principal amounts of Notes to be
exchanged) with the other noteholders named in Schedule I. The aggregate
principal amount of Notes to be exchanged by the Noteholder and such other
noteholders is $85,500,000, but the exchanges by the Noteholder and such other
noteholders are to be separate and several transactions.
5. PREPAYMENT OF NOTES.
In addition to the payment of the entire unpaid principal amount of
the Notes of each series at the final maturity dates thereof, the Company will
make required, and may make optional, prepayments of the Notes as hereinafter
provided.
<PAGE>
28
5.1. REQUIRED PREPAYMENT.
(a) FIXED RATE NOTES. On June 30, 2001, December 31, 2001 and June 30,
2002 the Company will prepay $8,875,000 aggregate principal amount of the Fixed
Rate Notes (or, if less, the unpaid balance thereof), at the principal amount to
be prepaid, together with accrued interest on such principal amount to the date
of such prepayment, without premium, whether or not any optional prepayment has
been or is being made pursuant to Section 5.2; provided that upon any partial
prepayment of the Fixed Rate Notes pursuant to Section 5.3 or 5.4, the principal
amount of each required prepayment of the Fixed Rate Notes becoming due under
this Section 5.1(a) on and after the date of such partial prepayment shall be
reduced in the same proportion as the aggregate unpaid principal amount of the
Fixed Rate Notes is reduced as a result of such partial prepayment.
(b) FLOATING RATE NOTES. The Company will prepay the respective
principal amounts of the Floating Rate Notes (or if less, the unpaid balance
thereof) on the dates set forth below:
DATE OF PREPAYMENT PRINCIPAL AMOUNT OF PREPAYMENT
------------------ -------------------------------
June 30, 2003 $5,000,000
September 30, 2003 $5,000,000
December 31, 2003 $5,000,000
March 31, 2004 $5,000,000
June 30, 2004 $7,500,000
September 30, 2004 $7,500,000
December 31, 2004 $7,500,000
in each case at the principal amount to be prepaid, together with
accrued interest on such principal amount to the date of such prepayment,
without premium, whether or not any optional prepayment has been or is being
made pursuant to Section 5.2; provided that upon any partial prepayment of the
Floating Rate Notes pursuant to Section 5.3 or 5.4, the principal amount of each
required prepayment of the Floating Rate Notes becoming due under this Section
5.1(b) on and after the date of such partial prepayment shall be reduced in the
same proportion as the aggregate unpaid principal amount of the Floating Rate
Notes is reduced as a result of such partial prepayment.
5.2. OPTIONAL PREPAYMENTS.
The Company, upon not less than 10 or more than 30 days' prior written
notice of the date and amount of optional prepayment to the holders of the
Notes, may prepay at any time all or from time to time any part (in an integral
multiple of $1,000,000) of the Notes of either series, upon payment of the
principal amount so to be prepaid, together with accrued interest on such
principal amount to the date of such prepayment and the Make-Whole Premium for
any Fixed Rate Notes or the Break Funding Cost for any Floating Rate Notes.
<PAGE>
29
5.3. PREPAYMENTS IN CONNECTION WITH AVAILABLE PROCEEDS.
(a) If at any time the Company shall have Available Proceeds (as
hereinafter defined), the Company will, promptly and in any event within five
days after such Available Proceeds are identified as such, give written notice
thereof to the holders of the Notes, which notice shall contain an irrevocable
offer by the Company to apply to the prepayment of the Notes (pro rata according
to the respective unpaid principal amounts of Notes held by each such holder) an
amount (rounded to the nearest $1,000) equal to such Available Proceeds, such
prepayment to be made on a date (the "AVAILABLE PROCEEDS PREPAYMENT DATE")
specified in such notice (which date shall be not less than 10 days and not more
than 30 days after the date of such notice, subject in the case of Floating Rate
Notes to extension to the next following Interest Payment Date as provided in
Section 5.3(e)), in each case at the principal amount so to be prepaid, together
with accrued interest on such principal amount to the Available Proceeds
Prepayment Date and the applicable Break Funding Cost for any Floating Rate
Notes but without premium on any Fixed Rate Notes. Each holder of a Note may
reject such offer (in whole but not in part with respect to any Note) and shall
be deemed to have rejected such offer unless such holder shall have accepted
such offer by notice delivered to the Company in writing or by telecopy (or by
telephone promptly confirmed in writing or by telecopy) at least three Business
Days prior to the Available Proceeds Prepayment Date. If any such holder shall
have rejected (or be deemed to have rejected) such prepayment offer, such holder
shall not be deemed to have waived its rights under this Section 5.3 with
respect to any later prepayment offer. A holder of more than one Note may
exercise its option under this Section in respect of all or any one of its
Notes. If any holder of Fixed Rate Notes rejects or is deemed to have rejected
such prepayment offer, then on the Available Proceeds Prepayment Date (i) the
share of such Available Proceeds attributable to such Fixed Rate Notes shall be
allocated pro rata between the Floating Rate Notes and the Term Loans and (ii)
the Company shall offer to apply such pro rata amount in the manner set forth in
Section 5.3(c) to (A) the prepayment of Floating Rate Notes (pro rata according
to the respective unpaid principal amounts of Floating Rate Notes being prepaid)
and (B) to the prepayment of obligations outstanding under the Credit Agreement
in accordance with paragraphs (e) and (f) of Section 2.13 thereof (or the
analogous provisions, if any, in respect of Refinancing Indebtedness).
(b) The Company shall, not less than two Business Days prior to the
Available Proceeds Prepayment Date, deliver to each holder of Notes a notice
specifying (i) the aggregate principal amount of all Notes of each series to be
prepaid by the Company on the Available Proceeds Prepayment Date, and (ii) the
series and principal amount of Notes held by such holder to be prepaid on the
Available Proceeds Prepayment Date.
<PAGE>
30
(c) Each holder of a Floating Rate Note may, subject to the following
sentence, elect by notice delivered to the Company in writing or by telecopy (or
by telephone promptly confirmed in writing or by telecopy) at least one Business
Day prior to any Available Proceeds Prepayment Date, to decline all or a portion
of the prepayment offer referred to in clause (ii) of Section 5.3(a) (in respect
of amounts rejected by holders of Fixed Rate Notes and offered to such holder of
a Floating Rate Note) and, under such circumstances, the Company shall retain
all amounts (such amounts, together with all amounts declined by holders of Term
Loans pursuant to Section 2.13(h) of the Credit Agreement or the analogous
provisions in respect of Refinancing Indebtedness, the "DECLINED AMOUNTS") that
would otherwise be used to prepay Notes and Term Loans. In the event that any
portion of the Declined Amounts has not been invested in assets used in the
principal lines of business of the Company or its Subsidiaries or used by the
Company to make an optional prepayment pursuant to Section 5.2 during the
one-year period after such Declined Amounts were so declined, the Company shall
be required, on the last day of such one-year period, to apply an amount equal
to the Pro Rata Share of the remaining Declined Amounts attributable to the
Notes, all in accordance with this Section 5.3 to the same extent as if such
amount constituted Available Proceeds pursuant to Section 5.3(a), provided that
(i) any amounts declined by any holder of a Fixed Rate Note shall be allocated
pro rata between the Floating Rate Notes and the Term Loans and (ii) no holder
of Floating Rate Notes or Term Lender shall be entitled to decline to accept any
such mandatory prepayment. It is understood and agreed that all references in
this Section 5.3 to Fixed Rate Notes, Floating Rate Notes and Term Loans shall
be deemed to include any Refinancing Indebtedness with respect thereto.
(d) In the case of any Prepayment Event or other event giving rise to
Available Proceeds, in respect of which the Company is required to prepay Loans,
Swingline Loans and Letters of Credit pursuant to Section 2.13 of the Credit
Agreement (or the analogous provisions in respect of Credit Agreement
Refinancing Indebtedness) prior to the Available Proceeds Prepayment Date, the
Company will, concurrently with such prepayment pursuant to the Credit Agreement
(or in respect of Credit Agreement Refinancing Indebtedness), make effective
provision whereby the Available Proceeds are placed in escrow with the
Collateral Agent until the Available Proceeds Prepayment Date whereupon such
amounts shall be applied to prepayments under this Section 5.3 (or the analogous
provisions in respect of Refinancing Indebtedness).
(e) Notwithstanding contrary provisions in Section 5.3(a), if the
Interest Payment Date next following the date the Company is required to give
notice pursuant to Section 5.3(a) in respect of the prepayment of Floating Rate
Notes out of any Available Proceeds is more than 30 days after the date of such
notice, the Company may in such notice specify such next following Interest
<PAGE>
31
Payment Date for the Floating Rate Notes as the Available Proceeds Prepayment
Date for such prepayment of Floating Rate Notes, provided that on or before the
Available Proceeds Prepayment Date in respect of the Fixed Rate Notes the
Company shall have deposited in the Prepayment Account (as security for such
prepayment) the Available Proceeds in respect of the Floating Rate Notes. On
such Interest Payment Date or, at the direction of the Company, on any earlier
date, the Collateral Agent shall apply any cash deposited in the Prepayment
Account to such prepayment in respect of the Floating Rate Notes, provided that
such cash shall not be applied to the payment of any Break Funding Cost due on
account of such earlier prepayment if the effect would be to reduce the
principal amount that would have been prepaid without applying any such cash to
pay Break Funding Cost. For purposes of this Agreement, "PREPAYMENT ACCOUNT"
shall mean a collateral account established by the Company with the Collateral
Agent as security for the Floating Rate Notes and over which the Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal for application in accordance with this Section 5.3(e) (or the
analogous provisions in respect of Note Refinancing Indebtedness).
"AVAILABLE PROCEEDS" means, at any date of determination,
(1) in the case of Net Cash Proceeds resulting from a Prepayment
Event, an amount equal to the Pro Rata Share of the holders of the Notes in
respect of such Net Cash Proceeds, and
(2) in the case of any fiscal year of the Company for which Excess
Cash Flow exists, 50% of Excess Cash Flow for such fiscal year LESS the
portion, if any, of such percentage ---- applied (or required concurrently
to be applied) pursuant to Section 2.13(c) of the Credit Agreement (or the
analogous provisions in respect of Credit Agreement Refinancing
Indebtedness) to the prepayment of obligations under the Credit Agreement
(or in respect of Credit Agreement Refinancing Indebtedness).
The Company will furnish to the holders of the Notes, concurrently
with the financial statements and other information furnished pursuant to
Sections 6.4(a) and (b), a certificate of a Financial Officer of the Company
containing computations in reasonable detail showing whether any Available
Proceeds existed during the fiscal period covered by such financial statements
and the source of such Available Proceeds.
5.4. PREPAYMENT IN CONNECTION WITH A CHANGE IN CONTROL.
Promptly and in any event within five Business Days after the
occurrence of a Change in Control, the Company will give written notice thereof
to the holders of the Notes, which notice shall (a) describe the Change in
<PAGE>
32
Control in reasonable detail and specify the Change in Control
Prepayment Date and the Response Date (as respectively defined below) in respect
thereof, (b) contain an irrevocable offer by the Company to prepay all Notes at
the prices specified below on the date therein specified (the "CHANGE IN CONTROL
PREPAYMENT DATE"), which shall be not less than 20 nor more than 45 days after
the date of such notice, and (c) state that such offer is conditioned upon
acceptance thereof by the Required Holders. Each holder of a Note shall notify
the Company of such holder's acceptance or rejection of such offer by giving
written notice of such acceptance or rejection to the Company at least 10 days
prior to the Change in Control Prepayment Date (the "RESPONSE DATE"). If the
Required Holders accept such offer, the Company shall, no later than two days
after the Response Date, send written notice of such acceptance to each holder
of a Note which had rejected such offer, which notice shall advise each such
holder that it may, by notice to the Company no later than five days prior to
the Change in Control Prepayment Date, rescind its prior rejection and accept
such offer. The failure by the holder of a Note to respond to such offer in
writing on or before the Response Date shall be deemed to be a rejection of such
offer by such holder in respect of such Change in Control. The Company shall
(but only if the Required Holders shall have accepted such offer as provided
above) prepay on the Change in Control Prepayment Date all of the Notes held by
the holders as to which such offer has been so accepted, at the unpaid principal
amount of each such Note, together with accrued interest thereon to the Change
in Control Prepayment Date and the Make-Whole Premium or Break Funding Cost, as
applicable, with respect to such Note. If the Required Holders fail to accept
such offer, such offer shall be deemed to be rejected (and any acceptances
thereof shall be ineffective) and the Company shall give written notice thereof
to the holders of all Notes no more than five days after the Response Date. If
any holder shall reject such prepayment offer and, if applicable, not exercise
its right to rescind such rejection, such holder shall be deemed to have waived
its rights under this Section 5.4 to require prepayment of all Notes held by
such holder in respect of such Change in Control but not in respect of any
subsequent Change in Control. A holder of more than one Note may exercise its
option under this Section 5.4 in respect of all or any one of such Notes.
If the Change in Control Prepayment Date does not occur on the last
day of an Interest Period, the Company shall also pay each holder of a Floating
Rate Note then being prepaid an amount equal to the Break Funding Cost with
respect to such Note, as specified by written notice given by the holder of such
Note at least two Business Days prior to the Change in Control Prepayment Date
(or, if such notice is subsequently given by such holder, within two Business
Days after receipt of such notice by the Company). The obligation of the Company
to pay such Break Funding Cost with respect to the prepayment of any Floating
Rate Note pursuant to this Section 5.4 shall survive the prepayment of such
Floating Rate Note and the termination of this Agreement.
<PAGE>
33
5.5. OBLIGATION TO PREPAY AFTER NOTICE; MAKE-WHOLE
COMPUTATION.
The principal amount of the Notes designated for prepayment in any
notice of optional prepayment given pursuant to Section 5.2 shall become due and
payable on the date fixed for prepayment, together with accrued interest on such
principal amount to the date of such prepayment and the amount of any Make-Whole
Premium or Break Funding Cost, as applicable, for the Notes of each series. Two
Business Days prior to the date fixed for any prepayment under this Agreement
that includes a Make-Whole Premium, the Company will furnish to each holder of a
Fixed Rate Note being so prepaid a certificate signed by a Financial Officer of
the Company setting forth in reasonable detail the computation and the
methodology and assumptions made in connection therewith and attaching a copy of
the source of the market data by which the Treasury Yield was determined in
connection with such computation.
5.6. APPLICATION OF PREPAYMENTS.
Each prepayment of less than all outstanding Notes of either series
pursuant to Section 5.1 or 5.2 shall be applied by the Company pro rata, as
nearly as may be, to all outstanding Notes of such series according to the
respective unpaid principal amounts thereof.
5.7. NOTE PURCHASE PROHIBITION.
The Company will not, and will not permit any of its Affiliates to,
directly or indirectly acquire any Note, by purchase or otherwise, except (a) by
way of payment or prepayment thereof by the Company in accordance with the
provisions of the Notes and of this Agreement or (b) pursuant to an offer to
purchase made by any such Affiliate and which complies with the following
conditions:
(i) such offer shall require such Affiliate to purchase Notes on
the same terms and conditions (except for such difference in the offering
price that reflect the interest rates and maturities of the Notes of the
respective series), pro rata among all Notes tendered; and
(ii) such purchase shall not be made, directly or indirectly, in
connection with and in anticipation of or in consideration of any waiver or
amendment of any provision of this Agreement or any Transaction Document.
Promptly and in any event within five Business Days after each such purchase of
Notes, the Company will furnish each holder of the Notes with a certificate of a
<PAGE>
34
Financial Officer describing such purchase (including the aggregate principal
amount of Notes of each series so purchased and the purchase price therefor) and
certifying that such purchase was made in compliance with the requirements of
this Section.
6. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that, so long as any of the Notes
shall remain outstanding, the Company will and will cause each of its
Subsidiaries to:
6.1. EXISTENCE; BUSINESSES AND PROPERTIES; KEEP BOOKS.
(a) Do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its legal existence.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is currently conducted and operated; comply
in all material respects with all material applicable laws, rules, regulations
and statutes (including any zoning, building, Environmental and Safety Law,
ordinance, code or approval or any building permits or any restrictions of
record or agreements affecting the Mortgaged Property) and decrees and orders of
any Governmental Authority, whether now in effect or hereafter enacted; and at
all times maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.
(c) Maintain all financial records in accordance with GAAP.
6.2. INSURANCE.
(a) Keep (and/or cause the related Network Operator, if any, to keep)
the Company's properties (including Improvements and Personal Property (each as
defined in the Mortgages)) insured at all times by financially sound and
reputable insurers against loss by fire, casualty and such other hazards as may
be afforded by an "ALL RISK" policy or a fire policy covering "SPECIAL" causes
of loss, including building ordinance law endorsements; cause all such policies
to be endorsed or otherwise amended to include a "STANDARD" or "NEW YORK"
lender's loss payable endorsement, in form and substance reasonably satisfactory
to the Required Holders and the Collateral Agent, which endorsement shall
<PAGE>
35
provide that, from and after the Closing Date, the insurance carrier shall
pay all proceeds otherwise payable to the Company, the applicable
Guarantor or the applicable Network Operator under such policies directly to the
Collateral Agent unless (i) the amounts so payable shall not exceed $50,000 and
(ii) the insurance carrier shall not have received written notice from any
holder of a Note or the Collateral Agent that an Event of Default has occurred
and, if received, such notice shall not have been withdrawn (with the Required
Holders agreeing to withdraw such notice if the related Event of Default shall
have been cured and no other Event of Default shall then exist); cause all such
policies to provide that neither the Company, the Guarantors, any holder of a
Note, the Collateral Agent nor any other party shall be a coinsurer thereunder
and to contain a "REPLACEMENT COST ENDORSEMENT", without any deduction for
depreciation, and such other provisions as the Required Holders or the
Collateral Agent may reasonably require from time to time to protect their or
its interest; deliver (and/or cause the related Network Operator, if any, to
deliver) original or certified copies of all such policies to the Collateral
Agent; cause each such policy to provide that it shall not be canceled, modified
or not renewed (i) by reason of nonpayment of premium upon not less than 10
days' prior written notice thereof by insurer to the Collateral Agent or (ii)
for any other reason upon not less than 30 days' prior written notice thereof by
insurer to the holders of the Notes and the Collateral Agent; deliver to the
holders of the Notes and the Collateral Agent, prior to the cancellation,
modification or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Collateral Agent) together with evidence satisfactory to the
Collateral Agent of payment of the premium therefor; and cause each all risk
policy maintained by the Company or either Guarantor to be endorsed to provide
for a waiver by the related insurer of all its rights to recovery against any
Network Operator for damage covered by such policy.
(b) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "FLOOD HAZARD AREA" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency, obtain
(and/or cause the related Network Operator, if any, to obtain) flood insurance
in such total amount as the Collateral Agent or the Required Holders may from
time to time require, and otherwise comply with the National Flood Insurance
Program as set forth in said Flood Disaster Protection Act of 1973, as it may be
amended from time to time, or (ii) a "ZONE 1" area, obtain (and/or cause the
related Network Operator, if any, to obtain) earthquake insurance in such total
amount as the Collateral Agent or the Required Holders may from time to time
require.
(c) With respect to any Mortgaged Property, carry and maintain (and/or
cause the related Network Operator, if any, to maintain) comprehensive general
liability insurance including the "BROAD FORM CGL ENDORSEMENT" and coverage on
an occurrence basis against claims made for personal injury (including bodily
<PAGE>
36
injury, death and property damage) and umbrella liability insurance against any
and all claims, in no event for a combined single limit of less than $5,000,000,
naming the Collateral Agent as an additional insured, on forms satisfactory to
the Collateral Agent.
(d) Notify (and/or cause the related Network Operator, if any, to
notify) the holders of the Notes and the Collateral Agent immediately whenever
any separate insurance concurrent in form or contributing in the event of loss
with that required to be maintained under this Section 6.2 is taken out by the
Company, any Guarantor or any Network Operator; and promptly deliver to the
Collateral Agent a duplicate original copy of such policy or policies.
(e) Use its reasonable efforts to cause the Phase II Consultant (as
defined in the Environmental Agreements) to maintain, and name the Company as an
additional insured wherever permissible under the contracts of insurance,
coverage at levels at least as high as set forth in Schedule 6.2(e).
(f) In connection with the covenants set forth in this Section 6.2, it
is understood and agreed as follows:
(i) Neither the Noteholder nor the holders from time to time of
the Notes, nor their agents or employees shall be liable for any loss or
damage insured by the insurance policies required to be maintained under
this Section 6.2, it being understood that (A) the Company shall look, and
shall cause each Guarantor to look, solely to its insurance company or any
other parties other than the aforesaid parties for the recovery of such
loss or damage and (B) such insurance company shall have no rights of
subrogation against the Noteholder or any such holder or their agents or
employees. If, however, the insurance policies do not provide waiver of
subrogation rights against such parties, as requested above, then the
Company hereby agrees, to the extent permitted by law, to waive its right
of recovery, if any, against the Noteholder, the holders from time to time
of the Notes and their agents and employees.
(ii) The designation of any form, type or amount of insurance
coverage by the Noteholder, any holder of a Note or the Collateral Agent
under this Section 6.2, shall in no event be deemed a representation,
warranty or advice by the Noteholder, such holder or the Collateral Agent
that such insurance is adequate for the purposes of the Company's and each
Guarantor's business or the protection of the Company's and each
Guarantor's properties and the Required Holders and the Collateral Agent
shall have the right from time to time to require the Company to keep
(and/or cause any Guarantor or the related Network Operator, if any, to
<PAGE>
37
keep) other insurance in such form and amount as the Required Holders or
the Collateral Agent may reasonably request, provided that such insurance
shall be obtainable on commercially reasonable terms.
6.3. OBLIGATIONS AND TAXES.
Pay its Indebtedness and other obligations promptly and in accordance
with their terms and pay and discharge promptly when due all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise that, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such payment and
discharge shall not be required with respect to any such obligation, tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Company, a
Guarantor or TAFSI, as applicable, shall have set aside on its books adequate
reserves with respect thereto in accordance with GAAP and such contest operates
to suspend collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien and, in the case of a Mortgaged Property, there is no risk
of forfeiture of such property.
6.4. FINANCIAL STATEMENTS, REPORTS, ETC.
Furnish to each holder of a Note (in duplicate):
(a) as soon as available, and in no event later than 105 days (or 90
days during any time that the Company is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended) after the end
of each fiscal year, the consolidated and consolidating balance sheets and
related statements of income and cash flow, showing the consolidated financial
condition of the Company and its consolidated Subsidiaries as of the close of
such fiscal year and the results of their operations during such year, all
audited by Price Waterhouse or other independent public accountants of
recognized national standing and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect) to the effect that such
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) as soon as available, and in no event later than 60 days (or 45
days during any time that the Company is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended) after the end
of each of the first three fiscal quarters of each fiscal year, the unaudited
consolidated and consolidating balance sheets and related statements of income
<PAGE>
38
and changes in financial position, showing the consolidated financial condition
of the Company and its consolidated Subsidiaries as of the close of such fiscal
quarter and the results of their operations during such fiscal quarter and the
then elapsed portion of the fiscal year, all certified by a Financial Officer of
the Company as fairly presenting the consolidated financial condition and
results of operations of the Company and its consolidated Subsidiaries in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes required by GAAP;
(c) concurrently with any delivery of financial statements under
subsection (a) or (b) above, a certificate of the accounting firm or a Financial
Officer of the Company opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to accounting
matters and disclaim responsibility for legal interpretations) (i) certifying
that no Event of Default or Default has occurred during the period covered by
such financial statements or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and (ii) setting forth
computations in reasonable detail demonstrating compliance with the covenants
contained in Sections 7.13, 7.14, 7.15, 7.16 and 7.17;
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Company or any of its Subsidiaries with the Securities and Exchange Commission,
or any governmental authority succeeding to any of or all the functions of said
Commission, or with any national securities exchange, or made generally
available to its other security holders, or distributed to its shareholders, as
the case may be;
(e) a copy of all solicitations or requests for any proposed waiver or
amendment of any of the provisions of the Credit Agreement Documents or
Subordinated Note Documents (but only if the consent or approval of holders of
the Notes is required in connection therewith);
(f) promptly following the preparation thereof, copies of each
management letter prepared by the Company's, either Guarantor's or TAFSI's
auditors (together with any response thereto prepared by the Company, such
Guarantor or TAFSI);
(g) as soon as available, and in any event no later than 105 days
after the end of each fiscal year of the Company, historical summary data for
the immediately preceding year and forecasted financial projections and summary
data through the end of the then-current fiscal year, in substantially the same
form and format as set forth in Section 10 of the Confidential Information
Memorandum (including a specification of the underlying assumptions and a
<PAGE>
39
management discussion of historical results), all certified by a Financial
Officer of the Company to be a fair summary of its results and its good faith
estimate of the forecasted financial projections and results of operations for
the period through the then- current fiscal year;
(h) upon the earlier of (i) 105 days after the end of each fiscal year
of the Company (commencing with the fiscal year ended December 31, 1996) and
(ii) the date on which the financial statements with respect to such period are
delivered pursuant to subsection (a) above, a certificate of a Financial Officer
of the Company setting forth, in reasonable detail, the amount of Excess Cash
Flow, if any, for such period, it being understood that the certificate
delivered pursuant to this Section 6.4(h) for the fiscal year ended December 31,
1996 shall set forth the amount of Excess Cash Flow (as defined in the National
Purchase Agreement and the TA Purchase Agreement, respectively) for such period
for National and TA, respectively;
(i) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Company, either
Guarantor or TAFSI, or compliance with the terms of any Financing Document, as
such holder may reasonably request;
(j) promptly, a copy of any amendment or waiver of any provisions of
any agreement referred to in Section 7.10, any amendment or waiver of any
provision of the Credit Agreement Documents not requiring the consent or
approval of holders of the Notes;
(k) promptly, a copy of any notice of a default received by the
Company, either Guarantor or TAFSI under any other Financing Document;
(l) promptly, a copy of any notice of default received by the Company,
either Guarantor or TAFSI (i) from the Agent or any Lender under the Credit
Agreement or (ii) under the Subordinated Note Indenture; and
(m) a copy of all notices (other than regarding any scheduled or
mandatory repayments), certificates, financial statements and reports, as and
when delivered by or on behalf of the Company, either Guarantor or TAFSI (i) to
the Agent or any Lender under the Credit Agreement or (ii) under the
Subordinated Note Indenture (except to the extent any such notice, certificate,
financial statement or report is otherwise required to be delivered pursuant to
this Agreement).
6.5. LITIGATION AND OTHER NOTICES.
Furnish to each holder of a Note prompt written notice of the
occurrence of the following:
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40
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with respect
thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or proceeding,
whether at law or in equity or by or before any Governmental Authority, against
the Company or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect; and
(c) any development that has resulted in, or could reasonably be
anticipated to result in, a Material Adverse Effect.
6.6. ERISA.
(a) Comply in all material respects with the applicable provisions of
ERISA.
(b) Furnish to each holder of a Note (i) as soon as possible, and in
any event within 30 days after any Responsible Officer of the Company or either
Guarantor or any ERISA Affiliate either knows or has reason to know that any
Reportable Event has occurred, as to which the Company, either Guarantor, TAFSI
or any ERISA Affiliate was or is required to file a report with the PBGC, that
alone or together with any other Reportable Event could reasonably be expected
to result in liability of the Company, either Guarantor, TAFSI or any ERISA
Affiliate to the PBGC in an aggregate amount exceeding $2,000,000, a statement
of a Financial Officer of the Company setting forth details as to such
Reportable Event and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Reportable Event given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice the Company,
either Guarantor, TAFSI or any ERISA Affiliate may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or Plans (other than
a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the Code) or to appoint
a trustee to administer any Plan or Plans, (iii) within 10 days after the due
date for filing with the PBGC pursuant to Section 412(n) of the Code of a notice
of failure to make a required installment or other payment with respect to a
Plan, a statement of a Financial Officer of the Company, such Guarantor or
TAFSI, as applicable, setting forth details as to such failure and the action
proposed to be taken with respect thereto, together with a copy of such notice
given to the PBGC and (iv) promptly and in any event within 30 days after
receipt thereof by the Company, either Guarantor, TAFSI or any ERISA Affiliate
from the sponsor of a Multiemployer Plan, a copy of each notice received by the
Company or any ERISA Affiliate concerning (A) the imposition of Withdrawal
Liability or (B) a determination that a Multiemployer Plan is, or is expected to
be, terminated or in reorganization, in each case within the meaning of Title IV
of ERISA.
<PAGE>
41
6.7. ACCESS TO PROPERTIES AND INSPECTIONS.
Permit any representatives designated by the Noteholder or any other
institutional holder of a Note to visit and inspect the financial records and
the properties of the Company, either Guarantor and TAFSI at reasonable times
and upon reasonable notice and as often as reasonably requested and to make
extracts from and copies of such financial records, and permit any
representatives designated by any such holder to discuss the affairs, finances
and condition of the Company, the Guarantors and TAFSI or any properties of
Company with, and to be advised as to the same by, their officers, employees,
environmental consultants and other experts and independent accountants (and by
this provision the Company, the Guarantors and TAFSI authorize such consultants
and accountants to discuss such affairs, finances and accounts, whether or not a
representative of the Company, either Guarantor or TAFSI is present), all at
such reasonable times and to such reasonable extent as such holder may desire;
and the Company, the Guarantors and TAFSI jointly and severally agree to pay all
out-of-pocket expenses incurred by the Noteholder and each such holder in
connection with the Noteholder's or such holder's exercise of rights pursuant to
this Section 6.7 at any time while a Default or Event of Default has occurred
and is continuing.
6.8. [INTENTIONALLY OMITTED].
6.9. FISCAL YEAR.
Cause its fiscal year to end on December 31 of each year.
6.10. FURTHER ASSURANCES.
(a) Execute any and all further documents, financing statements,
agreements and instruments, and take all further action (including filing
Uniform Commercial Code and other financing statements, mortgages and deeds of
trust) that may be required under applicable law, or which the Required Holders
or the Collateral Agent may reasonably request, in order to effectuate the
transactions contemplated by the Transaction Documents and in order to grant,
preserve, protect and perfect the validity and first priority of the security
interests created or intended to be created by the Security Documents. In
addition, from time to time, each of the Company, each Guarantor and TAFSI will,
at its cost and expense, promptly secure the Obligations by pledging or
creating, or causing to be pledged or created, perfected security interests with
respect to such of its assets and properties as the Required Holders shall
designate (it being understood that it is the intent of the parties that the
Obligations shall be secured by, among other things, substantially all the
<PAGE>
42
assets of the Company, the Guarantors and TAFSI (including real and other
properties acquired subsequent to the Closing Date)). Such security interests
and Liens will be created under the Security Documents and other security
agreements, mortgages, deeds of trust and other instruments and documents in
form and substance satisfactory to the Required Holders, and each of the
Company, each Guarantor and TAFSI shall deliver or cause to be delivered to all
holders of the Notes all such instruments and documents (including legal
opinions, title insurance policies and lien searches) as the Required Holders
shall reasonably request to evidence compliance with this Section 6.10. Each of
the Company and each Guarantor agrees to provide such evidence as the Required
Holders shall reasonably request as to the perfection and priority status of
each such security interest and Lien.
(b) Within 90 days following the Closing Date, enter into Lockbox
Agreements with financial institutions reasonably acceptable to the Collateral
Agent.
6.11. RATE PROTECTION AGREEMENTS.
In the case of the Company, within 90 days following the Closing Date
enter into (and thereafter maintain in effect) Rate Protection Agreements
required to be maintained under the Credit Agreement.
6.12. ENVIRONMENTAL AND SAFETY LAWS.
(a) Comply with, and use its best efforts to ensure compliance by all
tenants and subtenants (including each Network Operator, if any) with, all
Environmental and Safety Laws and obtain and comply with and maintain, and use
its best efforts to ensure that all tenants and subtenants (including each
Network Operator, if any) obtain and comply with and maintain, any and all
licenses, approvals, registrations or permits required by Environmental and
Safety Laws, except to the extent that failure to so comply or to obtain and
comply with and maintain such licenses, approvals, registrations and permits,
individually or in the aggregate, does not have and could not reasonably be
expected to result in a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions, required under
Environmental and Safety Laws and promptly comply with all lawful orders and
directives of all Governmental Authorities respecting Environmental and Safety
Laws, except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings, individually or in
the aggregate, would not have a Material Adverse Effect.
<PAGE>
43
(c) Notify the holders of the Notes of any of the following that,
individually or in the aggregate, is likely to have a Material Adverse Effect:
(i) any Environmental Claim that the Company, either Guarantor or
TAFSI receives, including one to take or pay for any remedial, removal,
response or cleanup or other action with respect to any Hazardous Substance
contained on any property owned or leased by the Company, such Guarantor or
TAFSI;
(ii) any notice of any alleged violation of or knowledge by the
Company, any Guarantor or TAFSI of a condition that might reasonably result
in a violation of any Environmental and Safety Law;
(iii) any commencement or threatened commencement of any judicial
or administrative proceeding or investigation alleging a violation or
potential violation of any requirement of any Environmental and Safety Law
by the Company, either Guarantor or TAFSI; and
(iv) any Release or threat of Release which, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect, based on an objective standard.
(d) Without limiting the generality of Section 16.4, indemnify the
Noteholder, the Collateral Agent and each holder from time to time of the Notes
and each of their respective directors, officers, employees, agents and
Affiliates (each such person being called an "INDEMNITEE") against, and hold
each Indemnitee harmless from, any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses (including reasonable
counsel fees, expert and consultant fees, charges and disbursements) of whatever
kind or nature arising out of, or in any way relating to, the violation of,
noncompliance with or liability under any Environmental and Safety Laws
applicable to the operations of the Company or either Guarantor or to the
Mortgaged Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
attorneys' and consultants' fees, investigation and laboratory fees, response
costs, court costs and litigation expenses, except to the extent that any of the
foregoing are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Indemnitee seeking indemnification therefor. The obligation of
the Company under this Section shall survive the payment of the Notes.
6.13. MATERIAL CONTRACTS.
Maintain in full force and effect (including, without limitation,
exercising any available renewal option and without amendment or modification)
<PAGE>
44
all its material contracts (including each operating lease permitted by Section
7.8) unless the failure so to maintain such contracts (or the amendments or
modifications thereto), individually or in the aggregate, would not have a
Material Adverse Effect, and promptly notify the holder of each Note of each
failure to comply with this Section 6.13.
6.14. CERTIFICATES OF OCCUPANCY, PERMITS AND ZONING.
(a) Within 270 days following the Closing Date, the Company shall
deliver the following documents to the Collateral Agent for Mortgaged Properties
set forth on Schedule 6.14 having 80% of the aggregate value (based upon the
Valuation Research Corp. real and personal property valuations delivered on the
Closing Date) of all Mortgaged Properties set forth on such Schedule:
(i) (A) a copy of the original permanent certificate or
certificates of occupancy or completion, as the same may have been amended
or issued from time to time, covering any Improvement located upon the
Mortgaged Property that was constructed after the date of the TA Purchase
Agreements or the National Purchase Agreements, as applicable (a "NEW
IMPROVEMENT"), that were required to have been issued by the appropriate
Governmental Authority for such New Improvement or (B) a letter from an
appropriate Governmental Authority stating that at the time of construction
certificates of occupancy were not required for each such New Improvement
for which a certificate as described above has not been delivered if
reasonably requested by the Collateral Agent and suitable evidence of the
date of construction of each New Improvement on such Mortgaged Property;
(ii) without limiting the Company's obligations under Section
6.12, (A) a copy of all material licenses, permits and authorizations
(other than certificates of occupancy or completion, all applications,
plans and filings necessary for the issuance of any such certificate and
all licenses, permits and authorizations that were no longer required once
any such certificate was issued) that were necessary for the construction
of each New Improvement located upon the Mortgaged Property or that are
necessary for the current operation of such New Improvement and (B) a copy
of all applications (including plans) that were necessary for the issuance
of any certificate of occupancy or completion with respect to any New
Improvement but only to the extent now or hereafter in the Company's
possession;
(iii) a copy of all applications (and documents filed in
connection therewith (including plans)) that the Company makes to any
Governmental Authority in order to comply with the provisions of this
Section 6.14; and
<PAGE>
45
(iv) one of the following: (A) written confirmation from the
applicable zoning commission or other appropriate Governmental Authority
stating that, with respect to each Mortgaged Property as built, it complies
with existing land use and zoning ordinances, regulations and restrictions
applicable to such property, (B) an opinion from local counsel acceptable
to the Collateral Agent to the same effect as covered by clause (A) above
or (C) a zoning endorsement satisfactory to the Collateral Agent in
connection with the Collateral Agent's mortgagee title insurance policy of
such Mortgaged Property.
(b) After the Closing Date, the Company shall use commercially
reasonable efforts to obtain (and promptly upon obtaining the same deliver to
the Collateral Agent):
(i) estoppel certificates from ground lessors of any Mortgaged
Property;
(ii) estoppel certificates from each Operator of each Mortgaged
Property; and
(iii) subordination and attornment agreements from each Operator
of each Mortgaged Property, unless the related operating lease by its
terms, is subject and subordinate to the Lien of the applicable Mortgage or
Leasehold Mortgage.
(c) After the Closing Date, the Company shall (i) use commercially
reasonable efforts (A) to cause the lease relating to its leasehold interest in
property located in Willington, Connecticut, to be amended to provide
commercially reasonable leaseholding financeability provisions and to provide
for the lessor of such property to consent to the granting of a Mortgage on such
leasehold interest and (B) to obtain the consent of the landlord of its property
(1) on site 1058 in Nashville, Tennessee, and (2) on site 1084 in Amarillo,
Texas, to the granting of a Mortgage on such leasehold interests, and (ii) upon
obtaining any such consent, promptly cause the applicable Guarantor to enter
into a Mortgage with respect to such Mortgaged Property.
7. NEGATIVE COVENANTS.
The Company covenants and agrees that, so long as any of the Notes
shall remain outstanding, the Company will not and will not permit any of its
Subsidiaries to:
7.1. INDEBTEDNESS.
Incur, create, assume or permit to exist any Indebtedness, except:
(a) Indebtedness existing on the Closing Date (after giving effect for
the consummation on the Closing Date of the Recapitalization and the other
Transactions) and set forth on Schedule 7.1 (but not any extensions, renewals or
replacements of such Indebtedness);
<PAGE>
46
(b) Indebtedness represented by the Notes;
(c) in the case of the Guarantors, Indebtedness consisting of purchase
money Indebtedness incurred in the ordinary course of business after the Closing
Date to finance Capital Expenditures or Transition Capital Expenditures
permitted under Section 7.13; provided, however, that (i) for purposes of
Section 7.13 the aggregate principal amount of any such Indebtedness shall be
deemed to be a Capital Expenditure or a Transition Capital Expenditure, as the
case may be, at the time incurred or assumed, (ii) the aggregate of (A) the
aggregate principal amount of Indebtedness permitted pursuant to this subsection
and (B) all Capital Lease Obligations permitted pursuant to Sections 7.1(d) and
7.11(c) shall not exceed $25,000,000 at any time outstanding and (iii) such
Indebtedness is incurred within 90 days after the making of the Capital
Expenditures or Transition Capital Expenditures financed thereby;
(d) in the case of the Guarantors, Indebtedness in respect of Capital
Lease Obligations permitted under Section 7.11(c);
(e) in the case of the Company or either Guarantor, Indebtedness in
respect of fuel-supply hedging agreements and arrangements, provided that any
such agreements or arrangements shall have been entered into for bona fide
hedging purposes pursuant to a written fuel-supply hedging policy approved by
the board of directors of the Company;
(f) (i) in the case of the Company, Indebtedness represented by the
Loans, the Swingline Loans, the Letters of Credit and the Subordinated Notes and
(ii) in the case of the Guarantors, Indebtedness represented by the Guarantee
Agreement and the Subordinated Note Guarantees;
(g) Indebtedness arising from the refinancing from time to time by the
Company of (i) the Loans, the Swingline Loans and the Letters of Credit under
the Credit Agreement and the Guarantee Agreement in respect of such Indebtedness
or (ii) the Notes of either series and the Guarantee Agreement in respect of the
Notes of such series, in either case ranking PARI PASSU with or subordinate to
the Notes (or the Notes of the series not being refinanced) and the
Guarantee Agreement in respect of the Notes (or the Notes of the series not
being refinanced); provided, however, that (i) such refinancing must be in whole
and not in part with respect to such Loans or the Notes of a series, as the case
may be, (ii) the weighted average interest rate (or applicable margins)
applicable to such Indebtedness must be less than or equal to the interest rate
(or applicable margins) applicable to the Loans or the Notes of the series being
<PAGE>
47
refinanced, as the case may be, (iii) no material terms applicable to
such Indebtedness or the related guarantees shall be more favorable to the
refinancing lenders or note purchasers than the terms that are applicable to the
Lenders under the Credit Agreement Documents or the holders of the Notes of such
series (or to lenders or note purchasers in respect of refinancing Indebtedness
then outstanding), (iv) the weighted average life to maturity of such
Indebtedness shall be greater than or equal to the remaining weighted average
life to maturity of the Term Loans (or of the term loan portion of any
refinancing Indebtedness then outstanding) or the Notes of the series being
refinanced, as the case may be, and the first scheduled principal payment or
required prepayment in respect of such Indebtedness shall not be earlier than
the first scheduled principal payment in respect of the Term Loans or the Notes
of the series being refinanced, as the case may be, (v) such Indebtedness shall
be Indebtedness of the Company, (vi) the priority of the security interest in
the collateral securing the repayment of such Indebtedness (if such Indebtedness
is to be secured) and the total amount or share of the collateral to be made
available to secure such Indebtedness shall be no more senior or favorable than
that which secured the repayment of the Loans or the Notes (or any refinancing
Indebtedness then outstanding) at the time of such refinancing and the
refinancing lenders or note purchasers shall enter into an intercreditor
agreement with the Collateral Agent and the holders of the Notes then
outstanding in substantially the form of the Intercreditor Agreement (or in such
other form as may be reasonably acceptable to the Required Holders) providing
for the sharing of collateral on such basis, (vii) the principal amount of such
Indebtedness shall be less than or equal to the principal amount then
outstanding of the Loans or the Notes of such series being refinanced, as the
case may be (or any refinancing Indebtedness then outstanding) and (viii) such
Indebtedness may not be incurred if at the time of such refinancing a Default or
Event of Default has occurred and is continuing or would result therefrom;
(h) Indebtedness arising from the refinancing from time to time by the
Company of the Subordinated Notes that is subordinate to the Obligations (which,
if required by the terms thereof, shall include any Indebtedness incurred
pursuant to Section 7.1(g) above in connection with any refinancing of the Loans
or the Notes of either series); provided, however, that (i) such refinancing
must be in whole and not in part, (ii) the weighted average interest rate
applicable to such Indebtedness must be less than or equal to the interest rate
applicable to the Subordinated Notes, (iii) no material terms applicable to such
Indebtedness (including the subordination provisions thereof) shall be more
favorable to the refinancing lenders than the terms that are applicable under
the Subordinated Note Indenture prior to such refinancing, (iv) the weighted
average life to maturity of such Indebtedness shall be greater than or equal to
the weighted average life to maturity of the Subordinated Notes and the first
scheduled principal payment in respect of such Indebtedness shall not be earlier
<PAGE>
48
than the first scheduled principal payment in respect of the Subordinated Notes,
(v) such Indebtedness shall be Indebtedness of the Company, (vi) such
Indebtedness shall be unsecured, (vii) the guarantees by the guarantors of such
Indebtedness shall be no more favorable to the refinancing lenders than the
Subordinated Note Guarantees, (viii) the principal amount of such Indebtedness
shall be less than or equal to the principal amount then outstanding of the
Subordinated Notes and (ix) such Indebtedness may not be incurred if at the time
of such refinancing a Default or Event of Default has occurred and is continuing
or would result therefrom;
(i) in the case of TAFSI, Indebtedness to the Company or either
Guarantor, provided that the amount of all such Indebtedness does not exceed
$3,000,000 in the aggregate at any time outstanding;
(j) in the case of either Guarantor, Indebtedness to the Company, the
other Guarantor or TAFSI;
(k) Rate Protection Agreements required by Section 6.11 of the Credit
Agreement;
(l) in the case of the Guarantors, other unsecured Indebtedness in an
aggregate principal amount at any time outstanding for both Guarantors not in
excess of $5,000,000; and
(m) in the case of the Company, Indebtedness to any of its
Subsidiaries.
7.2. LIENS.
Create, incur, assume or permit to exist any Lien on any property or
assets (including stock or other securities of any person) now owned or
hereafter acquired by it or on any income or revenues or rights in respect of
any thereof, except:
(a) Liens on property or assets of the Company or any Subsidiary
thereof existing on the date hereof and set forth on Schedule 7.2 (including, to
the extent any such Lien is the result of a lease, any extensions, renewals or
replacements of such lease, provided that the annual lease payment under any
such extension, renewal or replacement shall be no less than the fair market
rental value of the leased property as of the date of such extension, renewal or
replacement), provided that such Liens shall secure only those obligations that
they secure on the date hereof;
(b) in the case of either Guarantor, any Lien existing on any property
or asset prior to the acquisition thereof by such Guarantor or TAFSI, provided
that (i) such Lien is not created in contemplation of or in connection with such
acquisition, (ii) such Lien does not apply to any other property or assets of
such Guarantor and (iii) such Lien does not (A) materially interfere with the
<PAGE>
49
use, occupancy and operation of any property, (B) materially reduce the fair
market value of such property but for such Lien or (C) result in any material
increase in the cost of operating, occupying or owning (or leasing) such
property;
(c) Liens for taxes, assessments or governmental charges not yet due
and payable (or due and payable but not yet delinquent) or which are being
contested in compliance with Section 6.3 or 6.12;
(d) in the case of the Guarantors, carriers', warehousemen's,
mechanics', materialmen's, repairmen's, landlord's or other like Liens arising
in the ordinary course of business and securing obligations that are not due and
payable or which are being contested in compliance with Section 6.3;
(e) in the case of the Guarantors, pledges and deposits made in the
ordinary course of business in compliance with worker's compensation,
unemployment insurance and other social security laws or regulations;
(f) in the case of the Guarantors, pledges and deposits to secure the
performance of bids, trade contracts (other than for Indebtedness), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(g) in the case of the Guarantors, zoning restrictions, easements,
rights-of-way, restrictions on use of real property and other similar
encumbrances that do not materially impair the current use or the value of the
property subject thereto;
(h) in the case of the Guarantors, purchase money security interests
in real property, improvements thereto or equipment hereafter acquired (or, in
the case of improvements, constructed), provided that (i) such security
interests secure Indebtedness permitted by Section 7.1(c), (ii) such security
interests are incurred, and the Indebtedness secured thereby is created, within
90 days after such acquisition (or construction), (iii) the Indebtedness secured
thereby does not exceed 75% of the lesser of the cost and the fair market value
of such real property, improvements or equipment at the time of such acquisition
(or construction) and (iv) such security interests do not apply to any other
property or assets;
(i) Liens incurred in connection with Capital Lease Obligations
permitted by Section 7.1(d), provided that such Liens do not extend to any other
property or assets of such person;
(j) any Lien created under the Financing Documents;
(k) the lease or sublease of retail space and office space at any
Truckstop so long as either (i) the term of the lease or sublease does not
exceed three years or (ii) such lease or sublease does not result in the lease
<PAGE>
50
or sublease of real property of the Company or any of its Subsidiaries
in excess of 3,000 square feet at any one location to any one lessee; and
(l) the lease or sublease of retail space and office space at any
Truckstop other than as described in clause (k) above, provided that (i) the
lease with respect thereto shall (A) contain provisions consistent with and not
in conflict with any term, condition, covenant or agreement contained in any
Financing Document, (B) require the lessee to deliver estoppel certificates to
the Collateral Agent in compliance with clause (iii) below, (C) provide that
such lease is subject and subordinate in all respects to the applicable Mortgage
and (D) constitute an "operating lease" (and not a financing lease) for all
purposes, (ii) in each case, the Company shall have delivered to the Collateral
Agent, reasonably in advance of the execution and delivery thereof, copies of
such lease and all other agreements to be entered into by the Company or any of
its Subsidiaries in connection therewith, (iii) the Company shall have delivered
to the Collateral Agent within 30 days of a request therefor by the holder of
any Note, an estoppel certificate of any lessee in form and substance
satisfactory to the Collateral Agent, (iv) in each case, the Company shall, at
its expense, take such action as shall be necessary or as shall be reasonably
requested by the Collateral Agent to assign to the Collateral Agent, for the
benefit of the Secured Parties, a perfected security interest in its rights
under such lease and other agreements, including the execution, delivery and
recording of an Assignment of Leases and Rents substantially in the form of
Exhibit C, (v) after giving effect to the entering into of such lease, no
Default or Event of Default shall have occurred and be continuing, (vi) promptly
after execution of such lease, an executed copy of such lease and a certificate
of an officer of the Company certifying that such lease complies with the
provisions of this Section 7.02(l) shall be delivered to the Collateral Agent
and (vii) the lease or sublease of such space: (A) shall not result in the
representations and warranties contained in the related Mortgage or in this
Agreement to be untrue, (B) shall not result in any material adverse effect on
the value or operations of the related Mortgaged Property as a Truckstop, (C)
shall have no effect on the Collateral Agent's Lien on the remaining Land under
the related Mortgage (as defined therein), (D) shall not restrict ingress and
egress to, the operation of or in any way interfere with the business currently
conducted on the Mortgaged Property and (E) shall be done and conducted, as
applicable, in accordance with all material laws, rules, regulations or statutes
(including any zoning, building, Environmental and Safety Laws, ordinances,
codes or approvals or any building permits) or any restrictions of record or
agreements affecting the Mortgaged Property.
<PAGE>
51
7.3. SALE AND LEASEBACK TRANSACTIONS.
Enter into any arrangement, directly or indirectly, with any person
whereby it shall sell or transfer any property, real or personal, used or useful
in the business of the Company or its Subsidiaries, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property being sold or transferred (any such transaction a "SALE AND LEASEBACK
TRANSACTION"), other than (a) any Sale and Leaseback Transactions involving the
properties described on Schedule 7.3 or (b) any Sale and Leaseback Transaction
with respect to property acquired by the Company or any Subsidiary following the
Closing Date, if such Sale and Leaseback Transaction (i) involves a sale by the
Company or any Subsidiary for consideration equal to at least the then-current
fair market value of such property and (ii) results in a Capital Lease
Obligation or an operating lease permitted by Section 7.11, in either case
entered into to finance a Capital Expenditure permitted by Section 7.13
consisting of (A) the initial acquisition by the Company or such Subsidiary of
the property sold or transferred in such Sale and Leaseback Transaction or (B)
the development of a Truckstop on such property.
7.4. INVESTMENTS, LOANS AND ADVANCES.
Purchase, hold or acquire any capital stock, evidences of Indebtedness
or other securities of, make or permit to exist any loans or advances to, or
make or permit to exist any investment or any other interest in, any other
Person, except:
(a) investments by the Company in the capital stock of, and loans to,
the Guarantors and in promissory notes described in Section 7.4(e);
(b) Permitted Investments;
(c) in the case of the Guarantors, pledges and deposits permitted by
Section 7.2(f);
(d) in the case of the Guarantors, loans or advances to employees in
the ordinary course of business in an aggregate amount outstanding to any single
employee at any time not in excess of $10,000 (or, if and to the extent such
loans or advances shall be used by such employees solely for relocation
expenses, $100,000) and in an aggregate amount outstanding for all employees at
any time not in excess of $1,000,000 (which loans and advances shall not be
forgiven by the Company);
(e) in the case of either Guarantor, promissory notes evidencing loans
made by the Company to members of such Guarantor's management or the
Institutional Equity Investors to enable them to purchase shares of Common
Stock, provided that (i) the amount loaned to any single member of management or
<PAGE>
52
any single Institutional Equity Investor shall not exceed 50% of the
aggregate purchase price of such member's or Institutional Equity Investor's
shares, (ii) all the shares purchased by such member or Institutional Equity
Investor with the proceeds of any such loan shall be retained by such Guarantor
for the benefit of the Secured Parties until such time as such loan shall have
been repaid, (iii) the aggregate amount of all such loans outstanding at any
time shall not exceed $1,500,000, (iv) such loans shall not be forgiven by the
Company, (v) any shares purchased by any Institutional Equity Investor with the
proceeds of any such loan shall be resold to members of the Company's management
as soon as such a resale may be consummated in accordance with applicable state
and federal securities laws and (vi) any member of the Company's management who
purchases shares pursuant to the preceding clause (v) shall assume all
obligations under the loans the proceeds of which were used by such
Institutional Equity Investor to purchase such shares;
(f) investments by the Company in the capital stock of, and loans to,
TAFSI that are consistent with the limitations on the business of TAFSI set
forth in Section 7.8;
(g) investments in connection with Permitted Business Acquisitions, it
being understood that the aggregate purchase consideration paid in any such
investment shall (i) constitute a Capital Expenditure during the period in which
such investment occurs or (ii) if and to the extent the Company and its
Subsidiaries are not permitted to incur additional Capital Expenditures under
Section 7.13(a) at the time of such investment, constitute a Transition Capital
Expenditure during the period in which such investment occurs;
(h) in the case of the Guarantors and TAFSI, investments in any joint
venture so long as the amount of all such investments does not exceed $5,000,000
in the aggregate at any time outstanding (any such joint venture, a "PERMITTED
JOINT VENTURE");
(i) Rate Protection Agreements required by Section 6.11 of the Credit
Agreement (or the analogous provision, if any, of any Credit Agreement
Refinancing Indebtedness);
(j) investments not otherwise permitted above so long as the amount of
all such investments does not exceed $1,000,000 in the aggregate at any time
outstanding; and
(k) in the case of the Guarantors and TAFSI, intercompany loans and
advances permitted under Sections 7.1(i), (j) and (m).
<PAGE>
53
7.5. MERGERS, CONSOLIDATIONS, SALES OF ASSETS AND
ACQUISITIONS.
Merge into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or sell, transfer, assign, lease,
sublease or otherwise dispose of (in one transaction or in a series of
transactions) (i) all or any substantial part of the assets (whether now owned
or hereafter acquired) of the Company, either Guarantor or TAFSI, or (ii) the
capital stock of either Guarantor or TAFSI, or purchase, lease or otherwise
acquire (in one transaction or a series of transactions) all or any substantial
part of the assets of any other Person; provided, however, that the foregoing
shall not prohibit:
(a) sales of Permitted Investments for cash;
(b) sales, transfers and other dispositions of used or surplus
equipment, vehicles and other assets in the ordinary course of business (to the
extent that the Company shall have complied with the provisions of Section 5.3);
(c) sales of inventory in the ordinary course of business;
(d) sales, transfers and other dispositions of Truckstops and the
related assets for at least the then-current fair market value of such assets
(other than any such sales, transfers and other dispositions permitted under
subsection (g) below), with the related Net Cash Proceeds being applied in
accordance with the provisions of Section 5.3 and the definition of the term
"PREPAYMENT EVENT," if (i) the aggregate number of Truckstops so sold,
transferred or disposed of pursuant to this subsection (d) shall not exceed ten
since the Closing Date, (ii) the aggregate amount of Net Cash Proceeds received
by the Company in respect of such sales, transfers and dispositions pursuant to
this subsection (d) shall not exceed $30,000,000 since the Closing Date, (iii)
the consideration received in any such transaction shall consist of immediately
available funds in an amount equal to at least 75% of the then-current fair
market value of the applicable asset(s) (with any instrument evidencing
consideration in other than immediately available funds being pledged to the
Collateral Agent as Collateral pursuant to the Pledge Agreement), (iv) no
Default or Event of Default shall have occurred and be continuing and no such
event shall occur as the result of such proposed transaction and (v) prior to
any such proposed transaction, each holder of a Note and the Collateral Agent
shall have received a certificate of a Financial Officer of the Company
describing the proposed transaction (including the consideration to be received)
and certifying as to the compliance with the foregoing provisions on a
prospective basis;
(e) sublicenses by the Company, either Guarantor or TAFSI to
Franchisees and Network Operators, if any, of the trademarks and servicemarks
owned by the Company, such Guarantor or TAFSI;
<PAGE>
54
(f) sales, transfers and other dispositions of any portion of a
Mortgaged Property in connection with the development of such property as
permitted in, and in accordance with, the provisions of Section 10 of the
Guarantee Agreement;
(g) sales, transfers and other dispositions of the parcels of real
estate listed on Schedule 7.5(g) (which Schedule may be amended by the Company
from time to time to substitute another parcel of real estate for any parcel of
real estate that is then listed on such Schedule and has not been sold,
transferred or otherwise disposed of on or prior to the date of such
substitution) and the related Truckstop assets, with the related Net Cash
Proceeds being applied in accordance with the provisions of Section 5.3 and the
definition of the term "Prepayment Event";
(h) in the case of the Guarantors and TAFSI, (i) the acquisition of
assets from, or shares or other equity interests in, any person in connection
with a Permitted Business Acquisition or a Permitted Joint Venture and (ii) the
merger of any person with and into one of the Guarantors as required by the
definition of the term "Permitted Business Acquisition;"
(i) leases permitted by Section 7.8;
(j) sales of assets in connection with Sale and Leaseback Transactions
permitted by Section 7.3; and
(k) any sale, transfer or other disposition of any asset by a
Guarantor to TAFSI or the other Guarantor or by TAFSI to a Guarantor provided
that the aggregate fair market value of all assets transferred to TAFSI by the
Guarantors does not exceed $3,000,000.
7.6. DIVIDENDS AND DISTRIBUTIONS.
(a) Declare or pay, directly or indirectly, any dividend or make any
other distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, with respect to any shares of its
capital stock or directly or indirectly redeem, purchase, retire or otherwise
acquire for value any shares of any class of its capital stock or set aside any
amount for any such purpose except that (i) each Guarantor and TAFSI may declare
and pay dividends or make other distributions to the Company, and (ii) the
Company may declare and pay dividends or make other distributions to repurchase
or redeem Common Stock (A) from officers, directors or employees of the Company
who are no longer employed by the Company so long as no Default or Event of
Default shall have occurred and be continuing immediately before and after
giving effect to such payment, repurchase or redemption and the aggregate amount
<PAGE>
55
of such dividends and other distributions (1) during any fiscal year shall not
exceed $1,000,000 and (2) since the Closing Date shall not exceed $3,000,000,
plus, in each case, the proceeds of any resale of such Common Stock to other or
new employees, directors or officers of the Company made prior to or within 180
days after such repurchases or redemptions and (B) from Operators, so long as
the aggregate amount of such repurchases since the Closing Date shall not exceed
$15,000,000.
(b) Permit its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to the Company other than any (A) consensual
encumbrances or restrictions set forth in the Credit Agreement or the
Subordinated Note Indenture and (B) consensual encumbrances or restrictions that
are incurred in connection with any Refinancing Indebtedness provided that such
encumbrances or restrictions are no more onerous than the encumbrances and
restrictions described in clause (A) above.
7.7. TRANSACTIONS WITH AFFILIATES.
Sell or transfer any property or assets to, or purchase or acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except that the Company, each Guarantor and TAFSI may engage
in any of the foregoing transactions in the ordinary course of business at
prices and on terms and conditions no less favorable to the Company, such
Guarantor or TAFSI, as the case may be, than could be obtained on an
arm's-length basis from unrelated third parties, provided that the foregoing
shall not restrict (a) any transaction listed on Schedule 7.7 or (b) any
transaction with an Affiliate expressly permitted by this Agreement (including
transactions expressly permitted by Section 7.2, 7.4, 7.5 or 7.6).
7.8. BUSINESS OF COMPANY, THE GUARANTOR AND TAFSI.
(a) In the case of the Company, (i) engage at any time in any business
or business activity other than (a) the ownership of all the outstanding capital
stock of each Guarantor and TAFSI, together with the activities directly related
thereto, (B) the exercise of its rights and the performance of its obligations
under or contemplated by the Transaction Documents and (c) actions required by
law to maintain its status as a corporation.
(b) In the case of a Guarantor,
(i) engage at any time in any activities other than the business
currently conducted by it and business activities reasonably incidental
thereto (including the operation of restaurants) on Truckstop premises, or
<PAGE>
56
(ii) lease any Truckstop to a third-party operator, or engage any
third party operator to operate any Truckstop, or otherwise cease to
conduct directly the operation of any Truckstop (other than in connection
with a sale of such Truckstop in accordance with Section 7.5); provided,
however, that such Guarantor may lease Truckstops to credit- worthy
third-party operators with experience in the operation of similar
facilities who shall at the time become Franchisees if (A) in each case the
lease shall (I) provide for payment of rent and all other material amounts
payable thereunder at rates at least equal to the fair market rental value
as a full service truckstop facility (using for such purpose the highest
number resulting at the time from at least three standard methods of
determining fair market rental value), as of the date such lease is
executed by such Guarantor, of the entire premises covered by such lease
for the term thereof, including any renewal options, (II) require the
lessee to use and operate the Truckstop in a manner consistent with
industry standards from time to time for the operation of similar
facilities (and in any event in compliance with the applicable Franchise
Agreement), (III) have a term not longer than ten years, except that such
lease may be renewed for a period of up to ten years, or successive periods
of up to ten years each, if such lease shall provide for payment of rent
and all other material amounts payable thereunder at rates reasonably
believed by such Guarantor, as of the date such lease is entered into, to
be the fair market rental value (determined as aforesaid) of the entire
premises covered by such lease for each such period, (IV) contain
provisions consistent with and not in conflict with any term, condition,
covenant or agreement contained in any Financing Document, (V) require the
lessee to deliver estoppel certificates to the Collateral Agent in
compliance with clause (D) below, (VI) provide that such lease is subject
and subordinate in all respects to the applicable Mortgage and may be
terminated by such Guarantor in case of a default under or termination of
the applicable Franchise Agreement and (VII) constitute an "OPERATING
LEASE" (not a financing lease) for all purposes, (B) in each case, such
Guarantor shall have delivered to the holders of the Notes, reasonably in
advance of the execution and delivery thereof, copies of such lease and all
other agreements to be entered into by such Guarantor in connection
therewith, (C) such Guarantor shall have delivered to the holders of the
Notes within 30 days of a request therefor by the holders of the Notes, an
estoppel certificate of any lessee in form and substance satisfactory to
the Required Holders, (D) in each case, such Guarantor, at its expense,
take such action as shall be necessary or as shall be reasonably requested
by the Required Holders and the Collateral Agent to assign to the
Collateral Agent, for the benefit of the Secured Parties, a perfected
security interest in its rights under such lease and other agreements,
including the execution, delivery and recording of an assignment of leases
<PAGE>
57
and rents substantially in the form included in Exhibit C, (E) on the
date of such lease the pro forma Interest Expense Coverage Ratio in
respect of the period of four fiscal quarters ending with the last full
fiscal quarter immediately preceding such date (giving effect to the
entering into of such lease as if it had been entered into on the first day
of such period but not giving effect to any transfer to the lessee of the
obligation to make capital expenditures that were made by such Guarantor),
shall be equal to or greater than the Interest Expense Coverage Ratio for
such period, (F) after giving effect to the entering into of such lease, no
Default or Event of Default shall have occurred and be continuing and there
shall have been no decrease in Consolidated Net Worth, (G) the
consideration to such Guarantor from the lessee in connection with such
lease (including without limitation any franchise fee and consideration for
the sale of inventory or other assets relating to such Truckstop) shall be
paid in cash and, in the case of assets, shall equal the greater of (x) the
then-current fair market value of such assets and (y) the book value of
such assets as reflected on such Guarantor's financial statements at such
time, (H) the lessee shall be an Accredited Lessee (as below defined), (I)
the lessee shall not be a lessee or operator of more than three Truckstops
leased by the Guarantors pursuant to this Section 7.8 (provided that no
more than ten persons may be lessee of more than one Truckstop leased
pursuant to this Section 7.8 and no more than five persons may be lessee of
more than two Truckstops leased pursuant to this Section 7.8), (J) such
lease shall prohibit the lessee from mortgaging such lessee's leasehold
interest in the Truckstop or such lease, (K) the rent payable at a fixed or
contractual rate under such lease shall equal or exceed 70% of the total
rent payable under such lease assuming such lease had been entered into on
the first day of the period of four consecutive fiscal quarters ending with
the last full fiscal quarter immediately preceding the date of such lease
and (L) promptly after execution of such lease, an executed copy of such
lease and a certificate of an officer of the Company certifying that such
lease complies with the provisions of this Section 7.8 shall be delivered
to the holders of the Notes; and provided, further, that such Guarantor may
(i) enter into extensions, renewals and replacements of leases permitted
pursuant to Section 7.2(a) and (ii) lease or sublease retail space and
office space at any Truckstop to the extent permitted pursuant to Sections
7.2(k) and (l).
As used in clause (ii) above, "ACCREDITED LESSEE" shall mean with respect to a
proposed lessee:
(1) in case the proposed lessee is a franchisee of a Guarantor
who has, for at least two years prior to the proposed lease, been in
compliance with all requirements of such lessee's franchise agreement or
franchise agreements with such Guarantor,
<PAGE>
58
(A) if such lessee is not a lessee of any other Truckstop
pursuant to this Section 7.8, an "ACCREDITED INVESTOR" within the
meaning of paragraph (a)(5), (a)(6) or a (8) of Rule 501 under the
Securities amended Act of 1933, as amended,
(B) if such lessee is (after giving effect to the proposed
lease) a lessee of two Truckstops pursuant to this Section 7.8, an
"ACCREDITED INVESTOR" as aforesaid, except that for purposes of
paragraph (a)(6) of said Rule 501, the individual and joint income
requirements shall be $400,000 and $600,000, respectively, and
(C) if such lessee is (after giving effect to the proposed
lease) a lessee of three Truckstops pursuant to this Section 7.8, an
"ACCREDITED INVESTOR" as aforesaid, except that for purposes of
paragraph (a)(5) of said Rule 501, the net worth requirement shall be
$1,500,000 and for purposes of paragraph (a)(6) of said Rule, the
individual and joint income requirements shall be $600,000 and
$900,000, respectively; and
(2) in case the proposed lessee is not a franchisee of either
Guarantor or, in case the proposed lessee is such a franchisee but has not
been such for at least two years in compliance with such lessee's franchise
agreement or franchise agreements as described in clause (1) above,
(A) if such lessee is not a lessee of any other Truckstop
pursuant to this Section 7.8, an "ACCREDITED INVESTOR" within the
meaning of paragraphs (a)(5) and (a)(6) of said Rule 501 or a
partnership or other entity in which each of the equity owners
constitutes an "ACCREDITED INVESTOR" within the meaning of both such
paragraphs of said Rule,
(B) if such lessee is (after giving effect to the proposed
lease) a lessee of two Truckstops pursuant to this Section 7.8, a
person meeting the requirements of subclause (A) above, except that
for purposes of paragraph (a)(6) of said Rule 501, the individual and
joint income requirements shall be $400,000 and $600,000,
respectively, and
(C) if such lessee is (after giving effect to the proposed
lease) a lessee of three Truckstops pursuant to this Section 7.8, a
person meeting the requirements of subclause (A) above, except that
for purposes of paragraph (a)(5) of said Rule 501, the net worth
requirement shall be $1,500,000 and for purposes of paragraph (a)(6)
of said Rule, the individual and joint income requirements shall be
$600,000 and $900,000, respectively.
<PAGE>
59
(c) In the case of TAFSI, (i) engage in any activities other than the
franchising of auto/truckstops and activities incidental thereto in accordance
with its past practice, (ii) own or acquire any material assets (other than
assets under the Franchise Agreements) or (iii) incur any material liabilities
(other than liabilities under the Transaction Documents and Franchise
Agreements).
7.9. LIMITATIONS ON DEBT PREPAYMENTS.
(a) Optionally prepay, repurchase or redeem or otherwise defease or
segregate funds with respect to any Indebtedness for borrowed money (including,
in the case of the Company, the Subordinated Notes) other than the Notes;
provided, however, that the foregoing shall not prevent the Company from (i)
making any payment pursuant to Section 2.12 or 2.13 of the Credit Agreement,
(ii) refinancing Indebtedness under the Credit Agreement or the Subordinated
Notes pursuant to, and in accordance with, the provisions of Section 7.1(g) or
(h), respectively (whereupon this Section 7.9 shall apply to the Indebtedness
incurred in connection with any such refinancing) or (iii) prepaying or
otherwise refinancing any Indebtedness permitted in Section 7.1(i), 7.1(j),
7.1(l) or 7.1(m). Without limiting the foregoing, neither the Credit Agreement
nor the Subordinated Note Indenture nor any document in respect of Credit
Agreement Refinancing Indebtedness or Subordinated Note Refinancing Indebtedness
shall prevent the Company from electing to apply to the optional prepayment of
Notes from time to time pursuant to Section 5.2 in an aggregate amount
(allocable to principal and Make-Whole Premium or Break Funding Cost, as the
case may be) in each case at least equal to the Pro Rata Share of the holders of
the Notes in respect of each optional prepayment of the Term Loans pursuant to
Section 2.12 of the Credit Agreement (or the analogous provision in respect of
Credit Agreement Refinancing Indebtedness).
(b) Permit any amendment or modification to the terms of any
Subordinated Note, any Subordinated Note Guarantees or the Subordinated Note
Indenture if the effect of such amendment or modification is to impose
additional or increased scheduled or mandatory repayment, retirement, repurchase
or redemption obligations in respect of the Indebtedness evidenced by such notes
or to require any scheduled or mandatory payment to be made in respect of such
notes prior to the date that such payment would otherwise be due; or permit any
amendment or modification to the terms of the Credit Agreement or any agreement
relating to Refinancing Indebtedness unless made in compliance with Section 7.04
of the Intercreditor Agreement (or the analogous provision of any successor
thereto).
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7.10. AMENDMENT OF CERTAIN DOCUMENTS AND SUBORDINATED NOTES.
(a) Permit any termination of, or any amendment or modification that
is adverse in any material respect to the interests of the holders of the Notes
to, (i) the Certificate of Incorporation of the Company, either Guarantor or
TAFSI, (ii) the By-laws of the Company, either Guarantor or TAFSI, (iii) the
Subordinated Notes, the Subordinated Note Guarantees and the Subordinated Note
Indenture, (iv) the Asset Purchase Agreements, (v) the Environmental Agreements
and (vi) the Ancillary Agreements, in each case without the prior written
consent of the Required Holders.
(b) Without limiting the generality of the foregoing, with respect to
the Subordinated Notes, the Subordinated Note Guarantees and the Subordinated
Note Indenture, it is understood that (i) any increase in the interest, fees or
other amounts payable in connection therewith, (ii) any amendment that imposes
additional covenants or events of default or makes more restrictive the
covenants or events of default contained therein or (iii) any amendment that
renders the subordination provisions contained therein less favorable to the
Noteholder shall in each case require the consent of the Required Holders.
7.11. LIMITATION ON LEASES.
Create or suffer to exist any obligations on the part of the Company
of any of its Subsidiaries for the payment of rents for any property under
leases or agreements to lease, except, in the case of either Guarantor:
(a) (i) leases (other than leases of real property) of such Guarantor
entered into in the ordinary course of business and in existence on the date
hereof having annual lease payments of less than $250,000 and (ii) leases of
such Guarantor in existence on the date hereof and listed on Schedule 7.11(a)
(and any extensions, renewals or replacements of such leases, provided that the
annual lease payment under any such extension, renewal or replacement shall be
no greater than the fair market rental value of the leased property, as of the
date of such extension, renewal or replacement for the term of such extension,
renewal or replacement);
(b) operating leases entered into after the date hereof by such
Guarantor as lessee (i) in the ordinary course of business in a manner and to an
extent consistent with historical practices of the Network as of the date hereof
and (ii) in connection with Sale and Leaseback Transactions permitted by Section
7.3, provided that the aggregate annual lease payments under all such leases
shall not exceed $10,000,000;
(c) Capital Lease Obligations incurred by such Guarantor to finance
the acquisition of equipment and other property, provided that (i) the aggregate
of (A) all such Capital Lease Obligations and (B) all purchase money
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61
Indebtedness permitted pursuant to Section 7.1(c) shall not exceed $15,000,000
at any time outstanding, (ii) each Capital Lease Obligation at the time of its
incurrence shall have an average life to maturity greater than the average life
to maturity of the Notes, (iii) none of the related leases shall contain
financial covenants and (iv) for purposes of Section 7.13, the amount of such
aggregate annual rental payments shall be deemed to be Capital Expenditures in
the year in which they are incurred; and
(d) any fair-market-value leases entered into by such Guarantor in
connection with the relocation of its offices.
7.12. SUBSIDIARIES.
After giving effect to the Recapitalization and the Transactions, in
the case of the Company, have any direct or indirect Subsidiaries other than the
Guarantors, TAFSI and any Permitted Joint Venture that is a direct or indirect
Subsidiary of the Company. Each of the Guarantor and TAFSI shall remain a wholly
owned Subsidiary of the Company.
7.13. CAPITAL EXPENDITURES.
(a) Make or permit Capital Expenditures during any fiscal year,
commencing with the fiscal year ending December 31, 1997, to exceed $25,000,000;
provided, however, that the amount of permitted Capital Expenditures in any
fiscal year shall be increased by (i) an amount equal to 50% of the excess of
(A) consolidated EBITDA for the immediately preceding fiscal year over (B)
$64,000,000 and (ii) the lesser of (A) 25% of the total amount of permitted
Capital Expenditures for the immediately preceding fiscal year (including
amounts permitted as a result of the application of clause (i) but excluding any
unused Capital Expenditures carried forward to such preceding year) and (B) the
total amount of unused permitted Capital Expenditures for the immediately
preceding fiscal year (excluding any unused Capital Expenditures carried forward
to such preceding year). Notwithstanding the foregoing, the aggregate amount of
Capital Expenditures permitted in any fiscal year shall not exceed $35,000,000.
(b) (i) Permit Transition Capital Expenditures to exceed (A)
$50,000,000 during any fiscal year (commencing with the fiscal year ending
December 31, 1997), or (ii) $140,000,000 during the term of this Agreement or
(ii) permit the aggregate purchase consideration in connection with Permitted
Business Acquisitions that, pursuant to Section 7.4(g), constitute Transition
Capital Expenditures to exceed $25,000,000 during the term of this Agreement.
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7.14. CONSOLIDATED NET WORTH.
Permit Consolidated Net Worth at any time to be less than $90,000,000,
plus, without duplication, (a) 50% of Net Income for each fiscal quarter
(beginning with the fiscal quarter ending June 30, 1997) for which Net Income is
positive, plus (b) 100% of the Net Cash Proceeds of any primary offering of
equity securities consummated by the Company or either Guarantor after the
Closing Date, plus (c) 100% of any capital contribution made to the Company or
either Guarantor after the Closing Date by any holder of its respective capital
stock (without duplication), minus (d) amounts paid to repurchase or redeem
Common Stock of the Company from Operators as permitted by Section 7.06(a)(ii).
7.15. CURRENT RATIO.
Permit on the last day of any fiscal quarter the ratio of Current
Assets to Current Liabilities to be less than 1.50 to 1.00.
7.16. INTEREST EXPENSE COVERAGE RATIO.
(a) Permit the Interest Expense Coverage Ratio for any fiscal year
ending on a date indicated below to be less than the ratio set forth opposite
such date:
FISCAL YEAR RATIO
----------- -----
December 31, 1997 1.50
December 31, 1998 1.75
December 31, 1999 2.00
December 31, 2000 2.25
December 31, 2001 2.50
December 31, 2002 2.75
December 31, 2003 3.00
December 31, 2004. 3.25
(b) Incur Indebtedness if, after giving effect to the incurrence of
such Indebtedness, the Interest Expense Coverage Ratio determined on the last
day of the most recently completed period of four consecutive fiscal quarters
for such period (or in the case of any fiscal quarter ending prior to March 31,
1998, for the period commencing April 1, 1997 and ending on the last day of such
fiscal quarter), as if such Indebtedness had been incurred at the beginning of
such period, would be less than 1.00 to 1.00.
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63
7.17. LEVERAGE RATIO.
Permit the Leverage Ratio on any date during any fiscal quarter ending
on the last day of or during any period indicated below to be in excess of the
ratio set forth opposite such period:
FROM AND INCLUDING: TO AND INCLUDING: RATIO:
- ------------------ ---------------- -----
July 1, 1997 June 30, 1998 5.50 to 1.00
July 1, 1998 December 31, 1998 5.25 to 1.00
January 1, 1999 December 31, 1999 4.75 to 1.00
January 1, 2000 December 31, 2000 4.50 to 1.00
January 1, 2001 December 31, 2001 3.75 to 1.00
January 1, 2002 December 31, 2002 3.25 to 1.00
January 1, 2003 December 31, 2003, 3.00 to 1.00
and thereafter
8. INVESTMENT OF CERTAIN ESCROWED AMOUNTS.
The Company also covenants and agrees that, so long as any of the
Notes shall remain outstanding, in the event that the Company or a Guarantor
deposits money with the Collateral Agent, or such money is received directly by
the Collateral Agent, pursuant to or in connection with (a) the definition of
the term "PREPAYMENT EVENT" (in connection with any deposit of Net Cash Proceeds
pending any permitted application of such money contemplated by such definition
(other than with respect to any Mortgaged Property Casualty or Condemnation
governed by Section 9 of the Guarantee Agreement)) or (b) Section 9 of the
Guarantee Agreement (in connection with any Mortgaged Property Casualty or
Condemnation), the Company understands and agrees that (i) such amounts shall be
held as Collateral for the payment of the Obligations in separate escrow
accounts (or sub-accounts of a single escrow account) with the Collateral Agent
for the benefit of the Secured Parties, (ii) the Collateral Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such accounts (or sub-accounts), (iii) other than any interest earned on
the investment of such deposits in Permitted Investments, which investments
shall be made at the option and sole discretion of the Collateral Agent, such
deposits shall not bear interest, (iv) interest or profits, if any, on such
investments shall accumulate in such accounts (or sub-accounts) and (v) amounts
held in such accounts (or sub-accounts) shall be released or applied (A) in the
case of Section 9 of the Guarantee Agreement, as provided in (and subject to the
provisions of) such Section and (B) in all other cases, upon the demand by the
Company or the applicable Guarantor in connection with the Company's or such
Guarantor's reinvestment of such amounts within the specified period of time in
accordance with the definition of the term "Prepayment Event".
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Nothing in this Section 8 shall prevent the Collateral Agent from
applying at any time all or any part of the amounts on deposit in the
above-contemplated accounts (or subaccounts) to the curing of any Event of
Default in accordance with the Intercreditor Agreement. The provisions of this
Section 8 are subject to the provisions of the Intercreditor Agreement.
9. DEFINITIONS.
9.1. DEFINITIONS.
Except as otherwise specified or as the context may otherwise require,
the following terms shall have the respective meanings set forth below:
"AFFILIATE" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"ANCILLARY AGREEMENTS" shall mean the TA Ancillary Agreements and the
National Ancillary Agreements.
"ASSET PURCHASE AGREEMENTS" shall mean the TA Asset Purchase Agreement
and the National Asset Purchase Agreement.
"AVAILABLE PROCEEDS" shall have the meaning ascribed in Section 5.3.
"BREAK FUNDING COST" shall mean, as a consequence of the receipt for
any reason (including a prepayment pursuant to Section 5.2, 5.3 (after giving
effect to the provisions of Section 5.3(e)) or 5.4 or acceleration pursuant to
Section 10.1 of payment on account of all or any part of any Floating Rate Note
prior to the last day of the applicable Interest Period therefor, an amount as
in the good faith determination of the holder of such Floating Rate Note will
compensate such holder for (a) any actual loss or reasonable expense incurred
(other than any lost profits) by such holder and (b) an amount equal to the
excess, if any, of (i) such holder's cost of obtaining the funds for the
principal amount of such Floating Rate Note in respect of which such holder has
received payment (assumed to be the LIBOR Rate applicable thereto) for the
period from and including the date of such payment to but excluding the last day
of the applicable Interest Period over (ii) the amount of interest that would be
realized by such holder in reemploying the funds so paid for such period. A
certificate of a holder of Floating Rate Notes setting forth in reasonable
detail any amount or amounts that such holder is entitled to receive as Break
Funding Cost shall be delivered to the Company and shall be conclusive as to the
Floating Rate Note held by such holder absent manifest error.
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65
"BUSINESS DAY" shall mean any day (other than a Saturday, Sunday or
legal holiday in the State of New York) on which banks are open for business in
New York City.
"CAPITAL EXPENDITURES" shall mean, for any period, the sum of all
amounts that would, in accordance with GAAP, be included as additions to
property, plant and equipment and other capital expenditures on a consolidated
statement of cash flows for the Company during such period (including the amount
of assets leased under any Capital Lease Obligation). Notwithstanding the
foregoing, the term "CAPITAL EXPENDITURES" shall not include (a) capital
expenditures in respect of the reinvestment of sales proceeds, insurance
proceeds and condemnation proceeds received by the Company or its Subsidiaries
in connection with the sale, transfer or other disposition of the Company's or
its Subsidiaries' business units, assets or properties, if (as contemplated in
the definition of the term "PREPAYMENT EVENT") such reinvestment (including, in
the case of insurance proceeds, reinvestment in the form of restoration or
replacement of damaged property) shall have resulted in the event giving rise to
the receipt of such amounts not being considered a Prepayment Event as
contemplated in the definition of such term, or (b) Transition Capital
Expenditures made during such period.
"CAPITAL LEASE OBLIGATIONS" of any Person shall mean the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CASH INTEREST EXPENSE" shall mean, for any period, the interest
expense (net of interest income) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP, excluding (a)
any fees and expenses payable or amortized during such period by the Company and
its Subsidiaries in connection with the Transactions and (b) any interest on the
Subordinated Notes not paid in cash prior to the maturity of the Subordinated
Notes. For purposes of the foregoing, interest expense (net of interest income)
shall be determined after giving effect to any net payments made or received by
the Company with respect to Rate Protection Agreements.
"CASUALTY" shall have the meaning ascribed in Section 9 of the
Guarantee Agreement.
"CERCLA" shall have the meaning ascribed in the definition of the term
"ENVIRONMENTAL AND SAFETY LAWS."
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A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(a) any person or Group (as below defined) other than (i) the
Institutional Equity Investors (including the First Boston Entities (as
below defined)) or (ii) the Management Investors and their Permitted
Transferees (as set forth in Section 2(b) of the Stockholders Agreement),
shall directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, have the ability to elect a majority
of the board of directors of the Company;
(b) (i) the Institutional Equity Investors (including the First Boston
Entities) or (ii) the First Boston Entities, respectively, in the aggregate
cease to own, directly or indirectly, beneficially and of record, shares
representing at least 65% of the aggregate ordinary voting power
represented by the shares of capital stock of the Company held by such
persons on the date hereof, provided that such 65% shall be reduced by the
dilution suffered by such persons solely as a result of issuances by the
Company after the Closing Date of additional shares of capital stock having
ordinary voting power (A) for fair value for cash to non- Affiliates of the
applicable parties under clause (i) or (ii) above, as the case may be, or
(B) to its employees to the extent that such additional shares of capital
stock issued to such employees do not at any time exceed 15% of the then
outstanding capital stock having ordinary voting power;
(c) any person or Group, other than the Institutional Equity Investors
(including the First Boston Entities), owns (directly or indirectly,
beneficially or of record) issued and outstanding voting stock of the
Company representing more than the lesser at any time of (i) 35% of the
aggregate ordinary voting power represented by issued and outstanding
capital stock of the Company and (ii) the percentage of the aggregate
ordinary voting power represented by the shares owned directly or
indirectly, beneficially or of record, by the Institutional Equity
Investors (including the First Boston Entities) at such time;
(d) a majority of the seats (other than vacant seats) on the board of
directors of the Company shall at any time be occupied by persons who were
neither (i) nominated by the Institutional Equity Investors (including the
First Boston Entities) or the Management Investors and their Permitted
Transferees nor (ii) elected by directors so nominated;
(e) any "CHANGE IN CONTROL" (as such term is defined in the Credit
Agreement and in the Subordinated Note Indenture) shall have occurred by
reason of facts or circumstances not otherwise constituting a Change in
Control hereunder (unless the event of default under the Credit Agreement
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67
resulting from such Change in Control has been waived pursuant to the
Credit Agreement; provided that if any consideration for such waiver has
been paid to the Lenders, then an amount bearing the same relation to the
aggregate unpaid principal amount of Notes at the time outstanding as the
amount of such consideration bears to the outstanding principal amount of
Indebtedness under the Credit Agreement shall be allocated and paid
concurrently to the holders of the Notes in proportion to the respective
unpaid principal amounts held by each such holder);
(f) the Company ceases to own and control directly, of record and
beneficially, all of the issued and outstanding capital stock of each
Guarantor and TAFSI, free and clear of all Liens (other than Liens created
under the Pledge Agreement); or
(g) either Guarantor or TAFSI issues any class of capital stock (or
security convertible into its capital stock) that is not pledged to the
Collateral Agent for the ratable benefit of the Secured Parties.
For purposes of clause (b) above the Convertible Preferred Stock and the Senior
Convertible Participating Preferred Stock shall be deemed to constitute capital
stock with ordinary voting power, and for purposes of clauses (a), (c) and (d)
above an Institutional Equity Investor shall be deemed to own all shares of the
Company having ordinary voting power in respect of which such Institutional
Equity Investor or First Boston Entity shall hold the irrevocable general proxy
of the holder of such shares in respect of such shares. For purposes of this
definition: the "FIRST BOSTON ENTITIES" shall mean Credit Suisse First Boston
Corporation, The Clipper Group, L.P., Clipper Capital Associates, L.P.,
Clipper/Merchant I, L.P., Merchant Truckstops, L.P. and their Affiliates and any
of their designees on the Closing Date; and "GROUP" shall mean a group within
the meaning of Rule 13d-5 of the Securities and Exchange Commission as in effect
on the date hereof.
"CLOSING DATE" shall have the meaning ascribed in Section 2.
"CODE" shall mean the Internal Revenue Code of 1986, or any successor
statute thereto, as the same may be amended from time to time.
"COLLATERAL" shall mean all the "COLLATERAL" as defined in any
Security Document and shall also include the Lockbox Collateral and the
Mortgaged Properties.
"COLLATERAL ACCOUNT" shall have the meaning given such term in the
Collateral Account Agreement.
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68
"COLLATERAL ACCOUNT AGREEMENT" shall mean the Collateral Account
Agreement, substantially in the form of Exhibit J, between the Company and the
Collateral Agent for the benefit of the Secured Parties.
"COLLATERAL AGENT" shall mean The Chase Manhattan Bank, as Collateral
Agent under the Intercreditor Agreement, the Security Documents and the
Guarantee Agreement.
"COLLATERAL ASSIGNMENT" shall have the meaning ascribed in Section
1.5.
"COMMON STOCK" shall have the meaning ascribed in Section 4.19.
"CONDEMNATION PROCEEDS" shall have the meaning ascribed in Section 9
of the Guarantee Agreement.
"CONFIDENTIAL INFORMATION MEMORANDUM" shall mean the Confidential
Information Memorandum of the Company dated February 1997.
"CONSOLIDATED NET WORTH" shall mean, at any date, on a consolidated
basis for the Company and its Subsidiaries, (a) the sum of (i) common stock
taken at par or stated value, (ii) preferred stock (other than preferred stock
that is mandatorily redeemable on or prior to the first anniversary of the
latest final maturity of the then outstanding Notes) taken at its liquidation
value, (iii) capital surplus relating to common stock and (iv) retained earnings
(or deficit) at such date minus (b) the sum of treasury stock at such date
(other than treasury stock repurchased pursuant to Section 7.6), all determined
in accordance with GAAP and after giving effect to all adjustments required
thereby, but excluding any adjustments required by purchase accounting.
"CONTROL" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "CONTROLLING" and "CONTROLLED" shall have meanings
correlative thereto.
"CONVERTIBLE PREFERRED STOCK" shall mean the Series I Preferred Stock
and the Series II Preferred Stock.
"CREDIT AGREEMENT" shall mean the Credit Agreement dated the date
hereof by and among the Company, the Lenders party thereto and The Chase
Manhattan Bank, as agent for said Lenders, as amended, modified or supplemented
in accordance with the provisions of this Agreement. After the incurrence of any
Credit Agreement Refinancing Indebtedness, the term "CREDIT AGREEMENT" shall
include all agreements (or comparable documents, such as loan agreements or
indentures) entered into by the Company in connection with the sale or issuance
of such refinancing Indebtedness.
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"CREDIT AGREEMENT DOCUMENTS" shall mean the Credit Agreement, the
Security Documents, the Intercreditor Agreement and the Guarantee Agreement.
"CREDIT AGREEMENT REFINANCING INDEBTEDNESS" shall mean any
Indebtedness incurred by the Company as contemplated by Section 7.1(g) in
connection with the refinancing of Indebtedness under the Credit Agreement.
"CURRENT ASSETS" as of any date shall mean the total assets that would
properly be classified as current assets of the Company and its Subsidiaries on
a consolidated basis as of such date in accordance with GAAP.
"CURRENT LIABILITIES" as of any date shall mean the total liabilities
that would properly be classified as current liabilities (other than the current
portion of Funded Debt) of the Company and its Subsidiaries on a consolidated
basis as of such date in accordance with GAAP.
"DECLINED AMOUNTS" shall have the meaning ascribed in Section 5.3.
"DEFAULT" shall mean any event or condition that upon notice, lapse of
time or both would constitute an Event of Default.
"DOLLARS" or "$" shall mean lawful money of the United States.
"EBITDA" with respect to the Company and its Subsidiaries for any
period shall mean the sum of (a) Net Income for such period, (b) all Federal,
state, local and foreign income taxes deducted in determining such Net Income,
(c) interest expense deducted in determining such Net Income, (d) depreciation,
amortization and other noncash charges deducted in determining such Net Income
and (e) to the extent deducted from such Net Income with respect to any fiscal
quarter ending on or prior to December 31, 2000, transition costs paid during
such period, provided that the aggregate amount of all transition costs incurred
after the Closing Date and permitted to be added back to Net Income pursuant to
this definition shall not exceed $11,000,000. For purposes of calculating the
Interest Expense Coverage Ratio, "EBITDA" shall not include the gain on the
initial sale of assets to any lessee in connection with the leasing of any
Truckstop in accordance with Section 7.8.
"ENVIRONMENTAL AGREEMENTS" shall mean (a) the Environmental Agreement
entered into as of July 22, 1993, among BP Exploration & Oil Inc., TA and
certain other parties, as amended by Amendment No. 1 thereto dated December 9,
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70
1993, and by the letter agreement dated as of December 9, 1993, and as further
amended, modified or supplemented in accordance with the provisions of Section
7.10 and (b) the Environmental Agreement dated as of November 23, 1992, between
Union Oil Company of California and National, as amended, modified or
supplemented in accordance with the provisions of Section 7.10.
"ENVIRONMENTAL AND SAFETY LAWS" shall mean any and all applicable
current and future treaties, laws, regulations, enforceable requirements,
binding determinations, orders, decrees, judgments, injunctions, permits,
approvals, authorizations, licenses, permissions, notices or binding agreements
issued, promulgated or entered by any Governmental Authority, relating to the
environment, to employee health or safety as it pertains to the use or handling
of, or exposure to, Hazardous Substances, to preservation or reclamation of
natural resources or to the management, release or threatened release of
contaminants or noxious odors, including the Hazardous Materials Transportation
Act, the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, the Clean Air Act of 1970 (to the extent it pertains to
the use or handling of, or exposure to, Hazardous Substances), as amended, the
Toxic Substances Control Act of 1976, the Occupational Safety and Health Act of
1970, as amended, the Emergency Planning and Community Right-to-Know Act of
1986, the Safe Drinking Water Act of 1974, as amended, and any similar or
implementing state or local laws, and all amendments or regulations promulgated
thereunder.
"ENVIRONMENTAL CLAIM" shall mean any written notice of any
Governmental Authority alleging potential liability for damage to the
environment or by any person alleging potential liability for personal injury
(including sickness, disease or death), in either case, resulting from or based
upon (a) the presence or Release (including intentional and unintentional,
negligent and nonnegligent, sudden or nonsudden, accidental or nonaccidental
leaks or spills) of any Hazardous Substance at, in or from the property, whether
or not owned or leased by the Company or a Guarantor or (b) any other
circumstances forming the basis of any violation, or alleged violation, of any
Environmental and Safety Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, or any successor statute, together with the regulations thereunder, as the
same may be amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that was, is or hereafter becomes, a member of a group of which
the Company is a member and which is treated as a single employer under Section
414 of the Code.
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"EVENT OF DEFAULT" shall have the meaning ascribed in Section 10.1.
"EXCESS CASH FLOW" shall mean, for any period, the consolidated Net
Income of the Company and its Subsidiaries during such period plus, without
duplication, (a)(i) the aggregate amounts deducted in determining such Net
Income in respect of all deferred charges and depreciation, amortization and
other noncash charges (including any interest expense other than Cash Interest
Expense), (ii) all noncash losses deducted in determining such Net Income, (iii)
to the extent not included in such Net Income, the aggregate amount of all
income tax refunds received during such period, (iv) the principal amount of any
Indebtedness incurred or assumed pursuant to Section 7.1(c) during such period,
(v) the aggregate amount of Indebtedness with respect to Capital Lease
Obligations incurred pursuant to Sections 7.1(d) and 7.11(c) during such period
and (vi) the net negative change, if any, in Net Working Capital during such
period MINUS (b)(i) all noncash gains and credits included in such Net Income,
(ii) scheduled required prepayments during such period of the principal of the
Notes, (iii) scheduled payments during such period of the principal of
Indebtedness permitted under Section 7.1 other than the Notes (including the
Term Loans, the Refinancing Indebtedness and the Subordinated Notes), but only
to the extent that such payments cannot by their terms be reborrowed or redrawn,
(iv) prepayments during such period of Term Loans and the Notes pursuant to
Section 2.12 of the Credit Agreement and Section 5.2, (v) the aggregate amount
of Capital Expenditures and Transition Capital Expenditures of the Company and
its Subsidiaries made and permitted hereunder during such period (other than the
amount of such Transition Capital Expenditures that were financed during such
period with funds released to the Company and its Subsidiaries from the
Collateral Account), (vi) repayments during such period of the portion of
Capital Lease Obligations of the Company and its Subsidiaries not allocable to
Cash Interest Expense and (vii) the net positive change, if any, in Net Working
Capital during such period, in each case determined in accordance with GAAP.
"EXISTING INDEBTEDNESS" shall have the meaning ascribed in Section
1.2.
"FINANCIAL OFFICER" of any corporation shall mean the chief financial
officer, principal accounting officer, treasurer or controller of such
corporation.
"FINANCING DOCUMENTS" shall mean this Agreement, the other agreements
referred to in Section 4.27, the Notes, the Intercreditor Agreement, the
Security Documents, the Guarantee Agreement and the Indemnity and Subrogation
Agreement.
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"FIRST PLAZA" shall mean the First Plaza Group Trust, a trust
organized under the laws of the State of New York.
"FIXED RATE NOTES" shall have the meaning ascribed in Section 1.3.
"FLOATING RATE NOTES" shall have the meaning ascribed in Section 1.3.
"FRANCHISE AGREEMENTS" shall mean the Franchise Agreements pursuant to
which the Franchisees have or shall become franchisees of a Guarantor or TAFSI.
"FRANCHISEE" shall mean each party who has executed, or will execute,
a Franchise Agreement with a Guarantor or TAFSI.
"FUNDED DEBT" as to any Person shall mean all Indebtedness of such
Person that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including
without limitation all amounts of Funded Debt required to be paid or prepaid
within one year from the date of its creation and, in the case of the Company,
all Indebtedness in respect of the Loans and the Swingline Loans under the
Credit Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"GUARANTEE" of or by any Person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term "GUARANTEE"
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
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"GUARANTEE AGREEMENT" shall have the meaning ascribed in Section 1.5.
"GUARANTORS" shall have the meaning ascribed in Section 1.5.
"HAZARDOUS SUBSTANCES" shall mean any toxic, radioactive, caustic or
otherwise hazardous substance, material or waste, including petroleum, its
derivatives, by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing characteristics, including,
without limitation, polychlorinated biphenyls ("PCBS"), asbestos or
asbestos-containing material, and any substance, waste or material regulated
under Environmental and Safety Laws.
"INDEBTEDNESS" of any Person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
assets purchased by such person, (e) all obligations of such person issued or
assumed as the deferred purchase price of property or services (excluding trade
accounts payable and accrued expenses arising in the ordinary course of business
in accordance with customary trade terms), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed by such person, (g) all Guarantees by such person of Indebtedness
of others, (h) all Capital Lease Obligations of such person, (i) all obligations
of such person in respect of interest rate protection agreements, foreign
currency exchange agreements or other interest or exchange rate hedging
arrangements, (j) all obligations of such person as an account party to
reimburse any bank or any other person in respect of letters of credit and
bankers' acceptances and (k) all obligations of such person in respect of
fuel-supply hedging agreements and arrangements. The Indebtedness of any person
shall include the Indebtedness of any partnership or joint venture in which such
person is a general partner or member, other than to the extent that the
instrument or agreement evidencing such Indebtedness expressly limits the
liability of such person in respect thereof pursuant to provisions and terms
reasonably satisfactory to the Required Holders.
"INDEMNITY AND SUBROGATION AGREEMENT" shall mean the Indemnity,
Subrogation and Contribution Agreement, substantially in the form of Exhibit K,
between the Company, the Guarantors and the Collateral Agent.
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"INSTITUTIONAL EQUITY INVESTORS" shall mean The Clipper Group, L.P.,
First Plaza, Credit Suisse First Boston Corporation, Barclays USA, Inc., Olympus
Private Placement Fund, L.P., Clipper/Merchant I, L.P., Clipper Capital
Associates, L.P., National Partners, L.P., National Partners II, L.P., National
Partners III, L.P., UBS Capital Corporation, The Travelers Indemnity Company and
The Phoenix Insurance Company and their respective Affiliates.
"INSURANCE PROCEEDS" shall have the meaning ascribed in Section 9 of
the Guarantee Agreement.
"INTERCREDITOR AGREEMENT" shall have the meaning ascribed in Section
1.5; and from and after the incurrence of any Refinancing Indebtedness pursuant
to Section 7.1(g), the term "INTERCREDITOR AGREEMENT" shall include any
intercreditor agreement entered into in connection with the incurrence of such
Refinancing Indebtedness.
"INTEREST EXPENSE COVERAGE RATIO" shall mean with respect to the
Company and its Subsidiaries on a consolidated basis, for any period, the ratio
of (a) EBITDA for such period to (b) Cash Interest Expense for such period.
"INTEREST PAYMENT DATE" shall mean (a) with respect to the Fixed Rate
Notes, each June 30 and December 31 commencing on June 30, 1997 and (b) with
respect to the Floating Rate Notes, each March 31 and September 30 commencing on
September 30, 1997.
"LEASEHOLD MORTGAGE" shall mean any Mortgage that is a leasehold or
subleasehold mortgage.
"LENDERS" shall have the meaning ascribed in the Credit Agreement.
After the incurrence of any Credit Agreement Refinancing Indebtedness, the term
"Lender" shall include all original lenders of such refinancing Indebtedness and
their successors and assigns.
"LETTERS OF CREDIT" shall have the meaning ascribed in the Credit
Agreement.
"LEVERAGE RATIO" shall mean on any date the ratio of (a) Total Debt as
of such date to (b) EBITDA for the period of four consecutive fiscal quarters
most recently ended as of such date.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, assignment for security (whether collateral or
otherwise), hypothecation, encumbrance, easement, restriction, covenant, lease,
sublease, charge or security interest in or on such asset, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement, or financing lease having substantially the same economic
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75
effect as any of the foregoing, relating to such asset, (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities and (d) zoning or land use restrictions.
"LOANS" shall have the meaning ascribed in the Credit Agreement and
shall also include Swingline Loans and Letters of Credit. After the incurrence
of any Credit Agreement Refinancing Indebtedness, the term "Loans" shall include
all loans outstanding in respect of such refinancing Indebtedness.
"LOCKBOX AGREEMENTS" shall have the meaning ascribed in Section 1.5.
"LOCKBOX COLLATERAL" shall have the meaning ascribed in each of the
Lockbox Agreements.
"MAKE-WHOLE PREMIUM" shall mean, in connection with any prepayment of
a Fixed Rate Note, the amount (but not less than zero) equal to the excess, if
any, of
(a) the sum of the Present Values (as hereinafter defined) of (1) the
principal amount of such Note being prepaid (assuming the required
prepayments pursuant to Section 5.1 and the principal balance of such Note
payable upon maturity are paid when due) and (2) the amount of interest
which would have been payable on each Interest Payment Date on the amount
of such principal being prepaid (assuming the required prepayments pursuant
to Section 5.1 and the principal balance of such Note payable upon maturity
and interest payments are paid when due), OVER
(b) the principal amount of such Note being prepaid.
For purposes of this definition, "PRESENT VALUE" shall be determined
in accordance with generally accepted financial practice by discounting on a
semiannual basis to the date of such prepayment at a discount rate per annum
equal to the sum of the applicable Treasury Yield plus 0.50% (or 1.25% if such
prepayment date is after December 9, 1998); and the "TREASURY YIELD" for such
purpose shall be determined as of 10:00 A.M. New York City time on the third
Business Day prior to the date of such prepayment by reference to the yields of
those actively traded "ON THE RUN" United States Treasury securities having a
maturity equal to the then-remaining weighted average life to maturity of such
Note as reported by the Telerate Access Service page 7677 (ask side) or the
equivalent page provided by Telerate Systems Incorporated (or any other
nationally recognized publicly available on-line source of similar market data),
provided that if such weighted average life to maturity is not equal to the
maturity of an actively traded "ON THE RUN" United States Treasury security,
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76
such yield shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the yields as so reported of actively traded "ON THE
RUN" Treasury securities having a maturity closest to such weighted average life
to maturity . For purposes hereof, "ON THE RUN" United States Treasury
securities refers to those United States Treasury securities which are most
recently auctioned.
"MANAGEMENT INVESTORS" shall mean the officers, directors or employees
of the Company or its Subsidiaries who have purchased or will purchase Common
Stock.
"MARGIN STOCK" shall have the meaning given such term under Regulation
G.
"MATERIAL ADVERSE EFFECT" shall mean (a) a materially adverse effect
on the business, assets, operations, prospects or condition, financial or
otherwise, or the material agreements of the Company and its Subsidiaries, taken
as a whole, (b) a material impairment of the ability of the Company, either of
the Guarantors or TAFSI to perform any of its obligations under any Transaction
Document to which it is or will be a party or (c) a material impairment of the
rights of or benefits available to the Collateral Agent or the holders of Notes
under any Financing Document.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MORTGAGED PROPERTIES" shall mean the owned real properties and
leasehold and subleasehold interests of the Company and TAFSI specified on
Schedule 1.1(a).
"MORTGAGES" shall have the meaning ascribed in Section 1.5.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"NATIONAL" shall have the meaning ascribed in Section 1.1.
"NATIONAL ANCILLARY AGREEMENTS" shall have the meaning assigned to the
term "Ancillary Agreements" in the National Asset Purchase Agreement and shall
include the Bill of Sale, the Assignment and Assumption Agreement, the
Non-Competition Agreement, the Office Sublease, the Credit Card Agreement, the
Trademark License Agreement, the Software License Agreement and the Services
Agreement (each as defined in the National Asset Purchase Agreement).
"NATIONAL ASSET PURCHASE AGREEMENT" shall mean the Asset Purchase
Agreement dated as of November 23, 1992, between National and Union Oil Company
of California, as amended, supplemented or otherwise modified from time to time
in accordance with the terms of this Agreement.
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"NATIONAL NETWORK" shall have the meaning ascribed in Section 1.1.
"NATIONAL NOTES" shall have the meaning ascribed in Section 1.1.
"NATIONAL PURCHASE AGREEMENTS" shall have the meaning ascribed in
Section 1.1.
"NET CASH PROCEEDS" shall mean, with respect to any Prepayment Event
or any issuance of equity of the Company or its Subsidiaries, (a) the gross cash
proceeds (including insurance proceeds, condemnation awards and payments from
time to time in respect of installment obligations, if applicable) received by
or on behalf of the Company or any Subsidiary thereof in respect of such
Prepayment Event or equity issuance, less (b) the sum of (i) in the case of a
Prepayment Event, the amount, if any, of all taxes (other than income taxes)
payable by the Company or any Subsidiary thereof in connection with such
Prepayment Event and the Company's good-faith best estimate of the amount of all
income taxes payable in connection with such Prepayment Event (to the extent
that such amount shall have been set aside for the purpose of paying such income
taxes), (ii) in the case of a Prepayment Event that is an asset sale or
disposition, (A) the amount of any reasonable reserve established in accordance
with GAAP against any liabilities associated with the assets sold or disposed of
and retained by the Guarantor or any Subsidiary thereof, provided that the
amount of any subsequent reduction of such reserve (other than in connection
with a payment in respect of any such liability) shall be deemed to be Net Cash
Proceeds of a Prepayment Event occurring on the date of such reduction, and (B)
the amount applied to repay any Indebtedness (other than the Term Loans and the
Notes) to the extent such Indebtedness is required by its terms to be repaid as
a result of such Prepayment Event and (iii) reasonable and customary fees,
commissions and expenses and other costs paid by the Company or any Subsidiary
thereof in connection with such Prepayment Event or equity issuance (other than
those payable to the Company or any Affiliate of the Company (other than
customary financial advisory fees payable to The Clipper Group, L.P. or its
Affiliates, in connection therewith to the extent that such fees are no greater
than the financial advisory fees that a third party could have obtained for the
same services after negotiation at arm's length)), in each case only to the
extent not already deducted in arriving at the amount referred to in clause (a).
"NET INCOME" shall mean, for any period, the aggregate net income (or
net deficit) of the Company and its Subsidiaries determined on a consolidated
basis for such period, which shall be equal to gross revenues for the Company
and its Subsidiaries determined on a consolidated basis during such period less
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the aggregate for the Company and its Subsidiaries determined on a consolidated
basis during such period, without duplication, of (a) cost of goods sold, (b)
interest expense, (c) operating expenses, (d) selling, general and
administrative expenses, (e) taxes, (f) depreciation, depletion and amortization
of properties and (g) any other items that are treated as expense under GAAP,
all computed in accordance with GAAP; provided, however, that the term "NET
INCOME" shall exclude, for all purposes other than for the purposes of
calculating Consolidated Net Worth, (i) extraordinary gains and losses from the
sale of assets other than in the ordinary course of business, (ii) one-time
charges taken in connection with the Recapitalization and the other Transactions
and (iii) any write-up in the value of any asset.
"NET WORKING CAPITAL" shall mean, with respect to any Person and its
Subsidiaries on a consolidated basis at any date, (a) the sum of inventory,
current receivables (including trade receivables and current rent receivables)
and prepaid expenses minus (b) the sum of accrued expenses payable and trade
payables, as each of such items would appear on a consolidated balance sheet of
such person and its Subsidiaries as of the date of determination in accordance
with GAAP.
"NETWORK" shall have the meaning ascribed in Section 1.1.
"NETWORK OPERATOR" shall mean each independent auto/truckstop operator
who will lease or sublease a Truckstop from either Guarantor.
"NOTEHOLDERS" shall mean the Noteholder and the other noteholders
listed in Schedule I hereto.
"NOTE REFINANCING INDEBTEDNESS" shall mean any Indebtedness incurred
by the Company as contemplated by Section 7.1(g) in connection with the
refinancing of the Notes of either series.
"NOTE REGISTER" shall have the meaning ascribed in Section 11.
"NOTES" shall have the meaning ascribed in Section 1.3.
"OBLIGATIONS" shall mean all obligations defined as "OBLIGATIONS" in
the Guarantee Agreement and the Security Documents.
"OFFERING MEMORANDUM" shall mean the Offering Memorandum of the
Company dated March 24, 1997, relating to the Subordinated Notes, as amended,
supplemented or otherwise modified from time to time.
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"OPERATORS" shall mean independent auto/truckstop operators who lease
or sublease their facilities from National.
"ORIGINAL NOTES" shall have the meaning ascribed in Section 1.1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERFECTION CERTIFICATE" shall mean the Perfection Certificate,
substantially in the form of Annex 2 to the Security Agreement, prepared by the
Company.
"PERMITTED BUSINESS ACQUISITION" shall mean any acquisition of assets
from, or shares or other equity interests in, any Person if (a) immediately
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing or would result therefrom, (b) all transactions related
thereto shall be consummated in accordance with applicable laws, (c) in the case
of any acquisition of shares or other equity interests in any Person, such
acquisition is an acquisition of 100% of the shares or other equity interests of
such Person and, simultaneously with or immediately following such acquisition,
such acquired Person is merged with and into one of the Guarantors and (d)
neither the Company nor any of its Subsidiaries shall assume or otherwise become
liable for any Indebtedness in connection with such acquisition (except for
Indebtedness permitted by Section 7.1).
"PERMITTED DEVELOPER" shall have the meaning ascribed in Section 10 of
the Guarantee Agreement.
"PERMITTED DEVELOPMENT ENTITY" shall be a corporation or limited
partnership that does not satisfy the criteri a to be considered a "SUBSIDIARY"
as contemplated in the definition thereof.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America), in each case
maturing within three months from the date of acquisition thereof;
(b) without limiting the provisions of paragraph (d) below,
investments in commercial paper maturing within three months from the date
of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from Standard & Poor's and from Moody's;
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(c) investments in certificates of deposit, banker's acceptances and
time deposits (including eurodollar time deposits) maturing within three
months from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, (i)
any domestic office of The Chase Manhattan Bank or (ii) any domestic office
of any other commercial bank of recognized standing organized under the
laws of the United States of America or any state thereof that has a
combined capital and surplus and undivided profits of not less than
$250,000,000 and which is rated (or the senior debt securities of the
holding company of such commercial bank are rated) A or better by Standard
& Poor's or A2 or better by Moody's, or carrying an equivalent rating by
another nationally recognized rating agency if neither of the two named
rating agencies shall rate such commercial bank (or the holding company of
such commercial bank);
(d) investments in commercial paper maturing within three months from
the date of acquisition thereof and issued by (i) the holding company of
The Chase Manhattan Bank or (ii) the holding company of any other
commercial bank of recognized standing organized under the laws of the
United States of America or any state thereof that has (A) a combined
capital and surplus in excess of $250,000,000 and (B) commercial paper
rated at least A-1 or the equivalent thereof by Standard & Poor's or at
least P-1 or the equivalent thereof by Moody's, or carrying an equivalent
rating by another nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of investments;
(e) repurchase agreements having a term of seven days or less with (i)
any domestic office of The Chase Manhattan Bank or (ii) any domestic office
of any other commercial bank of recognized standing organized under the
laws of the United States of America or any state thereof that has a
combined capital and surplus and undivided profits of not less than
$250,000,000 and which is rated (or the senior debt securities of the
holding company of such commercial bank are rated) A or better by Standard
& Poor's or A2 by Moody's or carrying an equivalent rating by another
nationally recognized rating agency if neither of the two named rating
agencies shall rate such bank, in each case relating to marketable direct
obligations issued or unconditionally guaranteed by the United States but
only if the securities collateralizing such repurchase agreements are
delivered to or on the order of the Collateral Agent;
(f) other investment instruments approved in writing by the Required
Holders and offered by financial institutions that have a combined capital
and surplus and undivided profits of not less than $250,000,000; and
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(g) investments consisting of Rate Protection Agreements.
"PERMITTED JOINT VENTURE" shall have the meaning ascribed in Section
7.4(h).
"PERSON" or "PERSON" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
"PLAN" shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code that
is maintained for employees of the Company or any ERISA Affiliate.
"PLEDGE AGREEMENT" shall have the meaning ascribed in Section 1.5.
"PREPAYMENT ACCOUNT" shall have the meaning ascribed in the
Intercreditor Agreement.
"PREPAYMENT EVENT" shall mean (a) any sale, transfer or other
disposition of any business units, assets, franchises or other properties of the
Company or any Subsidiary thereof (including dispositions in the nature of
casualties (to the extent covered by insurance) or condemnations (including any
Casualty or Condemnation in respect of a Mortgaged Property as contemplated in
Section 9 of the Guarantee Agreement)), (b) any sale and leaseback of any asset
or the mortgaging of any real property other than (i) any Sale and Leaseback
Transaction permitted by Section 7.3 or (ii) pursuant to a Mortgage (or a
modification thereof) by the Company or any Subsidiary thereof, or (c) the
issuance or incurrence by the Company or any Subsidiary thereof of any
Indebtedness (excluding any Indebtedness permitted under Section 7.1), or the
issuance or sale by the Company or any Subsidiary thereof of any debt securities
or any obligations convertible into or exchangeable for, or giving any Person
any right, option or warrant to acquire from the Company or any Subsidiary
thereof any Indebtedness or any such debt securities or any such convertible or
exchangeable obligations (excluding any Indebtedness permitted under Section
7.1). Notwithstanding the foregoing, the term "PREPAYMENT EVENT" shall not
include:
(i) sales, transfers and other dispositions of used or surplus
equipment, vehicles and other assets in the ordinary course of business
permitted pursuant to Section 7.5(b) not exceeding in the aggregate
$1,000,000 in any fiscal year, provided that (A) at any time when such
sales, transfers and other dispositions in the ordinary course of business
shall exceed $1,000,000 in any fiscal year, the resultant Prepayment Event
shall include the entire amount of such sales, transfers and dispositions
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since the date of such most recent payment, if any, with respect to such
fiscal year and not just amounts above such dollar threshold and (B) to the
extent that the Company or any of its Subsidiaries shall have reinvested on
the date of such Prepayment Event (or certified to the holders of the Notes
that it intends to reinvest within 180 days of such Prepayment Event) any
of the proceeds of such sales, transfers and dispositions in equipment,
vehicles or other assets used in the principal lines of business of the
Subsidiaries, the resultant Prepayment Event shall be reduced by the lesser
of (I) $1,000,000 and (II) the amount so reinvested or to be reinvested;
(ii) sales of inventory in the ordinary course of business;
(iii) sales, transfers and other dispositions of Truckstops and the
related assets permitted pursuant to Sections 7.5(d) and 7.5(g) resulting
in Net Cash Proceeds in an aggregate amount not exceeding (A) during the
period commencing on the Closing Date and ending on March 31, 2000,
$50,000,000 and (B) during each period of four consecutive fiscal quarters
ending on each March 31 thereafter, $7,500,000, provided that (1) such Net
Cash Proceeds are either (x) used to prepay or voluntarily prepay the Notes
or the Loans, in accordance with Section 5.2 or 5.3 of this Agreement and
Section 2.12 or 2.13 of the Credit Agreement, on such date as may be
elected by the Company or (y) reinvested in other Truckstop properties and
related assets, (2) in connection with any such reinvestment, the Company
shall (x) provide the holders of the Notes and the Collateral Agent with
such opinions, documents, certificates, title insurance policies (as
required by Section 3.14(a)), surveys and other insurance policies as they
may reasonably request and (y) take such other actions as the Required
Holders and the Collateral Agent may reasonably deem necessary or
appropriate (including actions with respect to the delivery to the
Collateral Agent of a first priority Mortgage as required by Section
3.14(a) and assignment with respect to the related real property for the
ratable benefit of the Secured Parties) and (3) the Company, pending any
such repayment, voluntary prepayment or reinvestment, promptly deposits
such Net Cash Proceeds in a cash collateral account established with the
Collateral Agent for the benefit of the Secured Parties;
(iv) the receipt of insurance or condemnation proceeds (other than
Condemnation Proceeds and Insurance Proceeds in respect of Mortgaged
Properties), provided that (A) such proceeds are reinvested in equipment,
vehicles or other assets used in the Subsidiaries' principal lines of
business within 180 days after the receipt thereof and (B) the Company,
pending such reinvestment, promptly deposits such proceeds so received and
unreinvested in a cash collateral account established with the Collateral
Agent for the benefit of the Secured Parties;
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(v) the receipt of Condemnation Proceeds and Insurance Proceeds in
respect of Mortgaged Properties to the extent that (A) such Condemnation
Proceeds or Insurance Proceeds are used to restore, repair or locate,
acquire and replace the related Mortgaged Property in accordance with
Section 9 of the Guarantee Agreement, (B) such Condemnation Proceeds or
Insurance Proceeds, pursuant to Section 9 of the Guarantee Agreement, are
not otherwise required to be applied as a mandatory prepayment pursuant to
Section 2.13(b) of the Credit Agreement and Section 5.3 or (C) to the
extent permitted by Section 9 of the Guarantee Agreement, any Condemnation
Proceeds or Insurance Proceeds are (I) reinvested in equipment, vehicles or
other assets used in the Subsidiaries' principal lines of business within
180 days after the receipt thereof and (II) the Company, pending such
reinvestment, has deposited such amounts in an escrow account with the
Collateral Agent as contemplated in Section 9 of the Guarantee Agreement;
(vi) except as otherwise specified in Section 10 of the Guarantee
Agreement, any sale, transfer and other disposition of any portion of a
Mortgaged Property in connection with the development of such property as
permitted in, and in accordance with, the provisions of Section 10 of the
Guarantee Agreement; and
(vii) in respect of any Mortgaged Property, sales, transfers and other
dispositions of any portion of the Land (as defined in the related
Mortgage) that has no significant improvements on it that are permitted
pursuant to Section 7.05(f) in an aggregate amount not exceeding $2,000,000
in any fiscal year or $8,000,000 since the Closing Date, provided that (A)
the proceeds of each such sale are reinvested in equipment, vehicles or
other assets used in the Subsidiaries' principal lines of business within
180 days of the date of such sale and (B) the Company, pending such
reinvestment, promptly deposits such proceeds so received and unreinvested
in a cash collateral account established with the Collateral Agent for the
benefit of the Secured Parties.
"PRO FORMA BALANCE SHEET" shall have the meaning ascribed in Section
4.5(a).
"PRO RATA SHARE" shall mean, in relation to any amount, (a) with
respect to all the Lenders as a group, a share of such amount determined by
multiplying such amount by a fraction, the numerator of which shall be the sum
of the aggregate principal amount of Revolving Credit Loans (as defined in the
Credit Agreement), Swingline Loans and Term Loans outstanding at the time plus
the aggregate face amount of all Letters of Credit outstanding at the time under
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the Credit Agreement plus the aggregate unused amount of Revolving Credit
Commitments (as defined in the Credit Agreement) in effect at the time (the sum
of the foregoing amounts being referred to as the "LENDERS' AMOUNT"), and the
denominator of which shall be the sum of the Lenders' Amount and the aggregate
unpaid principal amount of the Notes at the time outstanding (the sum of the
foregoing amounts being referred to as the "DENOMINATOR AMOUNT"), and (b) with
respect to the holders of the Notes or the Notes of either series, a share of
such amount determined by multiplying such amount by a fraction, the numerator
of which shall be the aggregate unpaid principal amount of Notes or the Notes of
such series, as the case may be, at the time outstanding, and the denominator of
which shall be the Denominator Amount. In making a determination of the Pro Rata
Share with respect to a Prepayment Event as of any date in a fiscal year prior
to prepayment pursuant to Section 2.12(d) of the Credit Agreement in respect of
Excess Cash Flow for the prior fiscal year, the Lenders' Amount shall be
determined on a pro forma basis after giving effect to such prepayment in
respect of Excess Cash Flow. After the incurrence of Refinancing Indebtedness,
the Pro Rata Share shall be determined, MUTATIS MUTANDIS, with respect to the
analogous provisions of the Refinancing Indebtedness.
"PURCHASE AGREEMENTS" shall have the meaning ascribed in Section 1.1.
"RATE PROTECTION AGREEMENTS" shall have the meaning ascribed in the
Credit Agreement.
"RECAPITALIZATION" shall have the meaning ascribed in Section 1.2.
"REDEEMED NOTES" shall have the meaning ascribed in Section 1.2.
"REFINANCING INDEBTEDNESS" shall mean, as the context requires,
individually the Credit Agreement Refinancing Indebtedness or the Note
Refinancing Indebtedness in respect of the Notes of either series, and
collectively the Credit Agreement Refinancing Indebtedness and such Note
Refinancing Indebtedness.
"RELEASE" shall mean any discharge, emission, release, or threat
thereof, including a "RELEASE" as defined in CERCLA at 42 U.S.C. ss. 9601(22),
and the term "RELEASED" has a meaning correlative thereto.
"REPORTABLE EVENT" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
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"REQUIRED HOLDERS" shall mean, at any time, the holder or holders of
at least 51% of the aggregate unpaid principal amount of the Notes then
outstanding. Unless the context otherwise clearly requires, any reference to the
"Required Holders" is a reference to the Required Holders of all Notes.
"RESELLERS" shall mean independent auto/truckstop operators who own
their facilities and who are part of the National Network.
"RESPONSIBLE OFFICER" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"SALE AND LEASEBACK TRANSACTION" shall have the meaning ascribed in
Section 7.3.
"SECURED PARTIES" shall have the meaning ascribed in the Security
Agreement.
"SECURITY AGREEMENT" shall have the meaning ascribed in Section 1.5.
"SECURITY DOCUMENTS" shall mean the Mortgages (including any
assignment of leases and rents and any leasehold mortgage covering the Mortgaged
Properties), the Security Agreement, the Pledge Agreement, the Collateral
Assignment, the Collateral Account Agreement, the Lockbox Agreements, the
Trademark Security Agreement and each of the security agreements, mortgages and
other instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 6.10.
"SENIOR CONVERTIBLE PARTICIPATING PREFERRED STOCK" shall mean the
Series I Senior Preferred Stock and the Series II Senior Preferred Stock.
"SENIOR FUNDED DEBT" means all Funded Debt of the Guarantor and its
Subsidiaries other than the Subordinated Notes (or the Subordinated Note
Refinancing Indebtedness).
"SERIES I PREFERRED STOCK", "SERIES I SENIOR PREFERRED STOCK", "SERIES
II PREFERRED STOCK" and "SERIES II SENIOR PREFERRED STOCK" shall have the
meaning ascribed in Section 4.19(a).
"STANDARD & POOR'S" means Standard & Poor's Ratings Group, a division
of The McGraw-Hill Companies, Inc.
"STOCKHOLDERS AGREEMENT" shall mean the Stockholders Agreement dated
as of April 14, 1993, as amended as of March 6, 1997, among certain
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Institutional Equity Investors, certain Resellers, certain Operators and the
Company and as the same may be further amended, modified or supplemented in
accordance with the provisions of this Agreement.
"SUBORDINATED NOTE DOCUMENTS" shall mean the Subordinated Note
Guarantees, the Subordinated Note Indenture and the Subordinated Notes.
"SUBORDINATED NOTE GUARANTEES" shall mean, collectively, the
Guarantees of the Guarantors guaranteeing repayment of the Subordinated Notes.
"SUBORDINATED NOTE INDENTURE" shall mean the Subordinated Note
Indenture, dated as of March 24, 1997, among the Company, the Guarantors and
Fleet National Bank, as trustee, as amended from time to time in accordance with
the terms hereof and thereof.
"SUBORDINATED NOTE REFINANCING INDEBTEDNESS" shall mean any
Indebtedness incurred by the Company as contemplated in Section 7.01(h).
"SUBORDINATED NOTES" shall have the meaning ascribed in Section 1.2.
"SUBSIDIARY" shall mean, with respect to any person (herein referred
to as the "PARENT"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held or (b) that is, at the time any
determination is made, otherwise Controlled by the parent or one or more
Subsidiaries of the parent or by the parent and one or more Subsidiaries of the
parent. Unless the context otherwise requires, references to "SUBSIDIARIES"
shall mean Subsidiaries of the Company.
"SWINGLINE LOANS" shall have the meaning ascribed in the Credit
Agreement.
"TA" shall have the meaning ascribed in Section 1.1.
"TA ANCILLARY AGREEMENTS" shall have the meaning ascribed to the term
"Ancillary Agreements" in the TA Asset Purchase Agreement and shall include the
Non-Competition Agreement, the Credit Card Agreement, the Services Agreement,
the Office Sub-Lease, the Assignment and Assumption Agreement, the TAFSI
Assumption Agreement, the Jobber Agreement, the Supplemental Agreement, the
Trademark Assignment and the Software License Agreement (each as defined in the
TA Asset Purchase Agreement).
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"TA ASSET PURCHASE AGREEMENT" shall mean the Asset Purchase Agreement
dated as of July 22, 1993, as amended by Amendment No. 1 thereto dated as of
December 9, 1993, among TA, BP Exploration & Oil, Inc. and Truckstops
Corporation of America, as the same may be further amended, supplemented or
otherwise modified from time to time in accordance with the terms of this
Agreement.
"TA HOLDINGS" shall have the meaning ascribed in Section 1.1.
"TA NETWORK" shall have the meaning ascribed in Section 1.1.
"TA NOTES" shall have the meaning ascribed in Section 1.1.
"TA PURCHASE AGREEMENTS" shall have the meaning ascribed in Section
1.1.
"TA STOCKHOLDERS AGREEMENT" shall mean the Stockholders Agreement
dated as of December 10, 1993 among the Company and the stockholders parties
thereto to be amended in accordance with the Company's Consent Solicitation
dated February 13, 1997, as the same may be amended, modified or supplemented in
accordance with the provisions of this Agreement.
"TA SUBORDINATED NOTES" shall mean all of TA's outstanding Series A
and Series B Senior Subordinated Notes due 2003.
"TAFSI" shall have the meaning ascribed in Section 1.2.
"TERM LENDER" shall have the meaning ascribed in the Credit Agreement.
"TERM LOANS" shall mean the Term Loans as defined in the Credit
Agreement.
"TOTAL DEBT" shall mean, with respect to the Company and its
Subsidiaries on a consolidated basis at any time, all Capital Lease Obligations,
Indebtedness for borrowed money, Indebtedness in respect of deferred purchase
price of property or services of the Company and its Subsidiaries and preferred
stock that is mandatorily redeemable on or prior to the first anniversary of the
latest final maturity of the then outstanding Notes less the amount of cash and
cash equivalents set forth on the Company's consolidated balance sheet at such
time (including all amounts on deposit in the Collateral Account at such time)
in excess of $2,500,000.
"TRADEMARK SECURITY AGREEMENT" shall have the meaning ascribed in
Section 1.5.
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"TRANSACTION DOCUMENTS" shall mean the Credit Agreement Documents, the
Financing Documents and the Subordinated Note Documents.
"TRANSACTIONS" shall have the meaning ascribed in Section 4.2.
"TRANSITION CAPITAL EXPENDITURES" shall mean, for any period, all
capital expenditures made by the Company and its subsidiaries during such period
to the extent that such capital expenditures (a) are in an amount in excess of
the Capital Expenditures permitted to be made during such period under Section
7.13(a) of this Agreement and (b) are capital expenditures substantially similar
to those described in Section 10 of the Confidential Information Memorandum.
"TRUCKSTOP" shall mean, as of any date, each full service truckstop
facility that is part of the Network and that is owned by the Company or a
Subsidiary or leased by the Company or a Subsidiary as lessee or sublessee.
"VOTING TRUST" shall mean the Voting Trust established pursuant to the
terms of the Voting Trust Agreement.
"VOTING TRUST AGREEMENT" shall mean the Voting Trust Agreement dated
as of April 14, 1993, as amended as of March 6, 1997, among the Company, certain
Resellers, certain Operators and United States Trust Company of New York, as
trustee, as the same may be amended, modified or supplemented in accordance with
the provisions of this Agreement.
"VOTING TRUST CERTIFICATES" shall mean the Voting Trust Certificates
issued pursuant to the terms of the Voting Trust Agreement.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
7.2. TERMS GENERALLY.
The definitions in Section 9.1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "INCLUDE," "INCLUDES" and "INCLUDING" shall be deemed to
be followed by the phrase "WITHOUT LIMITATION." All references herein to
Sections, Exhibits and Schedules shall be deemed to be references to Sections
of, and Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made and all financial statements required to be delivered hereunder shall be
prepared in accordance with GAAP as in effect from time to time.
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10. EVENTS OF DEFAULT; REMEDIES.
10.1. EVENTS OF DEFAULT; ACCELERATION OF MATURITY.
If any of the following events ("EVENTS OF DEFAULT") shall have
occurred and be continuing (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or by operation of law or
otherwise), that is to say:
(a) any representation or warranty made or deemed made in this
Agreement or any Transaction Document, or any representation, warranty,
statement or information contained in any report, certificate, financial
statement or other instrument furnished pursuant to this Agreement, shall
prove to have been false or misleading in any material respect when so
made, deemed made or furnished;
(b) default shall be made in the payment of all or any part of the
principal of, or premium (if any) on, any Note when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Note,
when and as the same shall become due and payable, and such default shall
continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance by the
Company, of any covenant, condition or agreement contained in Section 5.3,
5.4, 6.1, 6.5, 6.11, 6.12, 6.13, 6.14, 7.1 or 7.3 to 7.17, inclusive, or
Section 8 or in Section 9 or 10 of the Guarantee Agreement;
(e) default shall be made in the due observance or performance by the
Company, either Guarantor or TAFSI of any covenant, condition or agreement
contained in any Financing Document (other than those defaults specified in
subsection (b), (c) or (d) above) and such default shall continue
unremedied for a period of the earlier of (i) 30 days after an executive
officer of the Company, such Guarantor or TAFSI first becomes aware or
should have become aware thereof and (ii) 15 days after notice thereof from
any holder of any Note to the Company, such Guarantor or TAFSI, as
applicable;
(f) the Company or any of its Subsidiaries shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $2,000,000, when and as the
same shall become due and payable (after giving effect to any applicable
grace period) or (ii) fail to observe or perform any other term, covenant,
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condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness (after giving effect to any
applicable grace period) if the effect of any failure referred to in this
clause (ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such Indebtedness to
become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Company or any of its Subsidiaries, or of a
substantial part of the property or assets of the Company or any of its
Subsidiaries, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or
any of its Subsidiaries, or for a substantial part of the property or
assets of the Company or any of its Subsidiaries, or (iii) the winding-up
or liquidation of the Company or any of its Subsidiaries; and such
proceeding or petition shall continue undismissed for 30 days or an order
or decree approving or ordering any of the foregoing shall be entered;
(h) the Company or any of its Subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner (but within 30 days in any event), any proceeding or the
filing of any petition described in (g) above, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or any of the its
Subsidiaries, or for a substantial part of the property or assets of the
Company or any of its Subsidiaries, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to pay its debts
as they become due or (vii) take any action for the purpose of effecting
any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $2,000,000 (to the extent not covered by insurance)
shall be rendered against the Company, either Guarantor or TAFSI or any
combination thereof and the same shall remain undischarged for a period of
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30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of the Company, either Guarantor or TAFSI to enforce
any such judgment;
(j) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(l) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Company, either Guarantor, TAFSI or any ERISA Affiliate to the PBGC or to a
Plan in an aggregate amount exceeding $2,000,000 and, within 30 days after
the reporting of any such Reportable Event to the holders of the Notes or
after the delivery of the statement required pursuant to Section
6.6(b)(iii), the Required Holders shall have notified the Company in
writing that (i) the Required Holders have reasonably determined that, on
the basis of such Reportable Event or Reportable Events or the failure to
make a required payment, there are reasonable grounds (a) for the
termination of such Plan or Plans by the PBGC, (b) for the appointment by
the appropriate United States District Court of a trustee to administer
such Plan or Plans or (c) for the imposition of a lien in favor of a Plan
and (ii) as a result thereof an Event of Default exists hereunder; or a
trustee shall be appointed by a United States District Court to administer
any such Plan or Plans; or the PBGC shall institute proceedings to
terminate any Plan or Plans;
(k) (i) the Company, either Guarantor, TAFSI or any ERISA Affiliate
shall have been notified by the sponsor of a Multiemployer Plan that it has
incurred Withdrawal Liability to such Multiemployer Plan, (ii) the Company,
such Guarantor, TAFSI or such ERISA Affiliate does not have reasonable
grounds for contesting such Withdrawal Liability or is not in fact
contesting such Withdrawal Liability in a timely and appropriate manner and
(iii) the amount of the Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer
Plans in connection with Withdrawal Liabilities (determined as of the date
or dates of such notification), either (a) is $2,000,000 or more and the
Required Holders have reasonably determined that the Company, such
Guarantor, TAFSI or such ERISA Affiliate will not be able to make the
payments required in connection with such Withdrawal Liability or (B) is
less than $2,000,000 and any payment due as a result of such liability
remains unpaid 30 days after such payment is due;
(l) the Company, either Guarantor, TAFSI or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
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meaning of Title IV of ERISA, if solely as a result of such reorganization
or termination the aggregate annual contributions of the Company, each
Guarantor, TAFSI and each ERISA Affiliate to all Multiemployer Plans that
are then in reorganization or have been or are being terminated have been
or will be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an
amount exceeding $2,000,000 and the Required Holders have reasonably
determined that the Company, such Guarantor, TAFSI or such ERISA Affiliate
will not be able to make the payments required in connection with such
contribution;
(m) any material security interest purported to be created by any
Security Document shall cease to be, or shall be asserted by the Company,
either Guarantor or TAFSI not to be, a valid, perfected, first priority
(except as otherwise expressly provided in this Agreement or such Security
Document) security interest in the securities, assets or properties covered
thereby, except to the extent that any such loss of perfection or priority
results from the failure of the Collateral Agent to maintain possession of
certificates representing securities pledged under the Pledge Agreement
(except to the extent that such loss is covered by a lender's title
insurance policy and the related insurer promptly after such loss shall
have acknowledged in writing that such loss is covered by such title
insurance policy);
(n) any Financing Document shall not be for any reason or shall be
asserted by the Company, either Guarantor or TAFSI, not to be in full force
and effect and enforceable in all material respects in accordance with its
terms;
(o) the Obligations and the guarantees thereof pursuant to the
Guarantee Agreement shall cease to constitute, or shall be asserted by the
Company or either Guarantor not to constitute, senior indebtedness under
the subordination provisions of the Subordinated Notes, the Subordinated
Guarantees and the Subordinated Note Indenture (or the provisions of the
Subordinated Note Refinancing Indebtedness) or such subordination
provisions shall be invalidated or otherwise cease to be a legal, valid and
binding obligation of the parties thereto, enforceable in accordance with
their terms; or
(p) any material provision of the Guarantee Agreement or any other
Financing Document shall cease to be in full force and effect and
enforceable in accordance with its terms for any reason whatsoever or
either Guarantor or TAFSI shall contest or deny in writing the validity or
enforceability of any of its obligations under the Guarantee Agreement or
any other Financing Document, as applicable, or the Notes shall cease to be
entitled to the benefits of any Security Document, this Agreement, or the
Intercreditor Agreement for any reason whatsoever;
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then (i) upon the occurrence of an Event of Default with respect to the Company
or any of its Subsidiaries described in subsection (g) or (h) above, the unpaid
principal amount of all Notes, together with the interest accrued thereon, shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Company or (ii) upon the occurrence and continuance of any other
Event of Default, the Required Holders may, by written notice to the Company,
declare the unpaid principal amount of all Notes to be, and the same shall
forthwith become, due and payable, together with the interest accrued thereon
and, to the extent permitted by law, an amount equal to the Additional Amount
(as hereinafter defined) in respect of each such Note, provided that during the
existence of an Event of Default described in subsection (b) or (c) above with
respect to any Note, the holder of such Note may, by written notice to the
Company, declare such Note to be, and the same shall forthwith become, due and
payable, together with the interest accrued thereon and, to the extent permitted
by law, an amount equal to the Additional Amount. If any holder of any Note
shall exercise the option specified in the proviso to the preceding sentence,
the Company will forthwith give written notice thereof to the holders of all
other outstanding Notes and each such holder may (whether or not such notice is
given or received), by written notice to the Company, declare the unpaid
principal amount of all Notes held by it to be, and the same shall forthwith
become, due and payable, together with the interest accrued thereon and, to the
extent permitted by law, an amount equal to the Additional Amount. If all Notes
are accelerated as specified above, the Company will forthwith give written
notice thereof to any holder of an outstanding Note which has not given written
notice to the Company with respect to such acceleration.
Notwithstanding the foregoing, in the event that a non-payment default
under subsection (a), (d) or (e) above is solely the result of any Network
Operator's failure to perform its obligations to either Guarantor pursuant to
any operating lease with such Guarantor permitted by Section 7.8, then, so long
as (i) there shall not be a similar failure by more than two other Network
Operators and (ii) such Guarantor has rights against such Network Operator with
respect to such default and has commenced enforcement of its rights against such
Network Operator (including compelling such Network Operator to cure such
default, exercising such Guarantor's self-help remedies as landlord under such
operating lease or terminating such operating lease and taking possession of the
premises within the time for cure as provided herein) and the Required Holders,
in their reasonable judgment, are satisfied that such Guarantor is diligently
and with best efforts prosecuting such enforcement until cure of such default,
no Event of Default shall be deemed to have occurred hereunder with respect
thereto.
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For purposes of this Section, the term "ADDITIONAL AMOUNT" means: with
respect to any Fixed Rate Note, an amount equal to the Make-Whole Premium that
would be payable with respect to such Note if the Company had elected to prepay
such Note in full pursuant to Section 5.2 on the date of acceleration; and with
respect to any Floating Rate Note, an amount equal to the Break Funding Cost
that would be payable with respect to such Note, if the Company had elected to
prepay such Note in full pursuant to Section 5.2 on the date of acceleration.
The provisions of this Section are subject, however, to the condition
that if, at any time after all Notes have been declared due and payable as
aforesaid by the Required Holders, the Company shall pay all arrears of interest
on the Notes and all payments on account of the principal of and premium (if
any) on the Notes which shall have become due otherwise than by acceleration
(with interest on such principal, premium (if any) and, to the extent permitted
by law, on overdue payments of interest, at the rate specified in the Notes with
respect to overdue payments) and all Events of Default (other than nonpayment of
principal of and accrued interest on Notes due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 13, then the
holders of at least 75% of the aggregate unpaid principal amount of the Notes at
the time outstanding may, by written notice to the Company, rescind and annul
any such acceleration and its consequences; but no such action shall affect any
subsequent Default or Event of Default or impair any right consequent thereon.
10.2. SUITS FOR ENFORCEMENT.
If any Event of Default shall have occurred and be continuing, the
holder of any Note may proceed to protect and enforce its rights, either by suit
in equity or by action at law, or both, whether for the specific performance of
any covenant or agreement contained in this Agreement or in aid of the exercise
of any power granted in this Agreement, or the holder of any Note may proceed to
enforce the payment of all sums due upon such Note or to enforce any other legal
or equitable right of the holder of such Note.
The Company covenants that, if it shall default in the making of any
payment due under any Note or in the performance or observance of any agreement
contained in this Agreement, it will pay to the holder thereof such further
amounts, to the extent lawful, as shall be sufficient to pay the costs and
expenses of collection or of otherwise enforcing such holder's rights, including
counsel fees.
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10.3. REMEDIES CUMULATIVE.
No remedy herein conferred upon the Noteholder or the holder of any
Note is intended to be exclusive of any other remedy and each and every such
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
otherwise.
10.4. REMEDIES NOT WAIVED.
No course of dealing between the Company and the Noteholder or the
holder of any Note and no delay or failure in exercising any rights hereunder or
under any Note in respect thereof shall operate as a waiver of any rights of the
Noteholder or any holder of such Note.
11. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.
The Company will keep at the Company's principal executive office or
at such other office as the Company may designate in writing to the holders of
the Notes a register (the "NOTE REGISTER") in which, subject to such reasonable
regulations as it may prescribe, but at its expense (other than transfer taxes,
if any), it will provide for the registration and transfer of Notes.
Whenever any Note shall be surrendered either at such office of the
Company or at the place of payment named in such Note, for transfer or exchange,
within five Business Days thereafter the Company will execute and deliver in
exchange therefor a new Note or Notes, as may be requested by such holder, in
the same aggregate unpaid principal amount as the unpaid principal amount of the
Note so surrendered. Each such new Note shall be payable to such person as such
holder may request. Each Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer, duly executed by the registered holder of such Note or
such holder's attorney duly authorized in writing. Any Note issued in exchange
for any other Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, and neither gain nor loss of interest shall result from any such
transfer or exchange. Any transfer tax relating to such transaction shall be
paid by the holder requesting the exchange.
The Company and any agent of the Company may deem and treat the Person
in whose name any Note is registered as the owner of such Note for the purpose
of receiving payment of the principal of and premium (if any) and interest on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue.
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As provided in the Intercreditor Agreement, the rights and obligations
of the holder of a Note thereunder shall be assigned automatically, without the
need for the execution of any document or any other action, to any transferee of
such Note whereupon such transferee shall automatically become a party to the
Intercreditor Agreement.
12. LOST, ETC., NOTES.
Upon receipt by the Company of evidence reasonable and satisfactory to
it of the loss, theft, destruction or mutilation of any Note, and (in case of
loss, theft or destruction) of indemnity satisfactory to it, and upon surrender
and cancellation of such Note, if mutilated, within five Business Days
thereafter the Company will deliver in lieu of such Note a new Note in a like
unpaid principal amount, dated as of the date to which interest has been paid
thereon.
Notwithstanding the foregoing provisions of this Section, if any Note
of which the Noteholder or any other institutional holder is the owner is lost,
stolen or destroyed, then the affidavit of your or such holder's treasurer or
assistant treasurer (or other responsible official), setting forth the
circumstances with respect to such loss, theft or destruction, shall be accepted
as satisfactory evidence thereof, and no indemnity shall be required as a
condition to the execution and delivery by the Company of a new Note in lieu of
such Note (or as a condition to the payment thereof, if due and payable) other
than the Noteholder's or such holder's unsecured written agreement to indemnify
the Company.
13. AMENDMENT AND WAIVER.
(a) Any provision of this Agreement or the Notes may, with the consent
of the Company, be amended or waived (either generally or in a particular
instance and either retroactively or prospectively), by one or more
substantially concurrent written instruments signed by the Required Holders
(subject to the provisions of the Intercreditor Agreement) provided, however,
that
(i) no such amendment or waiver shall
(A) change the rate or the time of payment of interest on
any of the Notes, change the maturity of any of the Notes or affect
the premium payable on any prepayment of a Note, modify any of the
other provisions of this Agreement with respect to the payment or
prepayment or purchase of any Note, modify this Section 13 or Section
14, reduce the percentage of the principal amount of the Notes the
holders of which are required to approve any such amendment or
effectuate any such amendment or effectuate any such waiver, or change
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the percentage of the principal of the Notes the holders of which are
required to accelerate the maturity of the Notes or rescind any such
acceleration, without the consent of the holders of all the Notes then
outstanding, or
(B) modify the definition of "MAKE-WHOLE PREMIUM" or "BREAK
FUNDING COST" without the consent of the holder of each Note affected
thereby, or
(C) be effective prior to the Closing Date without your
consent, and
(ii) no such waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon.
(b) Any amendment or waiver pursuant to subsection (a) above
shall apply equally to all the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company, in each case
whether or not a notation thereof shall have been placed on any Note.
(c) The Company will not, and will cause its Subsidiaries not to,
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
holder of a Note (irrespective of the principal amount of Notes then held by it)
shall be informed thereof by the Company and shall be afforded the opportunity
of considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any amendment or waiver effected pursuant
to the provisions of this Section shall be delivered by the Company to each
holder of Notes forthwith following the date on which the same shall have become
effective. The Company will not, and will cause its Subsidiaries not to,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise, to any holder of a
Note as consideration for or as an inducement to the entering into by such
holder of any such amendment or waiver unless such remuneration is concurrently
paid, on the same terms, ratably to the holders of all of the Notes then
outstanding.
(d) For purposes of determining whether the holders of
outstanding Notes of the requisite unpaid principal amount at any time have
taken any action authorized by this Section or otherwise by this Agreement, any
Notes owned by the Company, any Subsidiary or any Affiliate of the Company shall
not be deemed outstanding.
14. HOME OFFICE PAYMENT.
Anything in the Notes, this Agreement or any other Security
Document to the contrary notwithstanding, so long as the Noteholder (or its
<PAGE>
98
nominee or nominees) shall hold any of the Notes, the Company agrees that it
will make or cause to be made all payments of principal of and interest and
premium, if any, on the Notes held by the Noteholder or nominee, without
surrender or presentation thereof, to the Noteholder or nominee in the manner
and at the address specified in Schedule I hereto (or in such other manner or at
such other address as the Noteholder or nominee may request in writing). The
Noteholder agrees that if it sells or transfers any Note held by it, prior to
such disposition it will make a notation thereon of all principal payments
previously made. The Company agrees that the provisions of this Section 14 shall
inure to the benefit of any other institutional holder of any such Note which
shall have agreed to comply with the requirements of this Section.
15. LIABILITIES OF THE PURCHASER.
Neither this Agreement nor the Security Documents or any other
document relating hereto or thereto nor any disposition of any of the Notes
shall be deemed to create any liability or obligation of the Noteholder or any
other holder of any Note to enforce any provision hereof or thereof for the
benefit or on behalf of any other person who may be the holder of any Note.
16. MISCELLANEOUS.
16.1. EXPENSES.
The Company agrees, whether or not the transactions contemplated
hereby shall be consummated, to pay all reasonable expenses incident to such
transactions (including without limitation all document production, recording,
filing and other expenses and the fees and disbursements of the Collateral Agent
for services with relation to such transactions, the fees and disbursements of
Willkie Farr & Gallagher, special counsel for the Noteholders, for their
services with relation to such transactions, the fees and disbursements of any
local counsel for any opinions furnished pursuant to Section 3.3 or any other
opinions that the Noteholder or said special counsel may reasonably deem it
advisable to obtain and all expenses in connection with the shipping to and from
the Noteholder's office or the office of its nominee, insured to the Noteholder
satisfaction, of the Notes and upon any exchange or substitution pursuant to the
provisions of the Notes or this Agreement) and to reimburse the Noteholder for
any out-of-pocket expenses in connection therewith. The Company also agrees to
pay all expenses incurred by the Noteholder, including without limitation
reasonable fees of local counsel and of a single special counsel for all
Noteholders (unless there shall exist a legitimate conflict in the interests of
the Noteholders, in which case the Company shall pay such fees of more than one
special counsel), in each case in connection with any amendment of, or waiver or
consent under or with respect to, this Agreement, any Security Document or any
of the Notes, whether or not the same shall become effective (including without
<PAGE>
99
limitation in connection with any incurrence or proposed incurrence of
Refinancing Indebtedness or Subordinated Refinancing Indebtedness). The Company
also agrees to pay, and to save the Noteholder and all subsequent holders of the
Notes harmless, against any loss or liability for the payment of costs and
expenses, including reasonable attorneys' fees and court costs, in connection
with the enforcement of any provision of this Agreement or the collection or
attempted collection of any Note or any investigation of any Default or Event of
Default (including investment banking and financial consultant fees). The
Company also agrees to pay, and to save the Noteholder and all subsequent
holders of the Notes harmless against, any loss or liability resulting from the
nonpayment or delay in payment of any placement fees and other obligations to
pay any agent or broker in connection with the transactions hereby contemplated.
The obligations of the Company under this Section 16.1 shall survive the payment
of the Notes.
In furtherance of the foregoing, on the Closing Date the Company will
pay the fees and disbursements and other charges (including estimated unposted
disbursements and other charges as of the Closing Date) of the Noteholders'
special counsel and any local counsel listed in Schedule 3.3 which are reflected
in any statement of such special counsel or local counsel, as the case may be,
delivered to the Company on or prior to the Closing Date; and thereafter the
Company will pay, promptly upon receipt of supplemental statements therefor from
time to time, additional fees, if any, and disbursements and other charges of
such counsel in connection with the transactions hereby contemplated.
16.2. TAXES.
The Company jointly and severally agrees to pay all documentary, stamp
or similar taxes (including any interest or penalty resulting from nonpayment or
delay in payment) with respect to the execution and delivery of this Agreement,
any other Transaction Document or any instrument contemplated hereby or thereby,
the execution and delivery (but not the transfer) of any of the Notes, or of any
amendment of, or waiver or consent under or with respect to, this Agreement, any
other Transaction Document or any such other instruments or of any of the Notes.
The obligations of the Company under this Section 16.2 shall survive the payment
of the Notes.
16.3. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement, the Intercreditor
Agreement and the other Security Documents by or on behalf of the Company for
the benefit of the Noteholder shall bind and inure to the benefit of the
successors and assigns of the Company, whether so expressed or not, and all such
covenants and agreements shall inure to the benefit of the Noteholder and their
successors and assigns, including all subsequent holders of the Notes; provided
that the benefits of Sections 12 and 14 shall be limited as specifically
provided therein.
<PAGE>
100
16.4. INDEMNIFICATION
The Company agrees, to the extent permitted by applicable law, to
indemnify, exonerate and hold the Noteholder and each of the Noteholder's
officers, directors, employees and agents (collectively the "INDEMNITIES" and
individually an "INDEMNITEE") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities and damages, and expenses
in connection therewith, including without limitation reasonable counsel fees
and disbursements (collectively the "INDEMNIFIED LIABILITIES") incurred by the
Indemnitees or any of them as a result of, or arising out of, or relating to any
transaction financed or to be financed in whole or in part directly or
indirectly with proceeds from the sale of any of the Notes, or the execution,
delivery, performance or enforcement of this Agreement, the Security Documents
or any instrument contemplated hereby by any of the Indemnitees, except as to
any Indemnitee for any such Indemnified Liabilities arising on account of such
Indemnitee's gross negligence or willful misconduct; and if and to the extent
the foregoing undertaking may be unenforceable for any reason, the Company
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The
obligations of the Company under this Section shall survive the payment of the
Notes.
16.5. RELIANCE ON AND SURVIVAL OF REPRESENTATIONS.
All agreements, representations and warranties of the Company herein
and in any certificates or other instruments delivered pursuant to this
Agreement or the Security Documents shall (A) be deemed to have been relied upon
by the Noteholder, notwithstanding any investigation heretofore or hereafter
made by the Noteholder or on the Noteholder's behalf, and (B) survive the
execution and delivery of this Agreement and the delivery of Notes to the
Noteholder, and shall continue in effect so long as any Note is outstanding and
thereafter as provided in Sections 6.12, 16.1, 16.2 and 16.4; provided that the
representation and warranty of the Company set forth in the first sentence of
Section 4.6 shall terminate and expire and shall not survive the execution and
delivery of this Agreement and the delivery of the Notes to the Noteholder.
16.6. NOTICES.
All communications and notices provided for hereunder or under the
Notes shall be in writing and delivered, or sent by a nationally recognized
overnight courier for delivery on the following Business Day or by telex or
telecopy (with such telex or telecopy to be confirmed promptly in writing sent
by overnight courier as aforesaid) (A) if to the Noteholder, at its address as
<PAGE>
101
set forth in Schedule I hereto, or (B) if to the Company at 24601 Center Ridge
Road, Suite 300, Westlake, Ohio 44145-5634, Attention of Edwin P. Kuhn,
President and CEO (Telecopy No. (216) 808-3301); with a copy to The Clipper
Group, L.P., 11 Madison Avenue, 26th Floor, New York, New York 10010, Attention
of Rowan G.P. Taylor (Telecopy No. (212) 448-5463); with a copy to Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New York
10019, Attention of Valerie E. Radwaner, Esq. (Telecopy No. (212) 757-3990), or
(C) if to any other holder of a Note, at the address of such holder as it
appears on the Note Register. Any address may be changed from time to time and
shall be the most recent address furnished in writing (1) if by the Noteholder
or any other holder of a Note, to the Company, or (2) if by the Company to the
Noteholder and to each other holder of a Note.
16.7. SEVERABILITY.
In case any one or more of the provisions contained in this Agreement
or in any instrument contemplated hereby, or any application thereof, shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein, and any
other application thereof, shall not in any way be affected or impaired thereby.
16.8. JURISDICTION AND PROCESS.
The Company agrees that any legal action or proceeding arising out of
or relating to this Agreement, the Notes or any other document executed in
connection herewith, or any legal action or proceeding to execute or otherwise
enforce any judgment obtained against the Company for breach hereof or thereof,
or against any of its properties, may be brought in the courts of the State of
New York or the United States District Court for the Southern District of New
York by or on behalf of the Noteholder or any holder of a Note, as the
Noteholder or such holder may elect, and the Company hereby irrevocably and
unconditionally submits to the non-exclusive jurisdiction of such courts for
purposes of any such legal action or proceeding. The Company consents to process
being served in any suit, action or proceeding by sending a copy thereof by any
commercial delivery service or by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to the address of the
Company specified in Section 16.6. The Company agrees that such service upon
receipt (A) shall be deemed in every respect effective service of process upon
it in any such suit, action or proceeding and (B) shall, to the fullest extent
permitted by law, be taken and held to be valid personal service upon and
personal delivery to the Company. In addition, the Company hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, the Notes or any other document
<PAGE>
102
executed in connection herewith brought in the courts of the State of New York
or the United States District Court for the Southern District of New York, and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
THE COMPANY WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH
RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH.
16.9. GOVERNING LAW.
This Agreement and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
16.10. HEADINGS.
The headings in this Agreement are for convenience of reference and
shall not limit or otherwise affect any of the terms hereof.
16.11. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By /s/ Marlene J. DeLeon
- ------------------------
Title: Marlene J. DeLeon
Investment Officer
Principal Amount of National Notes held: $11,000,000
Principal Amount of TA Notes held: $0
Facility Fee payable on the Closing Date: $41,250
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
MELLON BANK, N.A., solely in its
capacity as Trustee for the
NYNEX MASTER PENSION TRUST,
(as directed by John Hancock
Mutual Life Insurance Company),
and not in its individual capacity
By /s/ Kerry Nelson
- ------------------------
Title: Vice President
Principal Amount of National Notes held: $2,000,000
Principal Amount of TA Notes held: $0
Facility Fee payable on the Closing Date: $7,500
The decision to partipate in the investment, any
representation made herein by the participant, and any
actions taken hereunder by the participant has/have been made
solely at the direction of the investment fiduciary who has
sole investment discretion with respect to this investment.
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
COMMONWEALTH OF PENNSYLVANIA STATE
EMPLOYEES' RETIREMENT SYSTEM
By: John Hancock Mutual Life Insurance
Company as Investment Adviser
By /s/ Stephen A. MacLean
------------------------
Title: Senior Investment Officer
Principal Amount of National Notes held: $2,000,000
Principal Amount of TA Notes held: $0
Facility Fee payable on the Closing Date: $7,500
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
THE TRAVELERS INSURANCE COMPANY
By /s/ Robert M. Mills
------------------------
Title: Investment Officer
Principal Amount of National Notes held: $10,000,000
Principal Amount of TA Notes held: $0
Facility Fee payable on the Closing Date: $0
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
THE TRAVELERS LIFE AND ANNUITY COMPANY
By /s/ Robert M. Mills
------------------------
Title: Investment Officer
Principal Amount of National Notes held: $5,000,000
Principal Amount of TA Notes held: $0
Facility Fee payable on the Closing Date: $0
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
THE TRAVELERS INDEMNITY COMPANY
By /s/ Robert M. Mills
------------------------
Title: Investment Officer
Principal Amount of National Notes held: $5,000,000
Principal Amount of TA Notes held: $7,000,000
Facility Fee payable on the Closing Date: $0
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
KEYPORT LIFE INSURANCE COMPANY
By: STEIN ROE & FARNHAM
INCORPORATED, AS AGENT
By /s/ Richard A. Hegwood
------------------------
Title:
Principal Amount of National Notes held: $15,000,000
Principal Amount of TA Notes held: $10,000,000
Facility Fee payable on the Closing Date: $93,750
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
OHIO NATIONAL LIFE ASSURANCE CORPORATION
By /s/ Michael A. Boedeker
------------------------
Title: Vice President, Fixed Income Securities
Principal Amount of National Notes held: $5,000,000
Principal Amount of TA Notes held: $0
Facility Fee payable on the Closing Date: $0
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
OHIO NATIONAL LIFE INSURANCE CORPORATION
By /s/ Michael A. Boedeker
------------------------
Title: Vice President, Fixed Income Securities
Principal Amount of National Notes held: $0
Principal Amount of TA Notes held: $3,500,000
Facility Fee payable on the Closing Date: $0
<PAGE>
103
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided, whereupon this Agreement shall become a
binding agreement between you and the Company.
TRAVELCENTERS OF AMERICA, INC.
By /s/ James W. George
----------------------
Title: Senior Vice President
and Assistant Secretary
The foregoing Agreement is
hereby accepted as of the date
first above written.
BARNETT & CO.
By Richard McCormick
------------------------
Title: Assistant Treasurer
Principal Amount of National Notes held: $10,000,000
Principal Amount of TA Notes held: $0
Facility Fee payable on the Closing Date: $37,500
<PAGE>
EXHIBIT A-1
[Form of Fixed Rate Note]
TRAVELCENTERS OF AMERICA, INC.
8.94% Series I Senior Secured Note due 2002
No. I- New York, New York
$ [DATE]
PPN: 894172 A* 6
TRAVELCENTERS OF AMERICA, INC., a Delaware corporation (the
"COMPANY"), for value received, hereby promises to pay to [ ], or registered
assigns, the principal sum of [ ] DOLLARS (or so much thereof as shall not have
been prepaid) on December 31, 2002, and to pay interest (computed on the basis
of a 360-day year of twelve 30-day months) (a) from the date hereof on the
unpaid balance thereof at a rate of 8.94% per annum, payable semiannually on
June 30 and December 31 in each year, until the principal hereof shall have
become due and payable (whether at maturity, upon acceleration, upon notice of
prepayment or otherwise) and (b) on any overdue principal, premium (if any) and,
to the extent permitted by applicable law, on any overdue payment of interest,
payable semiannually as aforesaid (or on demand at the option of the registered
holder hereof) at a rate per annum from time to time equal to the greater of (i)
10.94% and (ii) 2% above the prime commercial lending rate of interest announced
by The Chase Manhattan Bank at its principal office in The City of New York, as
in effect from time to time.
Payments of principal, premium (if any) and interest with respect to
this Note shall be made in lawful money of the United States of America at said
principal office of The Chase Manhattan Bank, or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Exchange Agreements referred to below.
This Note is one of a series of Senior Secured Notes issued pursuant
to the several Senior Secured Note Exchange Agreements dated as of March 21,
1997 (as from time to time amended, the "NOTE EXCHANGE AGREEMENTS") entered into
by the Company with certain institutional investors and the holder of this Note
is entitled to the benefits thereof and of a Guarantee Agreement referred to
therein and, subject to compliance with the terms of the Intercreditor Agreement
referred to therein, the security and benefits of said Intercreditor Agreement
and of the Security Documents referred to therein. As provided in said
Intercreditor Agreement, the rights and obligations of the holder of this Note
thereunder shall be assigned automatically, without the need for the execution
of any document or any other action, to any transferee of this Note whereupon
such transferee shall automatically become a party to said Intercreditor
Agreement.
<PAGE>
This Note is subject to mandatory prepayment by the Company on the
dates and in the amounts specified in the Note Exchange Agreements. The Company
may at its election prepay this Note and the maturity hereof may be accelerated
following an Event of Default, all as provided in the Note Exchange Agreements,
to which reference is made for the terms and conditions of such provisions as to
prepayment and acceleration, including without limitation the payment of a
make-whole premium in connection therewith. The Company is also required under
circumstances described in the Note Exchange Agreements to offer to prepay all
or a portion of the Notes of this series on the terms and under the
circumstances specified in the Note Exchange Agreements.
Upon surrender of this Note for registration of transfer or exchange,
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note of the same series for a like principal amount will be
issued to, and, at the option of the holder, registered in the name of, the
transferee. The Company and any agent of the Company may deem and treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payments of the principal of, premium (if any) and interest hereon
and for all other purposes whatsoever whether or not this Note is overdue, and
the Company shall not be affected by any notice to the contrary.
As provided in the Note Exchange Agreements, this Note shall be
governed by and construed in accordance with the laws of the State of New York.
TRAVELCENTERS OF AMERICA, INC.
By
----------------------------
Title:
-2-
<PAGE>
EXHIBIT A-2
[Form of Floating Rate Note]
TRAVELCENTERS OF AMERICA, INC.
Series II Senior Secured Note due 2005
No. II- New York, New York
$
------- [Date]
PPN: 894172 A@ 4
TRAVELCENTERS OF AMERICA, INC., a Delaware corporation (the
"COMPANY"), for value received, hereby promises to pay to [-------- ], or
registered assigns, the principal sum of [-------- ] DOLLARS (or so much thereof
as shall not have been prepaid) on March 31, 2005, and to pay interest (computed
on the basis of actual days elapsed and a year of 360 days) on the unpaid
balance thereof (a) from the date hereof, payable on each Interest Payment Date
(as defined below), at a rate per annum for the Interest Period ending on such
Interest Payment Date equal to the LIBOR Rate (as the terms Interest Period and
LIBOR Rate are defined in the Note Exchange Agreements referred to below) as
determined in respect of such Interest Period pursuant to said Note Exchange
Agreements plus the LIBOR Spread (as therein defined) as in effect from time to
time during such Interest Period, until the principal hereof shall have become
due and payable, and (b) on any overdue principal, break funding costs and (to
the extent permitted by applicable law) any overdue payment of interest, payable
on each Interest Payment Date as aforesaid (or on demand at the option of the
registered holder hereof) at a rate per annum from time to time equal to 2%
above the Adjusted LIBOR Rate (as so defined).
As used herein the term "INTEREST PAYMENT DATE" means each March 31
and September 30[, commencing September 30, 1997].1
Payments of principal, premium (if any) and interest shall be made in
lawful money of the United States of America at the principal office in The City
of New York of The Chase Manhattan Bank, or at such other place as the Company
shall have designated by written notice to the holder of this Note as provided
in said Note Exchange Agreements.
This Note is one of a series of Senior Secured Notes issued pursuant
to the several Senior Secured Note Exchange Agreements dated as of March 21,
1997 (as from time to time amended, the "NOTE EXCHANGE AGREEMENTS") entered into
by the Company with certain institutional investors and the holder of this Note
is entitled to the benefits thereof and of a Guarantee Agreement referred to
therein and, subject to compliance with the terms of the Intercreditor Agreement
referred to therein, the security and benefits of said Intercreditor Agreement
and of the Security Documents referred to therein.
- -------------------
1 Bracketed langauge is only required for Floating Rate note
dated prior to April 1, 1997.
<PAGE>
As provided in said Intercreditor Agreement, the rights and
obligations of the holder of this Note thereunder shall be assigned
automatically, without the need for the execution of any document or any other
action, to any transferee of this Note whereupon such transferee shall
automatically become a party to said Intercreditor Agreement.
Pursuant to the Note Exchange Agreements the Company is required to
give written notice to the holder of this Note of the LIBOR Rate for each
Interest Period as determined on the Reset Date (as defined in the Note Exchange
Agreements) for such Interest Period. The applicable LIBOR Rate for each
Interest Period and LIBOR Spread from time to time during such Interest Period
for this Note shall be endorsed by the holder of this Note on the schedule
attached hereto or any continuation thereof prior to any transfer of this Note.
This Note is subject to mandatory prepayment by the Company on the
dates and in the amounts specified in the Note Exchange Agreements. The Company
may at its election prepay this Note and the maturity hereof may be accelerated
following an Event of Default, all as provided in said Note Exchange Agreements,
to which reference is made for the terms and conditions of such provisions as to
prepayment and acceleration, including without limitation the payment of certain
break funding costs in connection therewith. The Company is also required under
circumstances described in the Note Exchange Agreements to offer to prepay all
or a portion of the Notes of this series on the terms and under the
circumstances specified in the Note Exchange Agreements.
Upon surrender of this Note for registration of transfer or exchange,
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note of the same series for a like principal amount will be
issued to, and, at the option of the holder, registered in the name of, the
transferee. The Company and any agent of the Company may deem and treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payments of the principal of, premium (if any) and interest hereon
and for all other purposes whatsoever whether or not this Note is overdue, and
the Company shall not be affected by any notice to the contrary.
As provided in the Note Exchange Agreements, this Note shall be
governed by and construed in accordance with the laws of the State of New York.
TRAVELCENTERS OF AMERICA, INC.
By
--------------------------
Title:
-2-
<PAGE>
Schedule of LIBOR Rates and LIBOR Spreads
Date of Change in
LIBOR Spread (3%
Reset Date LIBOR Rate unless otherwise noted) Made By
- ---------- ---------- ----------------------- -------
<PAGE>
EXHIBIT B
[Included in Exhibit 10.25 as Exhibit F]
<PAGE>
EXHIBIT C
[Included in Exhibit 10.25 as Exhibit I]
<PAGE>
EXHIBIT D
[Included in Exhibit 10.25 as Exhibit K]
<PAGE>
EXHIBIT E
[Included in Exhibit 10.25 as Exhibit J]
<PAGE>
EXHIBIT F
[Included in Exhibit 10.25 as Exhibit E]
<PAGE>
EXHIBIT G
[Included in Exhibit 10.25 as Exhibit L]
<PAGE>
EXHIBIT H
[Included in Exhibit 10.25 as Exhibit H]
<PAGE>
EXHIBIT J
[Included in Exhibit 10.25 as Exhibit D]
<PAGE>
EXHIBIT K
[Included in Exhibit 10.25 as Exhibit G]
Exhibit 10.27
TABB, LLC
LIMITED LIABILITY
COMPANY AGREEMENT
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LIMITED LIABILITY
COMPANY AGREEMENT
OF
TABB, LLC
A DELAWARE LIMITED LIABILITY COMPANY
The undersigned members, desiring to form a limited liability
company under the Delaware Limited Liability Company Act, hereby agree as
follows:
ARTICLE 1
FORMATION
1.1 NAME. The name of the limited liability company is TABB,
LLC (the "Company"). At such time as TA Operating Corporation is no longer a
member of the Company, the Company shall immediately change its name to a name
which does not include "TA" and shall cease using "TABB" and "TA" in any manner.
At such time as Burns Bros., Inc. is no longer a member of the Company, the
Company shall immediately change its name to a name which does not include "BB"
and shall cease using "TABB" and "BB" in any manner. Each member agrees that
upon the completion of the dissolution and winding up of the Company the right
of the Company to use the names "TABB", "TA" and "BB" shall cease and the
Company shall have no continuing rights or interests in such names or in any
derivations thereof to use or to convey to others (including any members) for
use thereafter. The Company and the members acknowledge and agree that the
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restrictions on the use of names contained in this Section 1.1 apply to any and
all uses of such names by the parties subject to such restrictions, including
but not limited to the use of any trade name, service name, trademark, service
mark, logo or other intellectual property rights which may incorporate any such
name in whole or in part.
1.2 CERTIFICATE OF FORMATION. A Certificate of Formation
having an effective date of November 16, 1995 shall be filed with the Delaware
Secretary of State promptly upon execution of this Agreement and before the
Company begins conducting business.
1.3 DURATION. The Company shall exist for a period ending on
December 31, 2025, unless earlier dissolved as provided in this Agreement.
1.4 PRINCIPAL PLACE OF BUSINESS. The principal office of the
Company initially shall be located at 24651 Center Ridge Road, Westlake, Ohio
44145. The Company may relocate the principal office or establish additional
offices from time to time.
1.5 REGISTERED OFFICE AND REGISTERED AGENT. The Company's
initial registered office in Delaware shall be located at 1209 Orange St.,
Wilmington, Delaware 19801. The Company's registered agent in Delaware and in
each state in which the Company appoints a registered agent shall be CT
Corporation.
1.6 PURPOSE. The purpose of the Company is to form and operate
a network of truckstops and travel plazas to enable members of the network to
compete for fuel purchase contracts with trucking companies desiring to purchase
fuel at a negotiated price and on acceptable terms at locations throughout the
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United States and to receive periodically a single statement for such purchases
from a single source. The Company may engage in any and all lawful activities
necessary or incidental to the foregoing purpose.
ARTICLE 2
MEMBERS, CONTRIBUTIONS, AND INTERESTS
2.1 NAMES AND ADDRESSES. The names and addresses of the
founding members of the Company and the amount of their initial capital
contributions are:
NAME AND ADDRESS CONTRIBUTION
Burns Bros., Inc. $ 10,000
------------
Address:
Weatherly Building, Suite 1200
516 S.E. Morrison
Portland, Oregon 97214
TA Operating Corporation,
dba Truckstops of America $ 10,000
-----------
Address:
King James Office Park
Point Five Building
Suite 300
24601 Center Ridge Road
Cleveland, Ohio 44145
Each founding member's initial capital contribution shall be paid in cash.
2.2 OTHER BUSINESS OF MEMBERS. Subject to any restrictions
imposed upon the members in any other agreement they may enter into with the
Company, each member may engage independently or with others in other business
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and investment ventures of every nature and description and shall have no
obligation to account to the Company or to the other member for such business or
investments or for business or investment opportunities.
2.3 ADDITIONAL MEMBERS. Additional members shall not be
admitted except with the consent of both founding members. Any additional
members shall have such management and economic rights with respect to the
Company as shall be mutually agreed upon by the founding members.
2.4 ADDITIONAL CONTRIBUTIONS. The members shall not be
required or permitted to make additional capital contributions unless the
members approve and set the amount of the additional capital contributions. Each
member's additional capital contributions shall be equal in amount to the other
member's contributions, and shall be paid in cash, unless the members agree
otherwise. In no event will any member be required to make any capital
contribution or other payment to restore any deficit balance in such member's
capital account maintained as provided in Section 2.6.
2.5 NO INTEREST ON CAPITAL CONTRIBUTIONS. No interest shall be
paid on capital contributions or on capital accounts.
2.6 CAPITAL ACCOUNTS.
(a) An individual capital account shall be maintained
for each member. Each member's capital account shall be (i) credited with all
capital contributions by such member and with all Net Profits and items in the
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nature of income and gain allocated to such member under the terms of this
Agreement; and (ii) charged with the amount of all distributions to such member
and with all Net Losses and items in the nature of losses and deductions
allocated to such member under the terms of this Agreement. Capital accounts
shall be maintained in accordance with federal income tax accounting principles
in compliance with Treasury Regulations promulgated under Section 704(b) of the
Internal Revenue Code of 1986, as amended (the "Code"); and, to the extent not
inconsistent with the provisions of this Agreement, the provisions of this
Agreement relating to the maintenance of capital accounts shall be interpreted
and applied in a manner consistent with such Treasury Regulations.
(b) If all or any portion of a member's interest in
the Company is transferred to a third party in compliance with the provisions of
Article 7, the original capital account established for the transferee of such
interest shall be in the same amount as the capital account of the member which
such transferee succeeds with respect to the transferred interest. The capital
account of any member whose interest shall be increased by means of the transfer
to it of all or part of the interest of another member shall be appropriately
adjusted to reflect such transfer. Any reference in this Agreement to a capital
contribution of or distribution to a then member shall include a capital
contribution or distribution previously made by or to any prior member on
account of the interest of such then member.
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ARTICLE 3
MANAGEMENT
3.1 GENERAL. The business and affairs of the Company will be
managed by the members. Except as otherwise provided in this Agreement, all
members shall be entitled to vote on any matter submitted to the vote or consent
of the members. All decisions of the members shall be made by the unanimous
action of the members entitled to vote thereon.
3.2 MANAGEMENT COMMITTEE. Except for those matters
specifically reserved for action by the members under the terms of this
Agreement, the members will manage the business and affairs of the Company
through a management committee consisting of four individuals (each a
"representative"). Each member will appoint two executive officers of the member
to serve as the member's representatives. Each member will appoint another
executive officer of the member to act as an alternate in the absence of one of
the member's representatives. Each member may remove at will one or both of the
member's representatives and the member's alternate. Each member promptly will
notify the other member in writing of appointments and removals of the member's
representatives and alternate.
3.3 QUORUM. The presence of three (3) out of the four (4)
representatives will constitute a quorum for the transaction of business at any
regularly scheduled meeting of the management committee or any special meeting
of the management committee.
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3.4 MANNER OF ACTING. The act of the majority of the
representatives present at a meeting at which a quorum is present will be the
act of the management committee, provided that at least one representative of
each member must be included in the majority for any action to be authorized and
approved.
3.5 AUTHORITY. The management committee shall have no
authority to bind the Company, and a representative shall have no authority to
bind the Company or to bind the member he or she represents, as to any matter
except by act of the majority as provided in this Article.
3.6 MEETINGS. During the one year period commencing on the
date of this Agreement, the management committee shall meet not less frequently
than one time in each month at a regularly scheduled time and place. Thereafter,
the management committee shall hold regular meetings, at a regularly scheduled
time and place, with such frequency as the members may decide. The management
committee also shall meet at such other times and places as the management
committee has agreed, and may specially meet upon call of one or more
representatives by written notice given to all other representatives and
alternates not less than forty-eight hours before the time set for the meeting.
The notice of special meeting shall specify the time, place and purpose of the
meeting.
3.6.1 MEETINGS BY TELEPHONE. Meetings of the
management committee may be held by conference telephone or by any other means
of communication by which all participants can hear each other simultaneously
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during the meeting, and such participation shall constitute presence in person
at the meeting.
3.6.2 INFORMAL ACTION. Any action required to be
taken at a meeting of the management committee may be taken without a meeting if
a consent in writing, setting forth the action taken, is signed by those
representatives whose affirmative votes would be required to authorize such
action at a meeting.
3.7 DEADLOCK. In the event the management committee is unable
to agree upon the taking of any action required or permitted to be taken by the
management committee, which the member whose representatives have recommended
such action reasonably believes to be in the best interests of the Company and
which materially affects the business of the Company, the member whose
representatives have recommended such action may declare that a deadlock exists
by delivering written notice to such effect to the other member within thirty
(30) days after the last meeting at which such matter was considered by the
management committee. For a period of up to thirty (30) days after such other
member's receipt of such notice, the chief executive officers of the members
shall consider the matter which has produced the deadlock in a good faith effort
to resolve the deadlock. If such officers should fail to resolve the deadlock in
such period, then the member declaring the deadlock shall have the right (acting
alone) to elect to cause the dissolution and termination of the Company within
ninety (90) days after the expiration of the second 30-day period referred to
above.
3.8 SALARIES; EXPENSE REIMBURSEMENTS. Representatives and
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alternates shall not receive from the Company a salary or other compensation for
services as a representative on the management committee. However,
representatives and alternates shall be reimbursed by the Company for all
reasonable expenses incurred by them in connection with attending meetings of
the management committee, promptly upon the presentation by them of such written
documentation of such expenses as would be reasonably necessary in order for the
Company to support the deduction of such expenses for federal income tax
purposes.
3.9 OTHER AGENTS. The management committee shall appoint a
general manager, and may appoint such other agents as the management committee
deems necessary, to carry out the day-to-day activities of the Company. The
general manager shall have general supervision and control of the day-to-day
business activities of the Company; PROVIDED that the general manager must act
in accordance with the limitations of this Agreement and general business
policies and specific operational directives adopted from time to time by the
management committee. Any other agents appointed by the management committee
shall have only the authority expressly conferred in writing by the management
committee. The management committee shall have the right to cause the Company to
engage any member, any affiliate of a member or any third party to provide any
or all of the billing and collection services which the Company is obligated to
provide under any Agency Agreement entered into with any member of its network.
3.10 EXECUTION OF DOCUMENTS. No member, representative or agent
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shall have authority to execute and deliver any contract, lease, certificate or
other document on behalf of the Company except as provided in this Section. In
furtherance of the delegation of authority to the general manager under Section
3.9, the general manager shall have the power and authority to negotiate and
enter into, on behalf of the Company: (i) fuel purchase contracts which meet the
guidelines for such contracts established by the members under the separate
Agency Agreements between the members and the Company; and (ii) such other
contracts and agreements, entered into in the ordinary course of the Company's
business, as the management committee may expressly delegate to the general
manager from time to time. All other documents to be executed and delivered on
behalf of the Company shall be approved by the management committee and executed
by at least one representative of each member.
3.11 BINDING EFFECT OF ACTIONS. Any action taken by the members,
the management committee, the general manager or any other agent on behalf of
the Company in accordance with the provisions of this Article 3 shall constitute
the act of the Company and shall serve to bind the Company. No member,
representative, agent or other person shall, on behalf of or in the name of the
Company, take any action which has not been authorized in accordance with this
Article 3, and any such action shall not bind the Company or constitute its act.
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ARTICLE 4
ACCOUNTING AND RECORDS
4.1 BOOKS OF ACCOUNT. The management committee shall cause the
Company to maintain complete and accurate books and records at the principal
office. The books and records shall be appropriate and adequate for the
Company's business and for the carrying out of this Agreement. Each member may
inspect and copy all books and records of the Company at all reasonable times.
4.2 FISCAL YEAR. The fiscal year of the Company shall be the
calendar year.
4.3 ACCRUAL METHOD. The Company will adopt the accrual method
of accounting for tax and financial reporting purposes.
4.4 ACCOUNTING REPORTS. Within ninety (90) days after the
close of each fiscal year, or as soon thereafter as practicable, the management
committee shall cause each member to receive unaudited financial reports of the
activities of the Company for the preceding fiscal year, including a copy of a
balance sheet of the Company as of the end of such year and a statement of
income or loss for such year. All financial statements of the Company shall be
prepared in accordance with generally accepted accounting principles,
consistently applied.
4.5 TAX RETURNS. The management committee shall cause all
required federal and state income tax returns for the Company to be prepared and
timely filed with the appropriate authorities. Within ninety (90) days after the
end of each fiscal year, or as soon thereafter as practicable, each member shall
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be furnished a statement suitable for use in the preparation of the member's
income tax return, showing the amounts of any distributions, contributions,
gains, losses, profits or credits allocated to the member during such fiscal
year. TA Operating Corporation will serve as the "tax matters partner" for
federal tax purposes. The Company shall, to the fullest extent permitted by law,
reimburse and indemnify the tax matters partner for all reasonable expenses,
including reasonable legal and accounting fees, claims, liabilities, losses and
damages incurred by the tax matters partner in connection with any
administrative or judicial proceeding with respect to the tax liability of the
members.
ARTICLE 5
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS OF NET PROFITS AND NET LOSSES.
(a) DEFINITIONS. As used in this Agreement, the
following terms shall have the meanings ascribed to them below:
(1) The "Book Value" of any Company asset
shall mean its adjusted basis for federal income tax purposes, except
as hereinafter provided. The initial Book Value of any asset
contributed by a member to the Company shall be the gross fair market
value of such asset at the time of such contribution (the "Initial Book
Value"). The Book Value of any asset of the Company may be adjusted by
the Company to equal its gross fair market value, as determined by the
management committee, as of the following times: (A) the admission of a
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new member to the Company or acquisition by an existing member of an
additional interest in the Company; (B) the distribution by the Company
of money or property to a retiring or continuing member in
consideration for the retirement of all or a portion of such member's
interest in the Company; (C) the termination of the Company for federal
income tax purposes pursuant to Section 708(b)(1)(B) of the Code; and
(D) such other times as determined by the members. The Book Value of a
Company asset shall be adjusted for the depreciation and amortization
of such asset taken into account in computing Net Profits and Net
Losses and for Company expenditures and transactions that increase or
decrease the asset's federal income tax basis.
(2) "Company Minimum Gain" has the meaning
of "partnership minimum gain" as set forth in Sections 1.704-2(b)(2)
and 1.704-2(d) of the Treasury Regulations.
(3) "Member Minimum Gain" has the meaning of
"partner nonrecourse debt minimum gain" as set forth in Sections
1.704-2(i)(3) and (5) of the Treasury Regulations, determined in
accordance with Sections 1.704-2(g)(1) and (3) of the Treasury
Regulations.
(4) "Member Nonrecourse Debt" has the
meaning of "partner nonrecourse debt" as set forth in Section
1.704-2(b)(4) of the Treasury Regulations.
(5) "Member Nonrecourse Deductions" has the
meaning of "partner nonrecourse deductions" as set forth in Section
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1.704-2(i)(2) of the Treasury Regulations. The amount of Member
Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a
fiscal year of the Company equals the excess, if any, of the net
increase, if any, in the amount of Member Minimum Gain attributable to
such Member Nonrecourse Debt during such fiscal year over the aggregate
amount of any distributions during such fiscal year to the member that
bears the economic risk of loss for such Member Nonrecourse Debt, to
the extent such distributions are from the proceeds of such Member
Nonrecourse Debt and are allocable to an increase in Member Minimum
Gain attributable to such Member Nonrecourse Debt determined in
accordance with Section 1.704-2(i)(2) of the Treasury Regulations.
(6) "Net Profits" and "Net Losses" shall
mean the income and loss of the Company as determined in accordance
with the accounting methods followed by the Company for federal income
tax purposes, including income exempt from tax and described in Code
Section 705(a)(1)(B), treating as deductions items of expenditure
described in, or under Treasury Regulations deemed described in, Code
Section 705(a)(2)(B) and treating as an item of gain (or loss) the
excess (deficit), if any, of the fair market value of distributed
property over (under) its Book Value. Depreciation, depletion,
amortization, income and gain (or loss) with respect to Company assets
shall be computed with reference to their Book Value rather than to
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their adjusted bases. The parties acknowledge that TABB's revenues,
income and working capital are to be provided principally from fees
paid by member firms of the TABB network as determined under their
respective Agency Agreements with TABB. Accordingly, TABB's Net Profit
or Net Loss for any fiscal year generally will represent any excess or
deficit of the aggregate amount of such fees for such fiscal year
relative to TABB's aggregate expenses for such fiscal year.
(7) "Nonrecourse Deductions" has the meaning
set forth in Section 1.704-2(b)(1) of the Treasury Regulations. The
amount of Nonrecourse Deductions for a fiscal year equals the net
increase, if any, in the amount of Company Minimum Gain during that
fiscal year over the aggregate distributions made during the year of
proceeds of any Nonrecourse Liability that are allocable to an increase
in Company Minimum Gain.
(8) "Nonrecourse Liability" has the meaning
set forth in Sections 1.704-2(b)(3) and 1.752-1(a)(2) of the Treasury
Regulations.
(9) "Treasury Regulations" shall mean the
federal income tax regulations, including any temporary or proposed
regulations, promulgated under the Code, as such regulations may be
amended from time to time.
(b) NET PROFITS GENERALLY. Except as otherwise
provided in paragraphs (d) and (e) below, the Net Profits of the Company shall
be allocated among the members in the following order and priority:
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(1) first, among the members until the
cumulative Net Profits allocated pursuant to this paragraph (b)(1) are
equal to the cumulative Net Losses allocated among the members pursuant
to paragraph (c)(3) below for all prior periods, and in the proportions
that such Net Losses have been so allocated;
(2) then, among the members until the
cumulative Net Profits allocated pursuant to this paragraph (b)(2) are
equal to the cumulative Net Losses allocated among the members pursuant
to paragraph (c)(2) below for all prior periods, and in the proportions
that such Net Losses have been so allocated; and
(3) thereafter, among the members in
proportion to their respective capital contributions.
(c) NET LOSSES GENERALLY. Except as otherwise
provided in paragraphs (d) and (e) below, the Net Losses of the Company shall be
allocated among the members in the following order and priority:
(1) first, among the members until the
cumulative Net Losses allocated pursuant to this paragraph (c)(1) are
equal to the cumulative Net Profits allocated among the members
pursuant to paragraph (b)(3) above for all prior periods, and in the
proportions that such Net Profits have been so allocated;
(2) then, among the members in proportion
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to, and to the extent of, the positive capital account balances of the
members; and
(3) thereafter, among the members in
proportion to their respective capital contributions.
(d) OTHER ALLOCATION RULES.
(1) Except as provided in paragraph (d)(3)
below, in the event any member unexpectedly receives any adjustments,
allocations or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, items
of Company income and gain shall be specially allocated to such member
in an amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations, any deficit balance in the capital account
of such member as quickly as possible.
(2) Except as provided in paragraph (d)(3)
below, in the event any member has a deficit balance in its capital
account at the end of any fiscal year, such member shall be specially
allocated items of Company income and gain in an amount and manner
sufficient to eliminate, to the extent required by the Treasury
Regulations, the deficit balance in the capital account of such member
as quickly as possible.
(3) Notwithstanding any other provision of
this Article 5, if there is a net decrease in Company Minimum Gain
during any fiscal year of the Company, each member shall be specially
allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such member's share
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of the net decrease in Company Minimum Gain, to the extent required
under the Section 1.704-2 of the Treasury Regulations. The items to be
so allocated shall be determined in accordance with Section 1.704-2 of
the Treasury Regulations. This paragraph (d)(3) is intended to comply
with the "minimum gain chargeback" requirement in such Section of the
Treasury Regulations and shall be interpreted consistently therewith.
(4) To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b)
or Code Section 743(b) is required, pursuant to Treasury Regulations
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 members in a
manner consistent with the manner in which their capital accounts are
required to be adjusted pursuant to such Section of the Treasury
Regulations.
(5) Nonrecourse Deductions and Nonrecourse
Liabilities for any fiscal year or other period shall be allocated
among the members in proportion to their respective capital
contributions. Member Nonrecourse Deductions and Member Nonrecourse
Debt for any fiscal year or other period shall be allocated among the
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members in accordance with applicable Treasury Regulations under
Sections 704 and 752 of the Code.
(6) For purposes of determining the Net
Profits, Net Losses or any other items allocable to any period, Net
Profits, Net Losses and any such other items shall be deemed to have
been earned ratably over the period of the fiscal year of the Company,
except that Net Profits, Net Losses and any other items arising from
the sale or other disposition of assets of the Company, other than in
the ordinary course of business, shall be taken into account as of the
date of such sale or other disposition.
(7) Except as otherwise provided in this
Agreement, all items of income, gain, loss and deduction, and any other
allocations not otherwise provided for, shall be allocated among the
members in the same proportions as they share Net Profits or Net Losses
(as the case may be) for each fiscal year.
(e) CURATIVE ALLOCATIONS. The allocations set forth
in paragraph (d)(1), (2), (3), (4) and (5) above (the "Regulatory Allocations")
are intended to comply with certain of the requirements of Section 1.704-1(b) of
the Treasury Regulations. The Regulatory Allocations may not be consistent with
the manner in which the members intend to share distributions from the Company.
Accordingly, the members hereby are authorized to divide other allocations of
income, gain, deduction or loss among the members so as to prevent the
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Regulatory Allocations from distorting the manner in which distributions from
the Company are intended to be shared among the members pursuant to this
Agreement. The members will have the discretion to accomplish this result in any
reasonable manner.
(f) TAX ALLOCATIONS.
(1) In accordance with Code Section 704(c)
and the Treasury Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the capital of
the Company shall, solely for tax purposes, be allocated among the
members so as to take account of any variation between the adjusted
basis of such property to the Company for federal income tax purposes
and its Initial Book Value.
(2) In the event the Book Value of any
Company asset is adjusted as specified in Section 5.1, subsequent
allocations of income, gain, loss and deduction for tax purposes with
respect to such asset shall take into account any variation between the
adjusted basis of such asset for federal income tax purposes and its
Book Value in the same manner as under Code Section 704(c) and the
Treasury Regulations thereunder.
5.2 DISTRIBUTIONS.
(a) TAX DISTRIBUTIONS. The Company shall make
distributions to the members to enable the members to pay federal, state and
local income taxes attributable to their interests in the Company (including
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quarterly tax distributions to those members who make estimated tax payments),
and all distributions under this paragraph (a) shall be made to the members
based upon an assumed tax rate equal to the highest marginal tax rate then
applicable to any of the members, and among the members based upon their
relative shares of the Company's taxable income for the period.
(b) INTERIM DISTRIBUTIONS. The Company may make other
distributions to the members when, as and if declared by the management
committee (except in connection with the termination and winding up of the
Company), and all distributions under this paragraph (b) shall be made among the
members in proportion to their capital contributions.
(c) WITHDRAWALS OF CAPITAL CONTRIBUTIONS. No member
shall be entitled to withdraw any part of its capital contributions to, or to
receive any distributions from, the Company except as provided in this Section
5.2, Section 6.1 and Section 6.3. No member shall be entitled to demand or
receive any property from the Company other than cash, except as provided in
Section 6.3.
5.3 LIMITATION ON DISTRIBUTIONS. No distributions shall be
declared and paid unless, after such distributions are made, the assets of the
Company exceed the liabilities of the Company.
ARTICLE 6
WITHDRAWAL; DISSOLUTION
6.1 VOLUNTARY RIGHT OF RESIGNATION AND WITHDRAWAL. Each member
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shall have the right to voluntarily resign from the Company, by the delivery of
written notice to such effect to the Company and the other member, at any time
after September 30, 1998 and on or before December 31, 1998. In the event a
member elects to resign as aforesaid, the Company shall be dissolved in
accordance with Section 6.2 unless the other member elects to continue the
Company and admit a new member thereto in accordance with the second paragraph
of Section 6.2; and if the other member makes the election to continue the
Company the resigning member shall be entitled to receive a cash payment from
the Company, in exchange for and in complete termination of the resigning
member's interest in the Company, equal to the amount such resigning member
would have received had the Company been liquidated and dissolved in accordance
with Section 6.3 as of the date the notice of such resignation is received by
the Company.
Except as provided in this Section 6.1, in connection with the
transfer of a member's entire interest in the Company to a transferee who is
admitted as a substituted member in accordance with Article 7, or in connection
with the dissolution and termination of the Company in accordance with Section
6.2, no member shall be entitled to resign or withdraw from the Company.
6.2 TERM. The Company will dissolve upon the earliest to occur
of (i) December 31, 2025; (ii) the mutual agreement of the founding members to
dissolve and terminate the Company; (iii) the bankruptcy (as defined in Section
18-101(1) of the Delaware Limited Liability Company Act) or dissolution of a
member; (iv) the resignation of a member in accordance with Section 6.1 of this
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Agreement; (v) if any event described in subparagraphs (A) - (F) below has
occurred and the member not affected by such event elects to dissolve and
terminate the Company, by written notice to such effect delivered to the Company
and the affected member, within ninety (90) days after the occurrence of such
event or such later date upon which the electing member first learns of the
occurrence of such event, (A) the affected member has materially breached this
Agreement or any agreement between the Company and such affected member, (B) the
Company or any of its representatives, managers, agents or employees have
materially breached the confidentiality covenants entered into for the benefit
of the electing member, (C) the Company has materially breached any agreement
between the Company and the electing member, (D) a deadlock has been declared
and has not been resolved with respect to any matter recommended for approval by
the representatives of the electing member serving on the management committee
(as described under "DEADLOCK," Section 3.7 above), (E) any secured creditor of
the affected member which has been granted a security interest in the affected
member's membership interest in the Company commences any action to foreclose
upon such membership interest, or (F) a Change in Control (as hereinafter
defined) has occurred with respect to the affected member; or (vi) the order by
any court of competent jurisdiction decreeing that the Company be dissolved and
terminated. For purposes of this Section 6.2, a "Change in Control" with respect
to a member shall be deemed to have occurred if (x) there is any substantial
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change in the individuals who constitute the executive officers of such member
immediately prior to the event or the entering into of any agreement with
respect to any transaction described below, which substantial change results
directly from any of the following: (1) the sale or other disposition of a
majority of the outstanding capital stock of such member, entitled to vote in
the election of directors, to a person or group of persons who are not then
affiliates of such member in a single transaction or series of related
transactions; (2) the sale or other disposition of all or substantially all of
the operating assets of such member to a person or group of persons who are not
then affiliates of such member in a single transaction or series of related
transactions; (3) a merger, consolidation or other similar transaction the
effect of which is substantially the same as a transaction described in clause
(1) or (2) above; (4) a decision of the Board of Directors of such member to
remove such individuals from office or to materially diminish the nature or
scope of the responsibilities, duties, power or authority of such individuals;
or (y) the Board of Directors of such member takes any action to remove from
office (other than by reason of disability), or to materially diminish the
nature or scope of the responsibilities, duties, powers or authority of, three
(3) or more of the individuals who are then the executive officers of such
member actively involved in the management of the day-to-day operations of such
member, in any period of twelve (12) consecutive months; or (z) in the case of
TA Operating Corporation, there should occur any merger or other combination of
the businesses of TA Operating Corporation and National Auto/Truckstops, Inc.
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For purposes hereof, a substantial change in the executive officers of a member
shall be deemed to have occurred directly as a result of any of the transactions
described in clause (x)(1), (2) or (3) above if (without limiting the
circumstances in which the change may result directly from such transaction)
such substantial change occurs within one (1) year after the occurrence of such
event. For purposes hereof, a "substantial change in the executive officers of a
member" shall mean the change (other than by reason of death, disability or
voluntary resignation) or material diminution in the nature or scope of the
responsibilities, duties, powers or authority of three (3) or more of the
individuals who are then executive officers of such member actively involved in
the management of the day-to-day operations of such member.
If an event described in clause (iii) or clause (iv) above
occurs with respect to a member, the other members shall have the right, for a
period of ninety (90) days after the occurrence of such event, to elect
unanimously to continue the business of the Company and admit a new member to
take the place of the affected member. If the remaining members make this
election, the Company will not be dissolved and terminated as a result of such
event.
6.3 LIQUIDATION UPON DISSOLUTION AND WINDING UP. Upon the
dissolution of the Company, the remaining member(s) shall wind up the affairs of
the Company. A full account of the assets and liabilities of the Company shall
be taken. The assets shall be liquidated and the business wound up as promptly
25
<PAGE>
as possible by either or both of the following methods: (i) selling the assets
and applying the proceeds thereof as hereinafter provided; or (ii) if all
remaining members shall agree, retaining the assets, adjusting the capital
accounts of the members in accordance with Article 5 to reflect a deemed sale of
such assets at their aggregate Book Value as of the date of dissolution and
applying such assets as hereinafter provided.
The proceeds of any liquidation or the retained assets of the
Company shall be applied as follows: (i) first, to the expenses of dissolution
and winding up; (ii) second, to the debts and liabilities of the Company to
third parties, if any, in the order of priority provided by law; (iii) third, a
reasonable reserve shall be set up to provide for any contingent or unforeseen
liabilities or obligations of the Company to third parties (to be held and
disbursed, at the discretion of the liquidating member(s), by an escrow agent
selected by the liquidating member(s)) and at the expiration of such period as
the liquidating member(s) may deemed advisable the balance remaining in such
reserve shall be distributed as provided herein; (iv) fourth, to debts of the
Company to the members or their affiliates and any fees and reimbursements
payable under this Agreement to the members or their affiliates; (v) fifth, to
the members in proportion to and to the extent of their positive capital account
balances; and (vi) sixth, any balance to the members in accordance with Section
5.2(b).
26
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ARTICLE 7
TRANSFER OF INTEREST
A member may sell, transfer or assign all or any part of its
interest in the Company to any entity which controls, is controlled by or is
under common control with such member; PROVIDED that two (2) or more of the
individuals who are then executive officers of the transferring member actively
involved in the management of the day-to-day operations of such member are
executive officers of the transferee actively involved in the management of the
day-to-day operations of the transferee, and FURTHER PROVIDED that no interest
in the Company shall be sold, transferred or assigned, by operation of law or
otherwise, under this sentence to National Auto/Truckstops, Inc. or to any
entity controlled by National Auto/Truckstops, Inc. For the purpose of this
Article, one entity controls another entity if the first entity beneficially
owns not less than a majority of the voting rights of the entity or not less
than two-thirds of the rights to share in distributions by the entity. A member
may not sell, transfer or encumber, including any voluntary or involuntary
transfer by operation of law by merger, in bankruptcy or by way of execution,
seizure or sale by legal process, or otherwise, all or any part of its interest
in the Company to any other entity, or to any natural person, except with the
prior written consent of the other member, which consent may be withheld for any
reason or no reason in the sole discretion of the other member; PROVIDED, that
Burns Bros., Inc. acknowledges and consents to the granting by TA Operating
27
<PAGE>
Corporation of a security interest in TA Operating Corporation's membership
interest in the Company and rights under this Agreement pursuant to that certain
Security Agreement dated as of December 9, 1993, as amended, among TA Operating
Corporation, TA Franchise Systems, Inc., TA Holdings Corporation and Chemical
Bank, as collateral agent for certain financial institutions and holders of
senior secured notes who are lenders to TA Operating Corporation; and FURTHER
PROVIDED that TA Operating Corporation acknowledges and consents to the granting
by Burns Bros., Inc. of a security interest in Burns Bros., Inc.'s membership
interest in the Company and its rights under this Agreement pursuant to that
certain Security Agreement Covering Accounts, Chattel Paper, Documents,
Instruments and General Intangibles dated as of March 20, 1992, as amended, by
and between Burns Bros., Inc. and United States National Bank of Oregon. A
permitted transferee (whether such transferee becomes a transferee by reason of
a transfer permitted by the first sentence or by the second sentence of this
Article 7) of a member shall have only the rights of an assignee as provided by
Delaware law and may be admitted to the Company as a substituted member only
with the prior written consent of the non-transferring member, which consent may
be withheld for any reason or no reason in the sole discretion of the
non-transferring member.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION. Any person made, or threatened to be
28
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made, a party to any action or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was (i) a member (or a shareholder, director, officer, employee or agent
thereof), or (ii) a representative or alternate of a member serving on the
management committee (collectively, the "Indemnified Persons"), shall be
indemnified by the Company for any losses or damages sustained with respect to
such action or proceeding, and the Company shall advance such Indemnified
Person's reasonably related expenses to the fullest extent permitted by law. The
Company shall have the power to purchase and maintain insurance on behalf of the
Indemnified Persons against any liability asserted against or incurred by them.
The duty of the Company to indemnify the Indemnified Persons under this Section
8.1 shall not extend to actions or omissions of any Indemnified Person which are
grossly negligent or which involve fraud, misrepresentation, bad faith or other
willful misconduct by such Indemnified Person, or which are in material breach
or violation by such Indemnified Person of this Agreement or which are in
derogation of the fiduciary duties owed by such Indemnified Person to the
Company and the members, in each case as determined by a court of competent
jurisdiction. The duty of the Company to indemnify the Indemnified Persons under
this Section 8.1 shall be limited to the assets of the Company and no recourse
shall be available against any member for satisfaction of such indemnification
obligations of the Company.
8.2 WAIVER OF LIABILITY. Representatives and alternates
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serving on the management committee shall not be personally liable to the
Company or to its members for monetary damages for conduct as members of the
management committee, unless the actions of such persons constitute gross
negligence, fraud, misrepresentation, bad faith, willful misconduct or breach of
the duty of loyalty owed by such persons to the Company and the members, in each
case as determined by a court of competent jurisdiction. No repeal or amendment
of this section or of the Delaware Limited Liability Company Act shall adversely
affect any right or protection of a representative or alternate for actions or
omissions prior to the repeal or amendment.
ARTICLE 9
CONFIDENTIALITY; NONSOLICITATION
9.1 ACCESS TO INFORMATION; CONFIDENTIAL TREATMENT. All
information disclosed by any party hereto (a "disclosing party") to any other
party hereto (a "receiving party") in connection with this Agreement or
otherwise, and whether disclosed prior to, on or after the date hereof, is
deemed to be confidential unless the disclosing party expressly advises the
receiving party to the contrary in writing. Each receiving party undertakes to
keep confidential during the term of this Agreement and for a period of five (5)
years thereafter any and all information disclosed by or otherwise obtained from
a disclosing party as aforesaid, and not to disclose the same to any third party
or to use it for its own benefit, unless (i) the same is first disclosed to the
receiving party by a source other than the disclosing party or an affiliate of
30
<PAGE>
such disclosing party (said source having properly obtained the information
independently of the disclosing party or any such affiliate), (ii) the
information has previously been, at the time, made generally available to the
public by a source neither directly nor indirectly related to the receiving
party, or (iii) the information was known to the receiving party or its
affiliates at the time of its initial disclosure to the receiving party by the
disclosing party; PROVIDED that the foregoing limitations shall not apply to the
disclosure or use of such information by the receiving party (x) to the extent
necessary to perform its obligations under this Agreement or any other agreement
between the receiving party and any other party to this Agreement or (y) as may
be required by law. Each party hereto also agrees that the existence and terms
of the relationships among them contemplated by this Agreement shall be
confidential information subject to the restrictions of this Section 9.1.
Should the receiving party at any time elect to rely on any
one or more of the reasons set forth in the preceding clause (i), (ii) or (iii),
then before making disclosure to any independent third party of or making use of
any information, the receiving party will notify the disclosing party in writing
of its intent to do so and supply the disclosing party with the basis for its
reliance upon the applicability of clause (i), (ii) or (iii) to the information
to be disclosed or used. In the event that the disclosing party fails to advise
31
<PAGE>
the receiving party in writing within 10 days from receipt of such notice that
in the judgment of the disclosing party the preceding clause (i), (ii) or (iii)
does not apply to the information which the receiving party intends to disclose
or use, then the disclosing party is deemed to have waived any objection to such
disclosure or use based on this Section 9.1 or otherwise.
With respect to its internal operations, each receiving party
shall make reasonable efforts to limit access to information disclosed or
otherwise obtained from a disclosing party to those of the receiving party's
employees to whom it is essential to give access and only to such extent as is
essential for each such employee to perform his or her regular duties. Each
receiving party will exercise reasonable efforts to limit access to any
information received from a disclosing party to a minimum number of its
respective management personnel. No copies of any information received from any
disclosing party shall be made by any receiving party, other than those copies
required specifically for internal operation, and each receiving party shall use
its reasonable efforts to keep records of all such copies. Each receiving party
agrees that it will not use, license, sell or in any manner convey any
information obtained by it from a disclosing party by virtue of this Agreement
or otherwise and that may not be disclosed or used by the receiving party
pursuant to this Section 9.1.
Each receiving party agrees that it shall ensure that the
provisions of this Section 9.1 with respect to the protection of confidential
32
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information shall also apply as against any affiliate (including shareholders,
officers and directors) of such receiving party.
9.2 NONSOLICITATION. Each member, while it is a member and for
a period of two (2) years thereafter, agrees that it shall not (and it shall
cause its affiliates not to) directly or indirectly solicit for purposes of
employment any person who is or was an employee of another member or the Company
at any time during the preceding 24 months, without the prior written consent of
the other member.
ARTICLE 10
AMENDMENTS
The Certificate of Formation of the Company and this Agreement
may be amended, and their provisions may be waived, only by written instrument
approved by the management committee and signed by the officers of the founding
members who have signed this Agreement or by their successors in office or by
successors in interest to the founding members.
ARTICLE 11
MISCELLANEOUS
11.1 ADDITIONAL DOCUMENTS. Each member shall execute such
additional documents and take such actions as are reasonably requested by the
other member or the Company in order to perform such first member's obligations
under by this Agreement.
11.2 ARBITRATION. Any dispute between the members or between the
33
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members and the Company concerning this Agreement shall be settled by
arbitration before a single arbitrator, using the rules of commercial
arbitration of the American Arbitration Association. Arbitration shall occur in
Portland, Oregon, if arbitration is demanded by TA Operating Corporation, and in
Cleveland, Ohio, if arbitration is demanded by Burns Bros., Inc. The parties
shall be entitled to conduct discovery in accordance with the Federal Rules of
Civil Procedure, subject to limitation by the arbitrator to secure just and
efficient resolution of the dispute. If the amount in controversy exceeds
$10,000, the arbitrator's decision shall include a statement specifying in
reasonable detail the basis for and computation of the amount of the award, if
any. A party substantially prevailing in the arbitration shall also be entitled
to recover such amount for its costs and attorneys fees incurred in connection
with the arbitration as shall be determined by the arbitrator. Judgment upon the
arbitration award may be entered in any court having jurisdiction. Nothing
herein, however, shall prevent a member from resort to a court of competent
jurisdiction in those instances where injunctive relief may be appropriate.
11.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, which together shall constitute one agreement.
11.4 GOVERNING LAW. This Agreement and the relationships of the
members to each other, and their relationships to the Company as members, shall
34
<PAGE>
be governed by Delaware law, without regard to the principles of conflicts of
laws.
11.5 THIRD-PARTY BENEFICIARIES. This Agreement is intended
solely for the benefit of the members and the Company and shall create no rights
or obligations enforceable by any third party, including any creditor of the
Company, except as otherwise expressly provided by this Agreement.
11.6 CERTIFICATE REQUIREMENTS. From time to time the members
shall sign and acknowledge all such writings as are required to amend the
Certificate of Formation or for the carrying out of the terms of this Agreement
or, upon dissolution of the Company, to cancel such Certificate of Formation.
11.7 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the members with
respect to the subject matter hereof.
11.8 SEVERABILITY. If any provision of this Agreement or the
application thereof to any circumstance shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement or of the application of such provision to
circumstances other than those as to which it is held invalid, illegal or
unenforceable shall not in any way be affected or impaired thereby.
11.9 NUMBER AND GENDER. As used in this Agreement, all pronouns
and any variation thereof shall be deemed to refer to the masculine, feminine or
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neuter, singular or plural, as the identity of the person or persons may
require.
11.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the members and their respective successors and
permitted assigns.
11.11 SECURITIES LAWS. All offerings and transfers of interests
in the Company shall be made in compliance with applicable federal and state
securities laws. Each member indemnifies the other members and the Company for
any loss, cost, liability or damage arising from its breach of the foregoing
sentence.
11.12 WAIVER OF PARTITION. Each member hereby waives its right
to bring any action for partition of any of the property owned by the Company.
11.13 INJUNCTIVE RELIEF. Each member acknowledges that it will
be impossible to measure in money the damages to the Company and to the other
member if there is a failure to comply with this Agreement. Accordingly, it is
agreed that the Company or any other member, in addition to any other rights or
remedies which they may have, shall be entitled to immediate injunctive relief
and to specific performance to enforce this Agreement without the necessity of
proving actual damages. Each member and the Company hereby waives any
requirement that the party seeking any such relief post a bond.
11.14 TAX ELECTION. In the event of a transfer of all or any
portion of the interest in the Company of a member, the Company may elect (by
action of the members) pursuant to Section 754 of the Code to adjust the basis
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of assets of the Company upon written request of the transferee.
11.15 SURVIVAL OF CERTAIN COVENANTS. The provisions of Article 9
of this Agreement shall survive any dissolution, termination and winding up of
the Company in accordance with the terms of such provisions and shall continue
to bind and inure to the benefit of the members and their successors and
permitted assigns for the entire period of such covenants as specified therein.
11.16 NOTICES. Notices required or permitted to be given
pursuant to this Agreement shall be given in writing addressed, if to TABB, to:
TABB, LLC, 24651 Center Ridge Road, Westlake, Ohio 44145; if to Burns Bros.,
Inc., to: Burns Bros., Inc., Weatherly Building, Suite 1200, 516 S.E. Morrison,
Portland, Oregon 97214; and , if to TA Operating Corporation, to: Truckstops of
America, 24601 Center Ridge Road, Suite 300, Westlake, Ohio 44145-5634, or to
such other address as a party may designate by notice to the other party.
Notices shall be deemed given (i) when personally delivered; (ii) when
transmitted by facsimile transmission if mailed in accordance with this
paragraph within two business days after such transmission; or (iii) three
calendar days after deposit in the United States mail, certified or registered
mail, postage prepaid.
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ADOPTED as of November 15 , 1995, by the undersigned,
----------------
constituting all of the members.
BURNS BROS., INC.
By: /s/ Bruce E. Burns
------------------------------
Name: Bruce E. Burns
----------------------------
Its: President
-----------------------------
TA OPERATING CORPORATION,
dba TRUCKSTOPS OF AMERICA
By: /s/ Edwin P. Kuhn
------------------------------
Name: Edwin P. Kuhn
----------------------------
Its: President
-----------------------------
38
EXHIBIT 10.28
- --------------------------------------------------------------------------------
TRAVELCENTERS OF AMERICA, INC.
STOCKHOLDERS' AGREEMENT
Dated as of March 6, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
1. Definitions......................................................2
2. Transfers of Shares..............................................4
(a) Restrictions on Transfer...................................5
(b) Permitted Transfers by Management Stockholders.............5
(c) Condition to Permitted Transfers...........................6
3. Share Certificates...............................................6
(a) Restrictive Endorsement....................................6
(b) Replacement Certificates...................................7
(c) Certificate as to Transferee...............................7
4. Drag-Along Right.................................................8
(a) Sale of Stock..............................................8
(b) Merger.....................................................8
5. Equitable Relief.................................................8
6. Convertible Preferred Stock, Series II...........................8
7. Compliance with Securities Laws.................................10
8. Miscellaneous...................................................10
(a) Notices...................................................10
(b) Amendment.................................................11
(c) Termination...............................................11
(d) Waiver....................................................11
(e) Counterparts..............................................12
(f) Governing Law.............................................12
(g) Benefit and Binding Effect................................12
(h) Entire Agreement..........................................13
(i) Amendment to the Voting Trust Agreement...................13
9. No Strict Construction..........................................13
i
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STOCKHOLDERS' AGREEMENT AMENDMENT
AMENDMENT, dated as of , 1997, to the STOCKHOLDERS'
---------
AGREEMENT, dated as of April 14, 1993 (the "Original Agreement" and as amended
by this Amendment, the "Agreement"), by and among (i) TRAVELCENTERS OF AMERICA,
INC., formerly National Auto/Truckstops Holdings Corporation, a Delaware
corporation (the "Company"), (ii) each of the
holders of voting trust certificates (the "Voting Trust Certificates") issued
under the Voting Trust Agreement (as hereinafter defined) listed on Schedule I
attached hereto (each, a "Certificate Holder" and collectively, the "Certificate
Holders"), (iii) United States Trust Company of New York, as Voting Trustee (the
"Voting Trustee") under such Voting Trust Agreement, (iv) each of the management
employees of the Company listed on Schedule II attached hereto (such persons,
together with any future employees of the Company or any of its subsidiaries who
acquire Common Stock (as hereinafter defined) and who become parties to this
Agreement, the "Management Stockholders"), (v) each person who acquires Common
Stock upon exercise of a Stock Purchase Warrant (as hereinafter defined) and
becomes a party to this Agreement (the "Additional Stockholders") and (vi)
Clipper Capital Associates, L.P. (formerly Clipper Truckstops, L.P.), a Delaware
limited partnership, National Partners, L.P., a Delaware limited partnership,
National Partners II, L.P., a Delaware limited partnership, National Partners
III, L.P., a Delaware limited partnership and Clipper/Merchant I, L.P. a
Delaware limited partnership, each of which holds shares of Convertible
Preferred Stock, Series I or Convertible Preferred
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Stock, Series II, par value $.01 per share, of the company (such series are
collectively referred to herein together as "Preferred Stock") (each of such
holders and their respective successive transferees as permitted hereunder are
sometimes hereinafter referred to as a "Preferred Stockholder" and collectively,
the "Preferred Stockholders," and together with the Additional Stockholders and
the Management Stockholders, the "Stockholders").
The parties to the Original Agreement wish to amend and restate the
Original Agreement in its entirety and, accordingly, the parties hereto agree
that the Original Agreement is hereby deleted in its entirety and the following
substituted therefor:
1. DEFINITIONS.
"Affiliate" of any person means (i) any other person directly or
indirectly controlling, controlled by, or under common control with, such
person, and (ii) a person owning or controlling more than 50% of the outstanding
voting securities of such person.
"Closing Date" means the date of this Agreement.
"Control," with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise.
"Disposition" means sale of the Company, by means either of a sale
of all the capital stock or a merger or consolidation of the Company with or
into another corporation, in each case prior to the consummation of a registered
public offering of the Company's capital stock, which transaction is effected on
the same terms and
2
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conditions for each holder of capital stock of the Company (including, without
limitation, that each outstanding share of capital stock of the Company is
entitled to the same amount and form of consideration per share, subject to
"appropriate adjustment in the event of any split, reclassification, subdivision
or combination of the outstanding shares of any of the Common Stock, the
Convertible Preferred Stock, Series I or the Convertible Preferred Stock, Series
II of the Company" (as such phrase is defined in the Company's Restated
Certificate of Incorporation)), provided, however, that holders of Convertible
Preferred Stock, Series II shall not be entitled to receive voting securities or
capital stock of any entity to the extent that doing so would result in a
violation of any applicable federal banking law or regulation, and such holders
instead shall, to the extent necessary to avoid a violation of any applicable
federal banking law or regulation, receive securities or capital stock
conferring rights that are as nearly identical to (but no more favorable than)
those received by such other holders of the company's capital stock as would not
violate any applicable federal banking law or regulation (which may, if
permitted by law or regulation, be a convertible security). The Company is
entitled to rely conclusively upon the written statement of the holder of the
Convertible Preferred Series II as to the status of any voting securities or
capital stock to be received and the nature of any limitation on amount or the
rights associated with such securities or capital stock necessary to comply with
federal banking laws and regulations.
"fully diluted basis" means assuming (i) the exercise of all then
outstanding options, warrants and subscription or similar rights issued by the
Company (whether or not then exercisable) for the purchase of voting securities
of the
3
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Company (other than any unvested options issued to management employees of the
Company or any of its subsidiaries) and (ii) the conversion of any debt security
or preferred stock (other than the Preferred Stock) of the Company that is
convertible into voting securities of the Company (whether or not then
convertible).
"Management Subscription Agreement" means each Management
Subscription Agreement between the Company and a Management Stockholder as the
same may be amended from time to time.
"Original Stockholders" means the Certificate Holders, the
Management Stockholders and the Preferred Stockholders parties to this Agreement
on the date hereof.
"person" means any individual, partnership, corporation, joint
venture, association, joint-stock company, trust, unincorporated organization,
union, business association, firm, government or agency or political subdivision
thereof, or other entity.
"Public Offering" means an offering of Shares registered under the
Securities Act of 1933, as amended, or any successor act (the "Securities Act").
"Shares" means, collectively, shares of Common Stock and Preferred
Stock.
"Stock Purchase Warrant" shall mean a Stock Purchase Warrant issued
by the Company pursuant to any Subordinated Note and Warrant Purchase Agreement,
dated as of April 13, 1993, among the Company, the Subsidiary and the Purchaser
party thereto.
4
<PAGE>
The "Subsidiary" means National Auto/Truckstops, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company.
"Voting Trust Agreement" means that certain Voting Trust Agreement
dated as of April 14, 1993, as amended through the date hereof and as the same
may be amended, from time to time, in accordance with Section 14.6 thereof,
among the Company, the Voting Trustee and the Stockholders named therein.
2. TRANSFERS OF SHARES.
(a) RESTRICTIONS ON TRANSFER. Each Management Stockholder agrees
that, except in a transaction or transactions permitted by this Section 2, he or
she shall not, either directly or indirectly, transfer, sell, assign, mortgage,
hypothecate, pledge, create a security interest in or lien upon, encumber, give,
place in trust, or otherwise voluntarily or involuntarily dispose of
(collectively, "transfer") any of the shares of Preferred Stock or Common Stock
held by him or her, including shares of Preferred Stock or Common Stock that may
hereafter be acquired by such Stockholder. In addition, in the event that the
Company effects a registered public offering of any shares of its capital stock,
and in connection therewith, enters into an underwriting or similar agreement,
each Stockholder and the Voting Trustee agree not to transfer any of the Voting
Trust Certificates or Shares held by such Stockholder or the Voting Trustee, as
the case may be, in violation of any standstill or similar provision (not to
exceed 180 days and otherwise on commercially reasonable terms) contained in
such underwriting or similar agreement, provided that such standstill provision
is equally applicable to each class of Preferred Stock of the Company which is
convertible into Common Stock of the Company.
5
<PAGE>
(b) PERMITTED TRANSFERS BY MANAGEMENT STOCKHOLDERS. Each Management
Stockholder shall have the right to transfer, directly or indirectly, any of the
shares of Common Stock held by him or her (i) to his or her parent, spouse,
ex-spouse or child (or any trust for the benefit of any such parent, spouse,
ex-spouse or child), (ii) pursuant to the laws of descent and distribution, and
(iii) as otherwise permitted or provided for in the Management Subscription
Agreement.
(c) CONDITION TO PERMITTED TRANSFERS. As a condition to any transfer
permitted pursuant to this Section 2, each transferee that is not a party hereto
shall, prior to such transfer, agree in writing to be bound by all of the
provisions of this Agreement applicable to the transferor and no such transferee
shall be permitted to make any transfer other than in accordance with the terms
of this Agreement. Except as otherwise provided herein, each such transferee of
Shares shall be entitled to the rights and privileges provided hereunder
applicable to the transferee of such Shares, including the right to transfer
such Shares, and shall be subject to all of the obligations and limitations with
respect to such Shares, as the case may be, to the extent of the original
transferee Stockholder under this Agreement.
(d) Any Management Stockholder who enters into a separate
stockholder agreement with the Company respecting Common Stock held by him or
her shall be governed by the terms of such agreement and not the terms of this
Agreement to the extent set forth in such other agreement.
6
<PAGE>
3. SHARE CERTIFICATES.
(a) RESTRICTIVE ENDORSEMENT. Each Voting Trust certificate and each
certificate representing Shares hereafter issued to a Stockholder subject to
this Agreement shall be stamped with a legend in substantially the following
form:
"THIS CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO A STOCKHOLDERS' AGREEMENT DATED AS OF APRIL 14, 1993, AS
AMENDED, A COPY OF WHICH (INCLUDING ALL AMENDMENTS) IS ON FILE AT THE
OFFICES OF THE COMPANY AND WILL BE FURNISHED TO ANY PROSPECTIVE PURCHASERS
ON REQUEST. BY ACCEPTANCE OF THIS CERTIFICATE, EACH HOLDER HEREOF AGREES
TO BE BOUND BY THE PROVISIONS OF THE STOCKHOLDERS' AGREEMENT."
"THIS CERTIFICATE AND THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR
QUALIFICATION PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT
BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS
OR APPLICABLE EXEMPTIONS THEREFROM."
The Voting Trustee and each Stockholder agrees that he, she or it will deliver
all Voting Trust Certificates and/or certificates for Shares hereafter issued to
him, her or it to the Company for the purpose of affixing such legend thereto.
7
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(b) REPLACEMENT CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificate representing Shares issued hereunder and of a bond or other
indemnity (including an indemnity agreement) reasonably satisfactory to the
Company and upon reimbursement to the Company of all reasonable expenses
incident thereto, and upon surrender of such certificate, if mutilated, the
Company will make and deliver a new certificate of like tenor in lieu of such
lost, stolen, destroyed or mutilated certificate.
(c) CERTIFICATE AS TO TRANSFEREE. The Voting Trustee agrees to
provide to the Company, concurrently with the transfer of any Voting Trust
Certificates or shares of Common Stock represented by Voting Trust Certificates,
the certificate received by the Voting Trustee pursuant to Section 7.2 of the
Voting Trust Agreement.
4. DRAG-ALONG RIGHT.
(a) SALE OF STOCK. In connection with the consummation of any
Disposition structured as a sale of all of the outstanding capital stock of the
Company, each of the Stockholders agrees to sell to the purchaser or purchasers
in such Disposition all Shares held by such Stockholder.
(b) MERGER. In connection with the consummation of any Disposition
structured as a merger or consolidation of the Company, each of the Stockholders
will (i) tender as required in connection therewith all Shares held by such
Stockholder in connection with such merger or consolidation, and (ii) vote all
of his, her or its Shares in favor of such merger (if such merger has been
approved by the Board of Directors of the Company and by a resolution of holders
of a majority of
8
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shares of capital stock of the Company) at any meeting held for such purpose and
waive any dissenters rights, appraisal rights or similar rights in connection
with such merger or consolidation.
5. EQUITABLE RELIEF. The parties hereto agree and declare that legal
remedies may be inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
6. CONVERTIBLE PREFERRED STOCK, SERIES II. The parties hereto agree that,
in the event any holder of shares of Convertible Preferred Stock, Series II
delivers to the company a written request that such shares be granted additional
rights not then attributable to a share of Convertible Preferred Stock, Series
II but which are then attributable (or would be attributable if any such shares
were outstanding) to a share of Convertible Preferred Stock, Series I (such
additional rights specified in such written request being hereinafter referred
to as "Additional Rights"), accompanied by an opinion of counsel to such holder,
rendered by a law firm of national standing having expertise in federal banking
laws reasonably acceptable to the Company, stating that the possession by such
holder (or, if such holder did not acquire such shares upon original issuance
from the Company, that the possession by such holder or any prior direct or
indirect transferor to such holder) of shares having such Additional Rights is
not prohibited by any federal banking law or regulation, the Stockholders shall
vote their Shares so as to approve any amendments to the Company's restated
certificate of incorporation, so that the Convertible Stock, Series II then held
by such holder shall thereafter have attributable to them such
9
<PAGE>
Additional Rights (provided that such Additional Rights shall only be so
attributable following tender of such shares to the Company for legending to
reflect the fact that such shares have such Additional Rights attributable to
them). Such Additional Rights may include, without limitation, the right to
convert into shares of Common Stock without regard for the limitation imposed by
the proviso to Section 4.3.2(f)(i) of the Company's restated Certificate of
Incorporation and the right to vote, together as a single class with the
Convertible Preferred Stock, Series I, on any matter on which such Convertible
Preferred Stock, Series I has a vote. The Company shall deliver a copy of each
written request and opinion of counsel referred to in the first sentence of this
Section 6, promptly after receipt thereof, to each member of the Board of
Directors of the Company.
7. COMPLIANCE WITH SECURITIES LAWS.
(a) The Voting Trustee and each Stockholder hereby acknowledge and
agree that the Shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the Securities
Act and any applicable state securities laws or unless an exemption from such
registration is available.
(b) Notwithstanding anything to the contrary contained herein, the
Company may require, as a condition precedent to any transfer of Shares, the
delivery by the transferor of an opinion of counsel, reasonably satisfactory to
the Company, to the effect that such transfer is permitted under the Securities
Act and any applicable state securities laws.
10
<PAGE>
8. MISCELLANEOUS.
(a) NOTICES. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be made by
hard delivery, first-class mail (registered or certified, return receipt
requested), telex, telecopier, or overnight air courier guaranteeing next day
delivery: (i) in the case of the Company, to TravelCenters of America, Inc.,
3100 West End Ave., Suite 200, P.O. Box 76, Nashville, TN 37202-0076 (Attention:
James F. Blackstock), (ii) in the case of the Voting Trustee, to United States
Trust Company of New York, 14 West 47th Street, New York, New York 10036
(Attention: Corporate Trust), and (iii) in the case of any Stockholder, to the
address of the party appearing under his, her or its name on Schedule I,
Schedule II, Schedule III or Schedule IV attached to the Original Agreement, as
the case may be (or to such other address as has heretofore or hereafter may be
designated by such party). Except as otherwise provided in this Agreement, each
such notice shall be deemed given at the time delivered by hand, if personally
delivered; five business days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next business day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
(b) AMENDMENT. The provisions of this Agreement may be amended by
the approval of the holders of two-thirds of the outstanding shares of Common
Stock and Preferred Stock acting together as a single class and the Company;
provided that no such amendment shall increase the liabilities and obligations
hereunder of any party hereto without the consent of such party.
11
<PAGE>
Notwithstanding the foregoing, no consent of the Voting Trustee or any
Stockholder shall be required in connection with any amendment hereof to add any
person or entity as a Stockholder or to appropriately amend the schedules
hereto.
(c) TERMINATION. This Agreement shall terminate on the earliest to
occur of (i) ten (10) years from April 14, 1993, or (ii) upon a Public Offering;
provided, however, that each party hereto agrees to abide by any standstill or
similar provision (not to exceed 180 days and otherwise on commercially
reasonable terms) contained in an underwriting or similar agreement in
connection with a Public Offering if such standstill provision is equally
applicable to each class of Common Stock and Preferred Stock which is
convertible into Common Stock.
(d) WAIVER. No failure or delay an the part of the Voting Trustee or
the Stockholders or any of them in exercising any right, power or privilege
hereunder, and no course of dealing among the Company, the Voting Trustee and
the Stockholders or any of them shall operate as a waiver thereof nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the simultaneous or later exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights and remedies which the Voting Trustee or the Stockholders or any
of then would otherwise have. No notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Voting Trustee
or the Stockholders or any of them to take any other or further action in any
circumstances without notice or demand.
12
<PAGE>
(e) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
(g) BENEFIT AND BINDING EFFECT. This Agreement shall be binding upon
and shall inure to the benefit of the Company, the Voting Trustee, and their
respective successors and assigns, and each of the Stockholders (including each
Certificate Holder who ceases to be a party to the Voting Trust Agreement), and
their respective executors, administrators and personal representatives and
heirs and assigns. In the event that any part of this Agreement shall be held to
be invalid or unenforceable, the remaining parts hereof shall nevertheless
continue to be valid and enforceable as though the invalid portions were not a
part hereof.
(h) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, discussions and understandings.
(i) AMENDMENT TO THE VOTING TRUST AGREEMENT. The parties hereto
agree that the Voting Trust Agreement is amendable or terminable by the Voting
Trustee, acting in accordance with a vote of the holders of the majority of
Voting Trust Certificates, and a vote of the holders of preferred stock of the
Company (and the holders of Common Stock issued on Conversion of such preferred
stock) who beneficially own more than 50% of such outstanding shares of stock.
The parties
13
<PAGE>
hereto further agree that in no case will any amendment or termination of the
Voting Trust Agreement be valid without the consent of the Company.
9. NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above written.
TRAVELCENTERS OF AMERICA, INC.
By: /s/ James W. George
------------------------------
Title: Senior Vice President and
Chief Financial Officer
UNITED STATES TRUST COMPANY OF
NEW YORK, as Voting Trustee
By: /s/ Margaret M. Ciesmelewski
------------------------------
Title: Margaret M. Ciesmelewski
Assistant Vice President
CLIPPER CAPITAL ASSOCIATES, L.P.
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ Robert B. Calhoun
------------------------------
Title:
NATIONAL PARTNERS, L.P.
By: Clipper Capital Associates, L.P.
Its: General Partner
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ Robert B. Calhoun
------------------------------
Title:
14
<PAGE>
NATIONAL PARTNERS II, L.P.
By: Clipper Capital Associates, L.P.
Its: General Partner
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ Robert B. Calhoun
------------------------------
Title:
NATIONAL PARTNERS III, L.P.
By: Clipper Capital Associates, L.P.
Its: General Partner
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ Robert B. Calhoun
------------------------------
Title:
CLIPPER/MERCHANT I, L.P.
By: Clipper Capital Associates, L.P.
Its: General Partner
By: Clipper Capital Associates, Inc.
Its: General Partner
By: /s/ Robert B. Calhoun
------------------------------
Title:
15
<PAGE>
/s/ EDWIN P. KUHN
--------------------------------------
EDWIN P. KUHN
/s/ JAMES W. GEORGE
--------------------------------------
JAMES W. GEORGE
/s/ MICHAEL H. HINDERLITER
--------------------------------------
MICHAEL H. HINDERLITER
/s/ LARRY W. DOCKRAY
--------------------------------------
LARRY W. DOCKRAY
/s/ JOHN G. SMITH
--------------------------------------
JOHN G. SMITH
/s/ GEORGE J. FORBES
--------------------------------------
GEORGE J. FORBES
/s/ FRED L. SNELL
--------------------------------------
FRED L. SNELL
/s/ ARA A. BAGDASARIAN
--------------------------------------
ARA A. BAGDASARIAN
/s/ IVAN W. WAGNER
--------------------------------------
IVAN W. WAGNER
/s/ WILLIAM A. BARTKUS
--------------------------------------
WILLIAM A. BARTKUS
16
<PAGE>
/s/ JAMES F. BLACKSTOCK
--------------------------------------
JAMES F. BLACKSTOCK
/s/ KENNETH DONNER
--------------------------------------
KENNETH DONNER
SMITH BARNEY, Custodian for James F.
Blackstock IRA Account
By: /s/ RANDY J. CAMPBELL
------------------------------
Title: Vice President
Portfolio Manager
17
Exhibit 10.29
TA FRANCHISE SYSTEMS, INC.
FRANCHISE AGREEMENT
THIS CONTRACT IS SUBJECT TO ARBITRATION
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
I. DEFINITIONS.....................................................2
II. APPOINTMENT AND FRANCHISE FEE...................................7
III. CONTINUING SERVICES AND ROYALTY FEE.............................8
IV. PAYMENT........................................................10
V. TERM AND RENEWAL...............................................11
VI. PROPRIETARY MARKS..............................................12
VII. CONFIDENTIAL OPERATIONS MANUAL.................................14
VIII. CONFIDENTIAL INFORMATION.......................................15
IX. MODIFICATION OF THE NETWORK....................................15
X. ADVERTISING....................................................16
XI. FRANCHISOR'S OPERATIONS ASSISTANCE.............................18
XII. FRANCHISEE'S OBLIGATIONS.......................................20
XIII. BUYING PROGRAM.................................................27
XIV. ACCOUNTING AND RECORDS.........................................28
XV ACCESS.........................................................29
XVI. FUEL SUPPLY....................................................29
XVII CREDIT.........................................................31
XVIII INSURANCE......................................................31
XIX. DEFAULT AND TERMINATION........................................32
XX. RIGHTS AND DUTIES OF PARTIES UPON
EXPIRATION OR TERMINATION......................................37
XXI. TRANSFERABILITY OF INTEREST....................................39
XXII. DEATH OR INCAPACITY OF FRANCHISEE..............................41
XXIII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION.....................42
XXIV. RESTRICTIVE COVENANTS..........................................46
XXV. APPROVALS......................................................47
XXVI. AMENDMENTS; WAIVERS; REMEDIES..................................47
XXVII. SUCCESSORS AND ASSIGNS.........................................48
XXVIII. GOVERNING LAW; JURY TRAIL WAIVER...............................48
XXIX. COUNTERPARTS; EFFECTIVENESS....................................48
i
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XXX. ENTIRE AGREEMENT...............................................49
XXXI. JURISDICTION...................................................49
XXXII. CAPTIONS.......................................................49
XXXIII. SEVERABILITY...................................................50
XXXIV, CONSTRUCTION...................................................50
XXXV. INCONSISTENCY..................................................50
XXXVI. FORCE MAJEURE..................................................50
XXXVII. NOTICE.........................................................50
XXXVIII. COST OF ENFORCEMENT OR DEFENSE.................................51
XXXIX. INJUNCTIVE RELIEF..............................................52
XL. ARBITRATION....................................................52
XLI. LINE OF CREDIT.................................................53
XLII. CAVEAT.........................................................53
XLIII. ACKNOWLEDGEMENTS...............................................53
EXHIBITS
A. EXCLUSIONS FROM THE PROTECTED TERRITORY
ii
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TA FRANCHISE SYSTEMS, INC.
FRANCHISE AGREEMENT
Franchise Agreement, made this day of , 19 , by
---- --------------- --
and between TA FRANCHISE SYSTEMS, INC., a Delaware corporation, having its
principal place of business at 24601 Center Ridge Road, Westlake, Ohio
44145-5634 ("TAFSI") and ("Franchisee").
-----------------------------------
WITNESSETH:
WHEREAS, TAFSI, together with its Affiliates (collectively,
"Franchisor") owns a unique auto/truckstop network which includes, among other
things, the establishment, development and operation of businesses for
full-service truckstop facilities that provide motor fuel pumping facilities,
along with one or more of the following services: truck care and repair
services, a full-service restaurant, a convenience store, showers, laundry
facilities, telephones, recreation rooms, truck weighing scales and other
compatible business services (the "Network"); and
WHEREAS, TAFSI has expended time, effort and money to develop the
Network; and
WHEREAS, TA Operating Corporation ("TA Operating") has granted TAFSI a
license to use and sublicense such registered or unregistered trademarks,
service marks and/or trade names in connection with the operation of the
Network; and
WHEREAS, in addition to the trademarks, service marks and/or trade
names granted by the trademark license referenced above, Franchisor may, from
time to time, develop, use and control other trademarks, service marks and/or
trade names for the benefit and use of Franchisor and the Franchised Businesses
in order to identify for the public the source of products and services and to
represent the Network's high standards of operations, quality, appearance and
service; and
WHEREAS, Franchisor grants to certain qualified persons a Franchised
Business providing products and services authorized and approved by Franchisor
and utilizing the Marks, and Franchisee desires to own and/or operate a
Franchised Business under the Network and wishes to enter into a franchise
relationship with Franchisor for that purpose, as well as to receive assistance
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provided by Franchisor in connection therewith (collectively, a "Franchise
Relationship"); and
WHEREAS, Franchisee understands and acknowledges the importance of and
agrees to comply with Franchisor's high and uniform standards of quality and
service and the necessity of operating the Franchised Business in conformity
with Franchisor's standards and specifications; and
WHEREAS, Franchisor expressly disclaims the making of and Franchisee
acknowledges that it has not received nor relied upon any warranty or guaranty,
express or implied, as to the revenues, profits or success of the business
venture contemplated by this Agreement. Franchisee acknowledges that it has read
this Agreement and Franchisor's Uniform Franchise Offering Circular and all
exhibits thereto ("Offering Circular") upon which it has exclusively relied, and
that it has no knowledge of any representations by Franchisor, or its officers,
directors, stockholders, employees or agents that are contrary to the statements
made in the Offering Circular or to the terms herein.
NOW, THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements set forth herein, the parties hereby agree
as follows:
I. DEFINITIONS
1.01. Except where the context otherwise requires, the following terms
used herein shall have the meanings set forth below.
A. "Advertising Fund" shall mean the advertising, marketing
and promotional fund to be used for the development, placement and
implementation of Advertising Materials to promote the Network.
B. "Advertising Material" shall mean any advertising or
promotional material, including, but not limited to, billboards, newspapers,
other print media, radio and television advertising, other electronic media
advertising, specialty and novelty items, signs, boxes, containers,
point-of-sale materials, napkins, bags and wrapping papers.
C. "Affiliates" shall mean, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under direct or
indirect common control with such Person.
2
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D. "Approved Supplies List" shall mean a list of approved
inventory, products, fixtures, furniture, equipment, signs, stationery,
supplies, and other items or services used to operate the Franchised Business.
E. "Approved Suppliers List" shall mean a list of approved
manufacturers, suppliers and distributors of items or services on the Approved
Supplies List.
F. "Branded Motor Fuel" shall mean such brands of Motor Fuel
meeting Franchisor's specifications and bearing such Marks as Franchisor may
approve in writing from time to time.
G. "Branded Products" shall mean certain petroleum products,
truck care products, and other merchandise bearing the Marks.
H. "Buying Program" shall mean a program to capitalize on
group buying power through the purchase by Franchisor on behalf of truckstops in
the Network of products or services used in the Franchised Business, including,
but not limited to, communications services and devices; store merchandise;
restaurant food supplies and services; garage parts and services; insurance
policies; and business services that serve the trucking industry and other
business customers.
I. "Claim" shall mean any action, suit, claim, demand, cause
of action, legal or administrative or arbitral proceeding, inquiry or
investigation.
J. "Commingle" shall mean any unauthorized purchase of
gasoline or diesel fuel delivered to or stored or sold at the Franchised
Premises.
K. "Confidential Information" shall mean any and all
information, whether obtained before or after Franchisor acquired the Network,
relating to the Network, including, but not limited to, trade secrets,
technology, processes, business plans, business systems, knowledge, knowhow,
drawings, blueprints, plans, materials, equipment, techniques, procedures for
display of products, product formula, training materials and other data,
including the Confidential Operations Manual. For purposes of this Agreement,
Confidential Information shall exclude information that (i) was in the public
domain at the time of its disclosure to Franchisee or (ii) becomes part of the
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public domain through no violation of this Agreement or any other obligation by
Franchisee or any third party to keep such information confidential.
L. "Confidential Operations Manual" shall mean the
confidential operations and procedures manual or series of manuals as developed
and maintained by Franchisor for the Franchised Businesses and as the same may
be modified or supplemented from time to time by Franchisor.
M. "Franchisee Party" shall mean the following persons:
- -----------------------------------.
N. "Franchised Business" shall mean a franchised business that
is part of the Network and provides full-service truckstop facilities that
provide motor fuel pumping facilities, along with one or more of the following
services: truck care and repair services, a full-service restaurant, a
convenience store, showers, laundry facilities, telephones, recreation rooms,
truck weighing scales and other compatible business services approved by
Franchisor.
O. "Incapacity" shall mean the death or continuing severe
physical or mental disability of Franchisee (if Franchisee is an individual), or
a Franchisee Party, of at least three (3) months' duration, which renders
Franchisee or such Franchisee Party, as the case may be, unable to provide for
the continued proper operation of the Franchised Business.
P. "Indemnified Parties" shall mean Franchisor and the
officers, employees, agents, stockholders, designees, successors, assigns and
representatives of each Franchisor entity, including but not limited to TA
Operating Corporation, TA Holdings Corporation, National Auto/Truckstops
Holdings Corporation and National Auto/Truckstops, Inc.
Q. "Lease Agreement" shall mean any lease for the Franchised
Premises between any Franchisor entity and Franchisee.
R. "Losses" shall mean all demands, claims, actions or causes
of action, assessments, losses, damages, costs, expenses, liabilities,
judgments, awards, finds, sanctions, penalties, charges and amounts paid or
payable in settlement, including, all reasonable costs, fees and expenses of
attorneys, experts, accountants, appraisers, consultants, witnesses,
investigators and other agents.
4
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S. "Mark(s)" shall mean the name "Truckstops of America,"
"TA," "Country Pride" and such other trade names, trademarks, service marks,
logos and commercial symbols as Franchisor determines in the future (and may
hereinafter be designated by Franchisor) as an integral part of the Network.
T. "Motor Fuel" shall mean diesel fuel and gasoline and such
other alternative fuel as Franchisor may sell to Franchisee or approve for
purchase by Franchisee from other Persons, from time to time.
U. "Person" shall mean any individual, corporation,
partnership, association, trust, estate or other entity or organization.
V. "Promotional Programs" shall mean programs developed,
established and marketed by Franchisor from time to time and designed to induce
users of Franchisee's products or services to patronize its Franchised Business.
W. "State Logo Signs" shall mean state-sponsored highway logo
signs containing space for advertising fuel, food and lodging brands available
at the Franchised Premises.
X. "TA Quality Inspection" shall mean the program for
operation and appearance of the Franchised Premises prescribed by Franchisor in
the Confidential Operations Manual.
1.02. Each of the following terms is defined in the paragraphs set
forth opposite such term:
"Asserted Liability" 23.04
"Assign" 21.02.A
"Claims Notice" 23.04
"Continuing Services and Royalty Fee" 3.03(c)
"Core Programs" 12.07
5
<PAGE>
"Customer Complaint Form" 19.01.D.2
"Designated Terminal" 16.03
"Force Majeure" XXXVI
"Franchise Relationship" Recitals
"Franchised Premises" 2.01
"Franchisee" First Paragraph
"Franchisor" Recitals
"Gross Negligence" 23.04
"Initial Term" 5.01
"Leased Premises" 2.01
"Network" Recitals
"Non-Fuel Revenue" 3.03(a)
"Offering Circular" Recitals
"Outside Elements" 12.14.E.
"Protected Territory" 2.03
"Renewal Term" 5.02
"TA Operating" Recitals
"TAFSI" First Paragraph
6
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"Tax" 16.03
"Transfer and Training Fee" 21.02.C
"Willful Misconduct" 23.04
II. APPOINTMENT AND FRANCHISE FEE.
2.01. Franchisor hereby grants to Franchisee, upon the terms and
conditions herein contained, the right, franchise and privilege to operate a
Franchised Business at, and only at, the following location:
- -----------------------------------------------------------------------------
The property and buildings to be used by Franchisee hereunder is defined in the
Lease Agreement as the "Leased Premises," is more particularly depicted and
described in Exhibit A to the Lease Agreement, and is referred to herein,
collectively, as the "Franchised Premises." Franchisee agrees to operate the
Franchised Business at, and only at, the Franchised Premises.
2.02. In connection with Franchisor's grant of the Franchised Business
to Franchisee, Franchisor will license Franchisee to use the Marks during term
of this Agreement solely in connection with the Franchised Business.
2.03. Franchisor agrees that so long as this Agreement is in force and
effect, and Franchisee is not in default of any term hereunder, Franchisor will
not operate, or allow another Person to operate, a truckstop or travelcenter
business which uses the "TA" brand, within seventy-five (75) miles in either
direction along the interstate(s) at which the Franchised Premises is located
(the "Protected Territory"). Notwithstanding anything to the contrary herein:
(a) Franchisor may operate, or may allow another Person to operate, a truckstop
or travelcenter business at or within any of the locations or areas described on
Exhibit A to this Agreement; and (b) nothing herein shall restrict, prevent or
prohibit any Person who purchases or assumes the operation of more than one TA
facility from rebranding such Person's existing facilities with a "TA" brand,
even if such facilities are located within the Protected Territory.
2.04. Upon execution of this Agreement, Franchisee agrees to pay to
Franchisor a franchise fee in the aggregate sum of One Hundred Thousand dollars
($100,000.00), which fee shall be due and payable as follows: (a) Fifty-Thousand
Dollars ($50,000.00), less credit for any application fee already paid to
7
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Franchisor, shall be due and payable upon execution of this Agreement, and (b)
the balance shall be due and payable upon the earlier to occur of the
commencement of any training of Franchisee (or any employee of Franchisee), or
six (6) months from the date of this Agreement. Notwithstanding the foregoing,
the franchise fee described above shall be reduced to Five Thousand Dollars
($5,000.00), which shall be due and payable upon execution of this Agreement, if
(i) Franchisee has been continuously operating during the past year pursuant to
a franchise agreement, license agreement or prescribed marketing plan or system
of another truckstop company, (ii) Franchisee meets or satisfies certain
conditions and requirements established by Franchisor for its franchise
applicants, and (iii) Franchisee executes this Agreement within six (6) months
of its or his receipt of the same. Upon the earlier of payment or the due date
for payment, such sums shall be deemed fully earned and non-refundable in whole
or in part, notwithstanding any termination of this Agreement, whereupon such
sums shall be kept by Franchisor as consideration for expenses incurred by
Franchisor in furnishing assistance and services to Franchisee and for
Franchisor's lost or deferred opportunity to franchise others for which,
although the exact amount of damages sustained by Franchisor could not be
ascertained, Franchisee acknowledges the sums are reasonable.
2.05. Franchisee may request in writing approval to operate
motel/lodging facilities, branded fast food, deli operations or other business
facilities on the Franchised Premises. Such request shall be made in advance of
any proposed operation and in advance of any proposed alterations or
modifications in connection therewith. If Franchisor approves such request in
writing, Franchisee agrees to operate such businesses in accordance with
Franchisor's standards and specifications and such businesses shall be included
in the definition of "Franchised Business." Franchisee and each Franchisee Party
agree not to operate any business or facility on the Franchised Premises other
than as stated in Section 2.01 or otherwise approved by Franchisor in writing in
Franchisor's sole discretion.
2.06. Simultaneously with the execution of this Agreement, Franchisee
shall execute the Lease Agreement.
III. CONTINUING SERVICES AND ROYALTY FEE.
3.01. Franchisee shall pay to Franchisor, without offset, credit or
deduction of any nature, so long as this Agreement shall be in effect, a monthly
Continuing Services and Royalty Fee in an amount equal to (a) three and three
quarters percent (3.75%) of all Non-Fuel Revenue (as defined in Section 3.03(a)
below); (b) three cents ($.03) per gallon on all sales at or from the Franchised
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Premises of gasoline which was purchased from a supplier other than Franchisor;
and (c) three percent (3%) of all revenues earned directly or indirectly by
Franchisee from or pertaining to all branded fast food sales approved for sale
by Franchisor, after deducting from such amount the amount of royalties and
advertising fees actually paid by Franchisee to any licensor or franchisor with
respect thereto.
3.02. In addition to the payments described in 3.01 above, Franchisee
agrees that it shall pay to Franchisor Improvement Rent (as defined in Exhibit B
of the Lease Agreement), in the event Franchisor (either upon request of
Franchisee or at Franchisor's sole discretion) performs or makes capital
expenditures to improve the Franchised Premises, including but not limited to
improvements to allow for the sale of branded fast food which has been approved
in writing by Franchisor. The amount of such Improvement Rent shall be
determined in accordance with Exhibit B of the Lease Agreement.
3.03. As used in this Agreement, the following terms shall
have the meanings set forth below:
(a) The term "Non-Fuel Revenue" shall mean all revenues earned
directly or indirectly by Franchisee (or any Affiliates of Franchisee or any
Franchisee Party), from the Franchised Business and all businesses conducted at
or from the Franchised Premises, excluding fuel sales. Each charge or sale upon
credit shall be treated as a sale for the full price in the calendar month
during which such charge or sale was made, irrespective of the time when
Franchisee receives payment (whether full or partial) therefor. Non-Fuel Revenue
shall not include (i) the amount of any sales tax, excise tax or inspection fees
imposed by any federal, state, municipal or other governmental authority
directly on sales and collected from customers; provided, that the amount
thereof is included in the selling price and is actually paid by Franchisee to
such governmental authority; (ii) refunds to customers for merchandise;
provided, that the amount received for such merchandise shall have previously
been included in Non-Fuel Revenues; (iii) trade discounts; and (iv) revenues
from the sale of branded fast food approved by Franchisor. In cases in which the
Franchisee receives only a commission from a business activity rather than the
gross revenues from such activity (e.g., game revenues, legalized gambling that
has been approved in writing by Franchisor, permit sales, lottery ticket sales,
CAT branded scale sales, telephone commissions and the like), only the
commission received by Franchisee shall be included in Non-Fuel Revenue;
provided, that such commissions are reasonable and customary.
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(b) For purposes of Section 3.01(b) above, in determining the
gallons of gasoline sales, each charge or sale, whether for cash or on credit,
shall be treated as a sale in the month during which such charge or sale was
made, irrespective of whether, or of the month when, Franchisee receives payment
therefor.
(c) The term "Continuing Services and Royalty Fee" shall mean
all amounts due or payable pursuant to this Section III.
IV. PAYMENT.
4.01. The Continuing Services and Royalty Fee shall be paid in the
manner prescribed in the Confidential Operations Manual and shall be due on the
tenth (10th) day of each month for the preceding month. Notwithstanding the
foregoing, payment terms for all amounts due Franchisor from Franchisee shall be
in accordance with terms established by Franchisor which may be changed at any
time at Franchisor's discretion. Among other things, Franchisor shall have the
right to require payment by certified check or by electronic funds transfer. All
Continuing Services and Royalty Fees, and amounts due for purchases by
Franchisee from Franchisor, and other amounts which Franchisee may owe to
Franchisor, shall bear interest after due date at the highest applicable legal
rate for open account business credit, not to exceed one and one-half percent
(1-1/2%) per month. Franchisee agrees to make all payments according to terms,
whether or not disputed, and waives any claim or right of offset, set-off, or
deduction for amounts disputed or otherwise. Franchisee's sole remedy, to the
exclusion of all others, for disputed amounts which are not resolved by
agreement of the parties (including amounts withheld for thirty (30) days
pursuant to the provision above) shall be to pay the disputed amount to
Franchisor and then to invoke arbitration under the procedures provided in
Section XL. If Franchisee obtains an award pursuant to the foregoing, recovering
the disputed amount from Franchisor, the award shall include interest at the
rate specified above for the period from the date of payment by Franchisee to
Franchisor, to the date of repayment by Franchisor. Notwithstanding anything to
the contrary herein, Franchisor may seek judgment in any court for any amount
due from Franchisee or with respect to any disputes hereunder and may exercise
termination rights under Section XIX.
4.02. Notwithstanding any designation by Franchisee, Franchisor shall
have the sole discretion to apply any payments by Franchisee to any past due
indebtedness of Franchisee for Continuing Services and Royalty Fees, advertising
contributions, purchases from Franchisor, interest or any other indebtedness
under this Agreement or any agreement related hereto, in such amounts and in
such order as Franchisor shall determine.
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V. TERM AND RENEWAL.
5.01. This Agreement shall be effective and binding for an initial term
commencing on the date hereof (the "Initial Term") and ending on
("Initial Term").
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5.02. Subject to Franchisor's rights under Section XIX to terminate or
not renew this Agreement, Franchisee shall have the right to renew the Franchise
Agreement at the expiration of the Initial Term for five (5) additional
successive terms of three (3) years each ("Renewal Term"); provided, that all of
the following conditions have been fulfilled:
A. Franchisee has during the Initial Term complied with all
the provisions of this Agreement and during any Renewal Term complied with the
provisions of the then-current franchise agreement;
B. Franchisee is not in default of the provisions of Paragraph
XIX. of this Agreement;
C. Franchisee has given written notice of a request for
renewal at least three (3) but not more than (6) months prior to the expiration
of the then-current term;
D. Franchisee has satisfied all monetary obligations owed by
Franchisee to any Franchisor entity and has timely met these obligations
throughout the term of this Agreement;
E. Franchisee has executed upon renewal Franchisor's
then-current form of Franchise Agreement, Lease Agreement and any other
agreements required to be executed by the parties (with appropriate
modifications to reflect the fact that the agreement relates to the grant of a
renewal franchise), which agreements shall supersede in all respects this
Agreement, the Lease Agreement and other agreements between the parties, and the
terms of which may differ from the terms of this Agreement and other agreements
between the parties, including, without limitation, a different percentage
Continuing Services and Royalty Fee or advertising contribution, or adoption and
utilization of any new or different computer hardware and software prescribed by
Franchisor for current franchisees; provided, however, that Franchisee shall not
be required to pay the then-current initial franchise fee;
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F. Franchisee has complied with Franchisor's then-current
qualification and training requirements; and
G. Franchisee has executed a general release, in the
then-current form prescribed by Franchisor, of any and all Claims against
Franchisor, and the officers, directors, agents, stockholders and employees of
each Franchisor entity.
5.03. Franchisor may terminate or not renew this Agreement by
written notice to Franchisee, as provided in Paragraph XIX. herein.
VI. PROPRIETARY MARKS.
6.01. Franchisee acknowledges that Franchisee's right to use the Marks
is derived solely from this Agreement and is limited to the conduct of the
Franchised Business by Franchisee pursuant to and in compliance with this
Agreement and all applicable standards, specifications, and operating procedures
prescribed by Franchisor from time to time during the term of this Agreement.
Any unauthorized use of the Marks by Franchisee is a breach of this Agreement
and an infringement of the rights of Franchisor in and to the Marks. Franchisee
acknowledges that all usage of the Marks by Franchisee and any goodwill
established by Franchisee's use of the Marks shall inure to the exclusive
benefit of Franchisor and that this Agreement does not confer any goodwill or
other interests in the Marks upon Franchisee. Franchisee shall not, at any time
during the term of this Agreement or after its termination or expiration,
contest the validity or ownership of any of the Marks or assist any other person
in contesting the validity or ownership of any of the Marks. All provisions of
this Agreement applicable to the Marks apply to any additional trademarks,
service marks, and commercial symbols authorized for use by and licensed to
Franchisee by Franchisor after the date of this Agreement.
6.02. Franchisee shall not use any Mark or portion of any Mark as part
of any corporate or trade name, or with any prefix, suffix, or other modifying
words, terms, designs, or symbols, or in any modified form, nor may Franchisee
use any Mark in connection with the sale of any unauthorized product or service
or in any other manner not expressly authorized in writing by Franchisor.
Franchisee shall give such notices of trademark and service mark registrations
as Franchisor specifies and obtain such fictitious or assumed name registrations
as may be required under applicable law, and at Franchisee's expense. Franchisee
shall not use any of the Marks in any manner which has not been specified or
approved by Franchisor.
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6.03. Franchisee shall promptly notify Franchisor of any Claim based
upon or arising from any attempt by any other Person to use the Marks or any
colorable imitation thereof. Franchisee shall also notify Franchisor of any
Claim against Franchisee relating to the Marks, within ten (10) days after
Franchisee received notice of such Claim. Upon receipt of timely notice of a
Claim against Franchisee relating to the Marks, Franchisor shall have the sole
right to defend any such action. Franchisor shall have the exclusive right to
contest or bring action against any third party regarding the third party's use
of any of the Marks and shall exercise such right in its sole discretion. In any
defense or prosecution of any litigation relating to the Marks undertaken by
Franchisor, Franchisee shall cooperate with Franchisor and execute any and all
documents and take all actions as may be desirable or necessary in the opinion
of Franchisor and/or its counsel, to carry out such defense or prosecution. Both
parties will make every effort consistent with the foregoing to protect,
maintain, and promote the Marks and their distinguishing characteristics.
6.04. If it becomes advisable at any time, and from time to time, in
Franchisor's sole discretion, for Franchisor and/or Franchisee to modify or
discontinue use of any Mark, including, but not limited to, the "TA" Mark,
and/or use one (1) or more additional or substitute trade names, trademarks,
service marks, or other commercial symbols, Franchisee shall comply with
Franchisor's directions within a reasonable time after notice to Franchisee by
Franchisor. Franchisee shall immediately, upon the request of Franchisor, and in
any event upon termination of this Agreement, at no expense to Franchisor,
discontinue and take such legal or other action as may be necessary to
discontinue the use of the Marks.
6.05 In order to preserve the validity and integrity of the Marks and
copyrighted material licensed herein and to ensure that Franchisee is properly
employing the same in the operation of its Franchised Business, Franchisor or
its agents shall have the right of entry and inspection of the Franchised
Premises at all reasonable times and, additionally, shall have the right to
observe the manner in which Franchisee is rendering its services and conducting
its operations, to confer with Franchisee's employees and customers, and at
Franchisee's expense to select fuel, products, inventory, equipment and other
items, materials and supplies for test of content and evaluation purposes to
make certain that the services, fuel, products, inventory, materials, supplies,
equipment and operations are satisfactory and meet the quality control
provisions and performance standards established by Franchisor.
6.06. Under no circumstances shall Franchisee use Franchisor's name or
Marks (i) on any forms, publication, material or item disapproved by Franchisor,
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or (ii) in connection with any product or service not authorized by Franchisor,
or iii) in connection with any service performed by Franchisee in any manner not
authorized by Franchisor.
6.07. Franchisee shall not use the Marks in any advertising or any
other form of promotion (i) in any manner disapproved by Franchisor, or (ii)
without the appropriate (R) or registration marks or the designations TM or SM
where applicable as specified by Franchisor in the Confidential Operations
Manual.
VII. CONFIDENTIAL OPERATIONS MANUAL.
7.01. Franchisor will loan to Franchisee during the term of this
Agreement one (1) copy of a Confidential Operations Manual containing mandatory
and suggested specifications, standards, operating procedures and rules
prescribed from time to time by Franchisor for the Network and information
relative to other obligations of Franchisee hereunder and the operation of its
Franchised Business. Franchisor shall have the right to add to and otherwise
modify the Confidential Operations Manual from time to time to reflect changes
in the specifications, standards, operating procedures and rules prescribed by
Franchisor for the Network; provided, that no such addition or modification
shall alter Franchisee's fundamental status and material rights under this
Agreement. Franchisee shall immediately upon notice adopt any and all such
changes.
7.02. The Confidential Operations Manual (and any copies thereof) shall
at all times remain the sole property of Franchisor and shall be returned
promptly by Franchisee to Franchisor, at Franchisee's expense, immediately upon
the expiration or other termination of this Agreement.
7.03. Franchisee acknowledges that the Confidential Operations Manual
contains proprietary information of Franchisor and agrees to keep such
information confidential both during the term of this Agreement and subsequent
to the expiration or termination of this Agreement. Franchisee shall at all
times ensure that one (1) up-to-date and current copy of the Confidential
Operations Manual is available at the Franchised Premises. At all times that the
Confidential Operations Manual is not in use by authorized personnel, Franchisee
shall maintain the Confidential Operations Manual in a locked receptacle at the
Franchised Premises and shall grant only authorized personnel, as defined in the
Confidential Operations Manual, access to the key or lock combination of such
receptacle.
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7.04. In the event of any dispute as to the contents of the
Confidential Operations Manual, the terms of the master copy of the Confidential
Operations Manual maintained by Franchisor at Franchisor's principal place of
business shall control.
VIII. CONFIDENTIAL INFORMATION.
8.01. Franchisee acknowledges that knowledge of the operation of the
Franchised Business is and will be derived from Confidential Information
disclosed to Franchisee by Franchisor and that such Confidential Information is
proprietary, confidential and a trade secret of Franchisor. Franchisee shall
maintain the absolute confidentiality of all such Confidential information
during and after the term of this Agreement and shall not use any such
Confidential Information in any other business or in any manner not specifically
authorized or approved in writing by Franchisor.
8.02. Franchisee shall divulge Confidential Information only to its
employees that must have access to such information and only to the extent
necessary to operate the Franchised Business. Franchisee agrees that all
employees of Franchisee having access to Confidential Information of Franchisor
shall be required to execute confidentiality agreements in a form acceptable to
Franchisor.
IX. MODIFICATION OF THE NETWORK.
Franchisee acknowledges that at any time and from time to time
Franchisor may change or modify the Network, including, without limitation, the
adoption and use of new or modified trade names, trademarks, service marks or
copyrighted materials; new business centers; new computer systems; new inventory
items; new products or services; new merchandising techniques; new equipment; or
new techniques and that Franchisee will be required to accept, use and display
for the purpose of this Agreement any such changes in the Network, as if they
were part of this Agreement at the time of execution hereof. Franchisee will
make such expenditures as are reasonably required by such modifications in the
Network. Franchisee shall not change, modify or alter in any way the Network,
except as directed by Franchisor.
X. ADVERTISING.
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10.01. Franchisor reserves the right to require Franchisee to
discontinue using any Advertising Material promoting the Franchised Business or
products and services sold at the Franchised Premises that Franchisor deems
unacceptable or detrimental to the Network.
10.02. Franchisee agrees to contribute to the Advertising Fund an
amount equal to six-tenths of one percent (0.6%) of the Non-Fuel Revenue derived
from the Franchised Business or any other business conducted at or from the
Franchised Premises, including all revenues from fast food sales (branded or
unbranded) after deducting from such fast food sales revenues the amount of
royalties and advertising fees actually paid by Franchisee to any licensor or
franchisor with respect thereto. The amount due hereunder shall be payable
monthly as provided in Section 4.01. The Advertising Fund shall be maintained
and administered by Franchisor or its designee, as follows.
A. Franchisor shall direct all advertising programs with sole
discretion over the creative concepts, materials and media used in such programs
and the placement and allocation thereof. Franchisor reserves the right in its
sole and exclusive discretion to use such media, create such programs and
allocate any money from the Advertising Fund to such regions or localities as
Franchisor shall deem appropriate. All Advertising Material shall be and remain
the sole property of Franchisor and may not be altered by Franchisee. Franchisee
acknowledges that the Advertising Fund need not be spent pro rata and is
intended to further the general recognition and acceptance of the Marks for the
benefit of the Network.
B. Franchisor shall match the total contribution made to the
Advertising Fund by each Franchisee and all other Franchised Businesses.
C. The Advertising Fund may be used to meet any and all costs
of maintaining, administering, directing and preparing Advertising Material
(including, without limitation, the cost of (i) preparing and conducting
television, radio, magazine and newspaper advertising campaigns and other public
relations activities; (ii) employing advertising agencies to assist therein;
(iii) producing billboards, signage and point-of-sale materials; (iv) conducting
marketing activities; (v) compensating personnel employed by Franchisor to
engage in advertising, marketing and/or public relations activities on behalf of
the Advertising Fund if Franchisor, in its sole and exclusive discretion,
decides to employ such personnel, but only to the extent such personnel actually
devote time to such activities, and (vi) providing promotional brochures and
other marketing materials to franchisees in the Network). All sums paid by
Franchisee to the Advertising Fund shall be accounted for separately from the
other funds of Franchisor and shall not be used to defray any of Franchisor's
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general operating expenses, except for such reasonable administrative costs and
overhead, if any, as Franchisor may incur in activities reasonably related to
the administration or direction of the Advertising Fund and advertising programs
including, without limitation, conducting market research, preparing marketing
and advertising materials, and collecting and accounting for assessments for the
Advertising Fund; provided, however, that up to ten percent (10%) of the
Advertising Fund may be expended by Franchisor for such reasonable
administrative costs and overhead, if any, as Franchisor may incur in activities
reasonably related to the administration or direction of the Advertising Fund
and advertising programs for Franchised Businesses including, without
limitation, collecting and accounting for assessments for the Advertising Fund.
D. Franchisor maintains the right to terminate the Advertising
Fund at any time. However, the Advertising Fund shall not be terminated until
all monies in the Advertising Fund have been expended for advertising and
promotional purposes, or returned to franchisees, as Franchisor deems fair and
reasonable in its sole discretion.
E. An accounting of the operation of the Advertising Fund
shall be prepared annually and shall be made available to Franchisee upon
request.
F. Once contributions to the Advertising Fund are made by
Franchisee, all such contributions shall be used as herein required and shall
not be returned to Franchisee, except pursuant to Subparagraph 10.02.D hereof.
10.03. Franchisee shall be required to maintain State Logo Signs (with
one State Logo Sign located in each direction on the primary interstate
approaching the Franchised Premises). Franchisor shall share equally with
Franchisee the cost of maintaining such State Logo Signs; provided, however,
that in no event shall Franchisor be required to spend more than Fourteen
Thousand Dollars ($14,000.00) per year pursuant hereto. If the state in which
the Franchised Premises is located allows State Logo Signs, and Franchisee
maintains State Logo Signs in accordance herewith, Franchisee may, but is not
required to, maintain (at its sole expense) billboards advertising the
Franchised Business, in a form and layout approved by Franchisor. If the state
in which the Franchised Premises is located does not allow State Logo Signs,
Franchisee shall be required to maintain at least two (2) billboards (with one
billboard located in each direction on the primary interstate approaching the
Franchised Premises) advertising the Franchised Business, in a form and layout
approved by Franchisor. Franchisor shall share equally with Franchisee the cost
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of maintaining billboards which are required hereunder; provided, however, that
in no event shall Franchisor be required to spend more than $14,000 per year
pursuant hereto. The locations for any billboards hereunder must be sites
approved in writing by Franchisor.
10.04. Franchisee shall spend a minimum of Five Thousand Dollars
($5,000.00) for newspaper, direct mail or advertising through other media during
Franchisee's initial thirty (30) days of operation of the Franchised Business in
accordance with Franchisor's policy for "Business Opening" advertising.
10.05. Franchisee shall participate in all Promotional Programs
conducted by Franchisor, except as excluded by law. Franchisor shall notify
Franchisee of the creation of all such Promotional Programs and shall advise
Franchisee with respect to all of the elements thereof. Franchisee shall adhere
to all elements of such Promotional Programs; provided, that no such Promotional
Program shall dictate or control the price charged by Franchisee for any item.
Franchisor may, however, suggest prices to be charged in any Promotional
Program. Franchisor may establish Promotional Programs, in its sole, subjective
discretion, and need not consult or confer with Franchisee or any other
franchisee of Franchisor, except to the extent provided in Subparagraph 10.02
above, with respect to the nature, content or amount of any Promotional
Programs.
XI. FRANCHISOR'S OPERATIONS ASSISTANCE.
11.01. Franchisor may, from time to time, advise or offer guidance to
Franchisee relative to prices for the products and services offered for sale by
its Franchised Business that in Franchisor's judgment constitute good business
practice. Such guidance will be based on the experience of Franchisor and its
franchisees in operating Franchised Businesses and an analysis of the costs of
such products and prices charged for competitive products. Franchisee shall not
be obligated to accept any such advice or guidance and shall have the sole right
to determine the prices to be charged from time to time by its Franchised
Business, and no such advice or guidance shall be deemed or construed to impose
upon Franchisee any obligation to charge any fixed, minimum or maximum prices
for any product offered for sale by the Franchised Business.
11.02. During the term of this Agreement Franchisor shall:
A. Provide to Franchisee the Approved Supplies List and
Approved Suppliers List;
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B. Provide site engineering assistance;
C. Provide centralized purchasing assistance for products and
services outside of the Buying Program;
D. Administer the Buying Program, as further described in
Paragraph XIII. herein;
E. Provide ongoing training programs for Franchisee;
F. Coordinate system-wide advertising and administer the
Advertising Fund; and
G. Regulate quality standards and products throughout the
Network.
11.03. Franchisor may, from time to time, provide operations assistance
which may consist of advice and guidance with respect to the following:
A. Proper procedures to be used by the Franchised Business
with respect to the sale of the Branded Motor Fuel, Branded Products and other
products and services as approved by Franchisor;
B. Additional products and services authorized for sale from
Franchised Businesses;
C. Ongoing research and development of products, services,
systems, procedures and techniques which may enhance the Network;
D. Central product purchasing services;
E. The institution of proper administrative, bookkeeping,
accounting, inventory control, supervisory and general operating procedures for
the effective operation of a Franchised Business;
F. Seminars and programs designed to increase knowledge of the
industry and/or foster and promote franchisee relations;
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G. Advertising and promotional programs; and
H. Required software and hardware packages for conducting
inventory control, point-of-sale and/or other functions.
11.04. Franchisor, or its representative, shall make periodic visits to
the Franchised Business for the purposes of consultation, assistance, and
guidance to Franchisee in all aspects of the operation and management of the
Franchised Business.
XII. FRANCHISEE'S OBLIGATIONS.
12.01. Franchisee shall comply with all requirements set forth in this
Agreement, the Confidential Operations Manual and other written policies
supplied to Franchisee by Franchisor. All references herein to this Agreement
shall include all such mandatory specifications, standards and operating
procedures and rules. Franchisee shall comply with the entire set of
specifications and standards for the Network including, but not limited to, the
provisions of this Section XII.
12.02. Franchisee shall promptly remove all inventory, fixtures,
furniture, furnishings, marketing materials, supplies and equipment which do not
conform with System, are not approved by Franchisor in writing, or which do not
meet the standards or specifications prescribed in the Confidential Operations
Manual (as amended from time to time). Franchisee shall refurbish and convert
the operation of the Franchised Premises in accordance with a Conversion
Obligation Schedule to be delivered by Franchisor in connection herewith, or as
otherwise agreed in writing.
12.03. Franchisee agrees to maintain the condition and appearance of
the Franchised Premises consistent with Franchisor's standards for the image of
a "TA" branded facility as an attractive, pleasant and comfortable facility
conducive to buying by its customers. Among other things, Franchisee agrees to
maintain the Franchised Premises in accordance with Exhibit C to the Lease
Agreement.
12.04. Franchisee shall follow such procedures or take such action as
Franchisor may from time to time require to maintain the appearance and
efficient operation of the Franchised Business and to meet or exceed
Franchisor's annually published minimal acceptable TA Quality Inspection. If at
any time in Franchisor's judgment the general state of repair or appearance of
the Franchised Premises or its equipment, fixtures, signs or decor does not meet
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Franchisor's standards, Franchisor shall so notify Franchisee, specifying the
action to be taken by Franchisee to correct such deficiency. If Franchisee fails
to cure such deficiency within the period of time specified in said notice and
thereafter fails to implement a bona fide program to complete any required
maintenance, Franchisor shall have the right, in addition to all other remedies,
to enter upon the Franchised Premises and effect such maintenance or repairs on
behalf of Franchisee, and Franchisee shall pay to Franchisor the entire cost
thereof upon demand. If Franchisee disputes the amounts owed Franchisor for such
maintenance or repairs, Franchisor shall be entitled to reimbursement of its
costs including, but not limited to, reasonable legal fees plus accrued
interest. Failure to correct such deficiency is a material default of this
Agreement and grounds for termination of this Agreement subject to the
provisions of Paragraph XIX. herein.
12.05. Franchisee shall not make or permit anyone to make any modifications
in or to the Franchised Premises of a permanent nature, including but not
limited to, permanent improvements, alterations, decorations, or additions,
structural or otherwise, in or to the Franchised Premises without first
obtaining the written consent of Franchisor. All improvements, alterations,
decorations, or additions made by Franchisee shall be completed in a good and
workmanlike manner in accordance with all applicable laws and requirements, and
Franchisee shall defend, indemnify, and hold Franchisor harmless from and
against any and all costs, expenses, claims, liens, and damages to person or
property resulting from the making of any such improvements, alterations,
decorations, or additions in or to the Franchised Premises.
Franchisee shall not do or suffer anything to be done whereby the
Franchised Premises may be encumbered by a mechanic's lien or liens. If,
however, any mechanic's lien is filed against the Franchised Premises,
Franchisee shall discharge the same of record within ten (10) days after the
date of filing. If Lessee fails to discharge any such lien as provided herein,
such failure shall be a default of this Agreement.
Franchisor shall not be liable for any labor or materials to be furnished
to Franchisee upon credit, and no mechanic's or other lien for any such labor or
materials shall attach to or affect the reversionary or other estate or interest
of Franchisor in and to the Franchised Premises.
12.06. Franchisee understands and acknowledges that uniformity of
standards, products and services is essential to the Network. To that end,
Franchisor reserves the right to reject any category of product or services
offered for sale at the Franchised Business. Should Franchisee elect to offer
and sell additional product or service categories to customers of the Franchised
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Business, Franchisor shall not unreasonably withhold its approval of any such
category of product or service.
A. Franchisee shall immediately cease offering for sale or
selling any product or service if Franchisor, in its sole discretion, deems such
product or service to be detrimental to the Marks or the image of the Network.
B. Franchisee is prohibited from displaying, offering and
selling any alcoholic beverages, packaged or otherwise, and any sexual or
pornographic materials (as determined by Franchisor in its sole discretion),
including, without limitation, books, magazines, videotapes, cassettes,
calendars, novelty and related items. Franchisor reserves the right, in its sole
discretion, to expand the categories of products and services which Franchisee
is prohibited from offering or selling from the Franchised Business.
C. Franchisee shall not offer fast food for sale at the
Franchised Premises and shall not permit any form of gambling or gaming at the
Franchised Premises without the prior written consent of Franchisor.
12.07. FRANCHISEE FURTHER AGREES TO COMPLY FULLY WITH ALL PROGRAMS
WHICH ARE PRESCRIBED FROM TIME TO TIME BY FRANCHISOR IN THE CONFIDENTIAL
OPERATIONS MANUAL (OR OTHER OPERATIONS MANUAL), OR ARE OTHERWISE COMMUNICATED BY
FRANCHISOR IN WRITING AND DESIGNATED BY FRANCHISOR AS CONSTITUTING A CORE
PROGRAM ("CORE PROGRAM"), INCLUDING BUT NOT LIMITED TO THE FOLLOWING: 1. Mystery
shop program; 2. Lowest price guarantee; 3. Frequent fueler or any other named
redemption program; 4. Nationwide guaranty - refund, exchange, replacement; 5.
Nationwide programs for national non-fuel accounts; 6. Check cashing program; 7.
Showers program; 8. ProntoPay; 9. Mandatory diesel fuel purchase; 10. Fleet
marketing programs; 11. Tire programs; 12. Preventative maintenance programs;
13. Lubricant programs; 14. Restaurant programs; 15. Fast food programs; and 16.
Billing programs. Franchisee shall also participate in the Franchise Advisory
Council and Franchisee training programs, as described in the Confidential
Operations Manual. FAILURE TO COMPLY WITH ANY CORE PROGRAM SHALL BE A MATERIAL
DEFAULT OF THIS AGREEMENT AND GROUNDS FOR TERMINATION OF THE AGREEMENT SUBJECT
TO THE PROVISIONS OF PARAGRAPH XIX HEREOF.
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12.08. All inventory, products and materials, and other items and
supplies used in the operation of the Franchised Business which are not
purchased in accordance with Franchisor's Approved Supplies List and Approved
Suppliers List shall conform to the specifications and quality standards
established by Franchisor from time to time. Franchisee recognizes and
acknowledges that Franchisor may receive fees, commissions and other
considerations of value from Persons on the Approved Suppliers List, that
Franchisee has no objection or right thereto, and that Franchisee shall receive
only such part thereof, if any, as Franchisor may in its sole discretion
allocate.
12.09. Franchisee shall carry an adequate supply and maintain a
representative inventory of Branded Products and other items and merchandise
packaged under the Marks as required by the Confidential Operations Manual in
such quantities sufficient to meet public demand. Franchisor may, in the future,
develop additional products bearing the Marks, and Franchisor may introduce such
products into the Network at Franchisor's discretion.
12.10. In order to maintain the common identity of the Network, Branded
Products shall be prominently displayed among the goods displayed for resale at
the Franchised Premises and Franchisee shall maintain at such premises a stock
of Branded Products sufficient to satisfy fully the demand of Franchisee's
customers for such products.
12.11. Franchisee, at its expense, shall secure and maintain in force
all required licenses, permits and certificates relating to the operation of the
Franchised Business and the property on which the Franchised Premises are
located and shall operate the Franchised Business and maintain the property on
which the Franchised Premises are located, in full compliance with all
applicable federal, state and local laws, ordinances and regulations, including,
without limitation, all such laws, ordinances and regulations relating to the
dispensing of food products, occupational hazards and health, general liability
and pollution liability insurance requirements, consumer protection,
environmental protection, underground storage facilities and dispensing of fuel,
trade regulation, workers' compensation, unemployment insurance and withholding
and payment of federal and state income taxes and social security taxes, and
sales, use and property taxes, as further described in Paragraph 23.06 herein
and in the Lease Agreement. Further, throughout the term of this Agreement,
Franchisee shall cause the Franchised Business to be in full and strict
compliance with the Americans with Disabilities Act, as amended, except as
otherwise provided in the Lease Agreement. Franchisee is responsible for daily
monitoring of the underground storage facilities and dispensing of fuel and for
reporting to and notifying Franchisor of any spills, leakage, losses and/or
other difficulties relating to such underground storage facilities.
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12.12. Franchisee shall refrain from any merchandising, advertising or
promotional practice which is unethical or may be injurious to the business of
Franchisor, the Network and/or other Franchised Businesses or to the goodwill
associated with the Marks, as determined by Franchisor in its sole discretion.
12.13. Franchisor may, from time to time, develop and market special
promotional items which will be made available to Franchisee at Franchisor's
cost plus a reasonable markup, and Franchisee shall maintain a representative
inventory of such promotional items to meet public demand. Franchisee shall have
the right to purchase alternative promotional items; provided, that such
alternative goods conform to the specifications and quality standards
established by Franchisor from time to time.
12.14. Franchisee shall operate the Franchised Business in a clean,
safe and healthful manner that will assure that customers receive quality
merchandise and courteous and efficient service, which shall include the
following minimum obligations:
A. Sell merchandise and provide service with care, courtesy,
and regard for customer satisfaction.
B. Take prompt action to respond to or correct all complaints
received by Franchisor concerning Franchisee's operation of, or condition of,
the Franchised Business or conduct of any employee of Franchisee. A written
reply must be made to Franchisor within fourteen (14) days outlining
Franchisee's actions or plans to resolve any such complaints.
C. The Franchised Business and Franchised Premises shall at
all times be under the direct supervision of Franchisee (or a trained and
competent employee approved by Franchisor acting as full-time general manager or
assistant general manager). Franchisee shall notify Franchisor in writing,
within seven (7) days, of the identity of any employees who become managers or
assistant managers of the Franchised Business or Franchised Premises.
D. Operate the Franchised Business so as not to pose a threat
or danger to public health or safety or the environment.
E. Provide reasonable security at the parking lot of the
Franchised Business for vehicles and drivers, and exert reasonable effort to
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maintain an absence of outside elements that negatively affect the image of the
Franchised Business as well as the Branded Motor Fuel and Branded Products.
Specifically, "outside elements" refers to prostitutes, gamblers, drug dealers,
and stolen goods dealers, but is not limited to same ("Outside Elements").
F. Provide, or have made outside arrangements for providing
emergency service for passenger cars including tire service, road towing, belt
replacement, and lens replacement, but not to be limited to same.
G. Keep the Franchised Business open for business twenty-four
(24) hours each day including, but not limited to, the diesel and gasoline
islands, garage, store and restaurant. Franchisee's closing the Franchised
Business or any part thereof shall constitute abandonment by Franchisee and
shall be a material breach of this Agreement.
H. Not engage in dishonest, fraudulent or scare selling
practices.
I. Perform all services in a good workmanlike manner.
J. Provide a sufficient number of trained, courteous, and neat
personnel who can communicate with customers by understanding and speaking
English to operate the Franchised Business in an efficient and organized manner.
K. Store and dispense Motor Fuel only from tanks, pumps, or
containers identified with only Franchisor-designated suppliers' trademarks or
trade names.
L. Comply with the requirements of any conditional use permit
or other approval covering the construction, maintenance, and/or operation of
the Franchised Business. If the Franchised Business is subject to a permit, a
copy shall be delivered to Franchisee and Franchisee shall acknowledge receipt
of the copy on a form provided by Franchisor.
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12.15. Franchisee shall have on staff at all times during regular
business hours a qualified mechanic experienced in truck service to provide
prompt, courteous and workmanlike service, and to otherwise fulfill Franchisee's
responsibilities under this Agreement. Such mechanic shall meet the requirements
set forth in the Confidential Operations Manual.
12.16. Franchisor shall provide Franchisee with specifications for
dispensing, storage and display equipment, cash registers, other equipment, fuel
facilities and equipment, fixtures, furniture, exterior and interior signs and
decorating required for the Franchised Premises. Specifications may include
minimum standards for performance, warranties, design and appearance and local
zoning, sign and other restrictions. Franchisee may purchase or lease original
and replacement equipment, fixtures, furniture, signs and decorating materials
and services meeting such specifications from any source. If Franchisee proposes
to purchase or lease any item of equipment or furniture or any fixture, sign or
decorating materials not theretofore approved by Franchisor as meeting its
specifications, Franchisee shall first notify Franchisor and Franchisor may
require, at Franchisee's expense, submission of sufficient specifications,
photographs, drawings or other information and samples to determine whether such
item of equipment or furniture or such fixture, sign or decorating materials
meets its specifications. Franchisor shall advise Franchisee within a reasonable
time whether such item of equipment or furniture or such fixture, sign or
decorating materials meets its specifications.
12.17. Franchisee shall notify Franchisor in writing within five (5)
days of the commencement of any action, suit, or proceeding, and of the issuance
of any order, writ, injunction, award, or decree of any court, agency, or other
governmental instrumentality, which may adversely affect the operation or
financial condition of the Franchised Business.
12.18. Franchisee must use a software, hardware, or point-of-sale and
reporting system in the operation of the Franchised Business and, if necessary,
change or convert to only such systems (hardware or software) that Franchisor,
in its sole discretion, determines are compatible with Franchisor's computer
systems and that permit Franchisor full remote access to any and all information
stored therein. Franchisee shall utilize only such systems approved by
Franchisor.
12.19. At any full service truckstop facility, Franchisee shall
maintain a minimum of fifty (50) paved truck parking spaces.
12.20. Franchisor shall provide initial and on-going training to
Franchisee throughout the term of this Agreement as described in the
Confidential Operations Manual.
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XIII. BUYING PROGRAM.
13.01. Franchisor shall offer Franchisee the right to participate in
the Buying Program, including the right to purchase products from its
distribution center(s), as long as Franchisor has a distribution center, upon
terms and conditions identified in the Confidential Operations Manual, as
modified from time to time. Nothing contained herein shall require Franchisor to
have a distribution center in operation.
13.02. Materials, supplies and products used in the operation of the
Franchised Business or otherwise held for resale (including but not limited to
menu items, beverages, ingredients and other food and beverage products and
materials, containers, packaging materials, other paper and plastic products,
plates, cups, utensils, menus, uniforms, forms, cleaning and sanitation
materials) shall conform to the specifications and quality standards established
by Franchisor from time to time and shall be procured from Franchisor or
suppliers approved by Franchisor. If Franchisee proposes to offer for sale at
the Franchised Premises any brand of product, or to use in the operation of the
Franchised Business, any brand of food ingredient or other material or supply
which is not then approved by Franchisor as meeting its minimum specifications
and quality standards, or to purchase any product, material or supply from a
supplier that is not then designated by Franchisor as an approved supplier, then
Franchisee shall first notify Franchisor in writing and shall submit samples and
such other information as Franchisor requests for examination or testing or to
otherwise determine whether such product, material or supply, or such proposed
supplier, meets Franchisor's specifications and quality standards or should
otherwise be approved. If Franchisor fails to disapprove the product, material,
supply or supplier, or request more samples or more information, within fourteen
(14) days of Franchisee's initial submission to Franchisor, then Franchisee is
free to commence the procurement. A charge not to exceed the reasonable cost of
the inspection and evaluation and the actual cost of the test shall be paid by
Franchisee promptly upon Franchisor's request. Franchisor reserves the right to
re-inspect the facilities and products of any supplier and to revoke approval of
any item or any supplier which fails to continue to meet any of Franchisor's
criteria.
13.03. Notwithstanding anything to the contrary herein, Franchisee
agrees to maintain a representative inventory of all products covered in the
Buying Program.
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13.04. All products and services not included in the Buying Program or
listed on the Approved Supplies List, or purchased from suppliers not on the
Approved Suppliers List, shall meet specifications and quality standards
prescribed by Franchisor.
XIV. ACCOUNTING AND RECORDS.
14.01. Franchisee shall maintain, preserve and submit to Franchisor, as
the case may be, any and all records in the manner and for such time as may be
required by the Internal Revenue Service of the United States or the
Confidential Operations Manual.
14.02. Franchisee shall maintain a daily Motor Fuel meter reading and
shall provide such daily meter reading to Franchisor on a monthly report or as
otherwise prescribed in the Confidential Operations Manual.
14.03. Franchisee shall, at its expense, submit to Franchisor, within
ninety (90) days of the end of each fiscal year during the term of this
Agreement, annual financial statements, prepared by an independent certified
public accountant in accordance with generally accepted accounting principles.
14.04. Franchisee shall provide Franchisor on or before the tenth
(1Oth) day of each month a sales report specifying all Non-Fuel Revenue derived
from and actual fuel gallonage purchased through and sold at the Franchised
Business in a form approved by Franchisor, as described in the Confidential
Operations Manual. In order to assist Franchisor in monitoring the Network,
Franchisee shall submit to Franchisor such other information requested by
Franchisor from time to time in the format prescribed by Franchisor in the
Confidential Operations Manual or as Franchisor shall otherwise reasonably
require in writing, including, but not limited to, state and federal fuel tax
records by location and daily Motor Fuel meter readings by location.
14.05. Franchisor or its designated agents shall have the right at all
reasonable times, at the Franchised Premises, to audit, inspect, examine and
copy, at its expense, the books, records, and tax returns of Franchisee.
Franchisor shall also have the right, at any time, to have an independent audit
made of the books and records of Franchisee at Franchisor's expense. If an
inspection or audit should reveal that any payments due to Franchisor have been
understated in any report to Franchisor, then Franchisee shall immediately pay
to Franchisor the amount understated upon demand, in addition to interest from
the date such amount was due until paid, at the rate of eighteen percent (18%)
per annum or the maximum rate permitted by law, whichever is lower. If an
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inspection or audit discloses an understatement in any report of two percent
(2%) or more, Franchisee shall, in addition, reimburse Franchisor for any and
all costs and expenses connected with the inspection or audit (including,
without limitation, reasonable accounting and attorneys' fees). The foregoing
remedies shall be in addition to any other remedies Franchisor may have,
including, but not limited to, termination or nonrenewal pursuant to Paragraph
XIX.
14.06. Franchisee acknowledges that nothing contained herein
constitutes Franchisor's agreement to accept any payments after same are due or
a commitment by Franchisor to extend credit to or otherwise finance Franchisee's
operation of the Franchised Business. Further, Franchisee acknowledges that its
failure to pay all amounts when due shall constitute a materially significant
default and grounds for termination of this Agreement.
XV. ACCESS.
15.01. In order to preserve the goodwill, validity and integrity of the
Marks and the Network, and to ensure that Franchisee is properly employing both
the Marks and the Network in the operation of the Network, Franchisor or its
agents shall have the right of entry and inspection of Franchisee's premises and
operating procedures at all reasonable times. Franchisor or its agents shall
have the right at any time to observe the manner in which Franchisee is
rendering its services and conducting its operations, to confer with
Franchisee's employees and customers, and to select motor fuel and other
petroleum products, ingredients, food and non-food products, beverages and other
items, products, equipment, merchandise, sundries, materials and supplies for
test of content and evaluation purposes to make certain that they are
satisfactory and meet the standards and specifications set by Franchisor. In the
event any products do not conform to Franchisor's standards and specifications,
Franchisee shall upon learning of the non-conformance immediately cease offering
and selling such products.
XVI. FUEL SUPPLY.
16.01. Franchisor agrees to sell to Franchisee one hundred percent
(100%) of Franchisee's requirements of diesel fuel for resale to the motoring
public, and Franchisee agrees to buy from Franchisor one hundred percent (100%)
of Franchisee's requirements of such diesel fuel. Notwithstanding anything to
the contrary herein, Franchisor shall not be in breach of its obligations
hereunder and shall have no liability to Franchisee if it is unable to sell or
provide 100% of Franchisee's diesel fuel requirements as a result of any event
or circumstance caused by Force Majeure.
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16.02. Franchisee agrees that it shall only purchase gasoline from
suppliers which have been approved by Franchisor in writing. Notwithstanding
anything to the contrary herein, Franchisee shall not Commingle any Motor Fuel
sold to Franchisee by Franchisor (or by gasoline suppliers approved in writing
by Franchisor) pursuant hereto with any fuel from any other suppliers or any
other source. Any violation of the preceding sentence shall be grounds for
termination of this Agreement.
16.03. The method and manner of purchase and payment for diesel fuel,
including but not limited to designation of the terminals for pick-up of such
diesel fuel (the "Designated Terminals") and determination of the purchase
price, taxes and freight shall be subject to and governed by the terms and
provisions set forth in the Confidential Operations Manual, or as otherwise
specified by Franchisor in writing, as the same may be amended from time to
time. Franchisor's records with respect to any particular transaction shall be
conclusive and binding for all purposes of this Agreement. If any governmental
authority now has, or later places, a tax, excise, inspection fee or charge
(each, a "Tax") on Franchisor because of the manufacture, storage, withdrawal
from storage, transportation, distribution, sale or handling of any diesel fuel
sold by Franchisor to Franchisee, such Taxes shall be added to the purchase
price and be the sole responsibility of and paid by Franchisee. At such time, if
ever, that both Franchisor and Franchisee shall be exempt from any Tax with
respect to the transfer or sale of diesel fuel, Franchisor shall sell such
diesel fuel to Franchisee without adding such Tax to the purchase price.
16.04. Title to, and risk of loss of, diesel fuel purchased by
Franchisee from Franchisor and delivered to the Franchised Premises shall pass
to Franchisee at the time such diesel fuel enters into the transportation
equipment provided by Franchisee or for Franchisee's account. Franchisee waives
any claim against Franchisor as to quantity or quality of diesel fuel available
to Franchisee unless Franchisee notifies Franchisor in writing within ten (10)
days after receipt thereof.
16.05. If at any time the volume of Motor Fuel that Franchisor has
available for sale to its Franchised Businesses is, for any reason, less than
the volume needed to supply its Franchised Businesses' demands, Franchisor shall
allocate the volume of available Motor Fuel to its Franchised Businesses under a
plan and formula that Franchisor determines is fair and reasonable.
XVII. CREDIT.
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In connection with evaluating Franchisee's financial status for credit
purposes, Franchisor's Credit Department may at any time, and from time to time,
request that Franchisee provide it with certain financial statements.
Franchisee's failure to respond to any such request may result in Franchisor's
denial of credit to Franchisee. If Franchisee fails to fulfill the terms of
payment or if Franchisee's financial responsibility shall deteriorate in
Franchisor's sole judgment, Franchisor may, without prejudice to any other
lawful remedy, withhold Motor Fuel until payment is made, demand cash payment,
demand advance payment or terminate or not renew this Agreement pursuant to
Paragraph XIX. Franchisor may apply any payment made by or on behalf of
Franchisee to any indebtedness owed Franchisor by Franchisee, notwithstanding
any direction to the contrary. No payment made to Franchisor by check or other
instrument shall contain a restrictive endorsement of any kind. A restrictive
endorsement shall have no legal effect, even if the instrument restrictively
endorsed is processed for payment and Franchisor retains the proceeds.
XVIII. INSURANCE.
18.01. Franchisee shall procure at its expense, and maintain in full
force and effect during the term of this Agreement, an insurance policy or
policies protecting Franchisee and Franchisor and the officers, directors,
partners and employees of each Franchisor entity, against any loss, liability,
personal injury, death, or property damage or expense whatsoever arising or
occurring upon or in connection with the Franchised Business, as Franchisor may
require under or pursuant to the Confidential Operations Manual, or otherwise in
writing, for its own and Franchisee's protection. Franchisor shall be named an
additional insured in such policy or policies.
18.02. Such policy or policies shall be written by a licensed insurance
company satisfactory to Franchisor in accordance with standards and
specifications set forth in the Confidential Operations Manual or otherwise in
writing, as either may be modified from time to time by Franchisor, following
written notice to Franchisee.
18.03. Franchisor reserves the right to review and amend the amounts
and types of the required insurance coverage annually.
18.04. The insurance afforded by the policy or policies respecting
liability shall not be limited in any way by reason of any insurance which may
be maintained by Franchisor. Within thirty (30) days after execution of this
Agreement, a Certificate of Insurance showing compliance with the foregoing
requirements shall be furnished by Franchisee to Franchisor for approval. Such
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certificate shall state that said policy or policies will not be canceled or
altered without at least ninety (90) days prior written notice to Franchisor and
shall reflect proof of payment of premiums. Maintenance of such insurance and
the performance by Franchisee of the obligations under this Paragraph shall not
relieve Franchisee of liability under the indemnity provision set forth in this
Agreement.
18.05. Should Franchisee, for any reason, not procure and maintain
insurance coverage as required by this Agreement, Franchisor shall have the
right and authority (without, however, any obligation to do so) immediately to
procure such insurance coverage and to charge same to Franchisee, which charges,
together with a reasonable fee for expenses incurred by Franchisor in connection
with such procurement, shall be payable by Franchisee immediately upon notice.
18.06. Although Franchisee is not required to maintain any business
interruption insurance, in the event a payment under or pursuant to any type of
business interruption insurance is made to Franchisee or any Affiliate thereof
in connection with a business interruption at the Franchised Premises, then
Franchisee will immediately thereafter pay to Franchisor a sum equal to the
average daily Continuing Services and Royalty Fees for the year preceding the
interruption multiplied by the number of days of the business interruption.
Franchisor shall be included in any such insurance policy as a loss payee as its
interest may appear.
XIX. DEFAULT AND TERMINATION.
19.01. Termination and Nonrenewal by Franchisor.
A. Franchisor may terminate or not renew this Agreement by
written notice to Franchisee, upon the occurrence of any of the following:
1. Franchisee's failure to comply with any provision
of this Agreement, the Lease Agreement, and any other agreement between the
parties, which provision is reasonable and of material significance to the
Franchise Relationship between Franchisor and Franchisee. Franchisor is not
required to give Franchisee an opportunity to remedy any such failure prior to
terminating or not renewing this Agreement; or
2. Franchisee's failure to exert good faith efforts
to carry out the terms and conditions of this Agreement or the Lease Agreement,
or any other agreement between the parties. Prior to terminating or not renewing
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this Agreement under the provisions of this Subparagraph 2., Franchisor shall
advise Franchisee in writing of such failure and give Franchisee a reasonable
opportunity to remedy it; or
3. The happening of any one (1) or more events which
is relevant to the Franchise Relationship including, but not limited to, the
following: (Franchisor is not required to give Franchisee an opportunity to
remedy any such happening prior to terminating or not renewing this Agreement).
a. Franchisee's fraud or criminal misconduct
in the operation of the Franchised Business.
b. Declaration of bankruptcy or judicial
determination of insolvency of Franchisee.
c. If Franchisee is an individual, the death
or continuing severe physical or mental disability of Franchisee of at least
three (3) months' duration which renders Franchisee unable to provide for the
continued proper operation of the Franchised Business.
d. If Franchisee is occupying the Franchised
Premises under a lease from a Franchisor entity, the loss of Franchisor's right
to grant possession under such lease through expiration of any underlying lease,
if Franchisee was notified in writing, prior to the commencement of the term of
this Agreement, of the duration of the underlying lease and of the fact that
such underlying lease might expire and not be renewed during the term of this
Agreement or at the end of this Agreement.
e. The condemnation or other taking, in
whole or in part, of the Franchised Premises under the power of eminent domain.
The condemnation award paid to Franchisor, or the payment received by Franchisor
in exchange for its voluntary conveyance in lieu of condemnation, shall belong
solely to Franchisor, and Franchisee shall not, by virtue of this Agreement, be
entitled to any part thereof; provided, however. that nothing in this Agreement
shall preclude Franchisee from prosecuting any claim directly against the
condemning authority for loss of business, or depreciation to, damage to, or
cost of, removal of, or for the value of stock, inventory and other personal
property of Franchisee; and further provided, however, that no such claim shall
diminish or otherwise adversely affect Franchisor's award or proceeds.
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f. Franchisor's loss of the right to grant
Franchisee the use of any Mark, unless the loss is due to Franchisor's trademark
abuse, violation of federal or state law, or other fault or negligence of
Franchisor related to bad faith action by Franchisor.
g. The destruction, other than by
Franchisor, of all or substantially all of the Franchised Premises. If
Franchisee is occupying the Franchised Premises under a lease from Franchisor
and Franchisor rebuilds or replaces the Franchised Premises and elects to offer
the operation of the rebuilt or replaced Franchised Premises in accordance with
the terms of the Lease Agreement, Franchisee shall have the preferential right
to again be the operator of the Franchised Premises.
h. Franchisee's failure to pay Franchisor in
a timely manner when due, all sums to which Franchisor is legally entitled.
i. Franchisee's failure to operate the
Franchised Business for seven (7) consecutive days, or shorter period of time
which, under the facts and circumstances, is an unreasonable period of time.
j. Franchisee's willful adulteration,
mislabeling or misbranding of Motor Fuel sold at the Franchised Premises, or
other trademark, trade name, service mark, or other identifying symbol or name
violations.
k. Franchisee's knowing failure to comply
with federal, state or local laws or regulations that are relevant to the
operation of the Franchised Business.
l. Franchisee commingles any fuel.
m. Franchisee's conviction of any felony
involving moral turpitude; or
4. Franchisor's good faith determination, made in the
normal course of business, to withdraw from the marketing of Motor Fuel through
retail outlets in the state or county or parish in which the Franchised Business
is located.
B. In addition to the rights of termination or nonrenewal by
Franchisor, set forth above, Franchisor may decline to renew this Agreement:
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1. If Franchisor and Franchisee fail to agree to
changes or additions to this Agreement made by Franchisor in good faith and in
the normal course of business, and Franchisor does not insist on such changes or
additions being made for the purpose of preventing the renewal of this
Agreement.
2. If Franchisor receives numerous bona fide
complaints concerning Franchisee's operation of the Franchised Business and
Franchisor promptly notifies Franchisee of each complaint and the reason it was
communicated to Franchisor, and as to those complaints relating to the condition
of the Franchised Business or the conduct of any employee of Franchisee,
Franchisee does not take prompt action to cure or correct the basis for such
complaints. Franchisor will communicate these complaints to Franchisee in
writing using Franchisor's Customer Complaint Form ("Customer Complaint Form").
A written statement from Franchisee as to the outcome is required by Franchisor.
3. If Franchisee fails on at least three (3)
occasions during the term of this Agreement, to operate the Franchised Business
in a clean, safe and healthful condition and Franchisor notified Franchisee of
each such failure.
4. If Franchisor makes a good faith determination in
the normal course of business not to renew this Agreement because such renewal
would be uneconomical to Franchisor, despite any changes or additions to the
provisions of this Agreement that may be acceptable to Franchisee; provided,
however, that such nonrenewal is not made for the purpose of converting the
Franchised Business to operation by employees or agents of Franchisor for
Franchisor's own account.
C. If the Franchised Premises are leased by Franchisee from a
Franchisor entity, Franchisor may also decline to renew this Agreement if
Franchisor makes a good faith determination, in the normal course of business,
to:
1. Convert the Franchised Premises to a use other
than for the operation of an auto/truckstop; or
2. Materially alter, add to or replace the Franchised
Premises if such alteration, addition or replacement is not made for the purpose
of converting the Franchised Premises to operation by employees or agents of
Franchisor for Franchisor's own account; or
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3. Sell the Franchised Premises.
D. Franchisor agrees that in the event of a nonrenewal
pursuant to Subparagraph B.4 above, Franchisor will not sell the Franchised
Premises or Franchised Business for at least ninety (90) days following the
expiration of this Agreement, during which time Franchisee shall be free to
tender to Franchisor a purchase offer pertaining to the Franchised Premises;
provided, however, that nothing herein shall be deemed to (i) prevent or
restrict Franchisor from negotiating with third parties for the sale of the
Franchised Premises during such 90-day period, or (ii) grant to Franchisee any
rights of first refusal with respect to any such offer to purchase which
Franchisor may receive from any third party.
E. Franchisor's written notice of termination or nonrenewal
shall include a statement that this Agreement is being terminated or not renewed
and shall set forth the reason or reasons for termination or nonrenewal. Except
as otherwise provided in this Section 19.01, the effective date of the
termination or nonrenewal shall be at least thirty (30) days after the date of
notice of termination or nonrenewal.
F. Although at least thirty (30) days written notice of
termination or nonrenewal is provided for in most circumstances, there may be
times when the giving of a thirty (30) day notice is not reasonable. If such a
circumstance occurs, Franchisor may terminate or not renew this Agreement by
giving Franchisee written notice of termination or nonrenewal on the earliest
date that is reasonably practical.
G. Nothing in this Agreement shall prohibit or restrict
Franchisor from terminating or not renewing this Agreement in any lawful manner
or for any lawful reason under applicable federal, state and local laws or
regulations, as such laws or regulations may be amended from time to time.
19.02. Mutual Termination. Franchisee and Franchisor may agree in
writing to terminate or not renew this Agreement. The effective date of such
termination or nonrenewal shall be the date agreed to by Franchisee and
Franchisor but may not be a date that is more than one hundred eighty (180) days
after the date of such agreement. Franchisor shall send by certified mail, or
personally deliver to Franchisee, a copy of the agreement promptly after it is
executed by Franchisor and Franchisee. Franchisee may repudiate such agreement
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by written notice to Franchisor, sent by certified mail, postmarked not more
than seven (7) days following the date Franchisee receives a copy of such
agreement.
19.03. Termination by Franchisee. (a) If Franchisee is in substantial
compliance with this Agreement and Franchisor materially breaches this Agreement
and fails to cure such breach within a reasonable time after written notice
thereof is delivered to Franchisor, Franchisee may terminate this Agreement.
Such termination shall be effective thirty (30) days after delivery to
Franchisor of written notice that such breach has not been cured and Franchisee
elects to terminate this Agreement. A termination of this Agreement by
Franchisee for any reason other than breach of this Agreement by Franchisor and
Franchisor's failure to cure such breach within a reasonable time after receipt
of written notice thereof shall be deemed a termination by Franchisee without
cause.
(b) Franchisee may terminate this Agreement at any time by one
hundred eighty (180) days advance written notice to Franchisor, posted by
certified mail. Upon receipt of such notice by Franchisor, it may not be
withdrawn without Franchisor's written approval.
19.04. Termination of Lease Agreement. This Agreement shall
automatically terminate upon the occurrence of any default or termination of the
Lease Agreement.
XX. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION.
20.01. Upon termination or expiration, this Agreement and all rights
granted hereunder to Franchisee shall forthwith terminate, and:
A. Franchisee shall immediately cease to operate the
Franchised Business under this Agreement, and shall not thereafter, directly or
indirectly, represent to the public or hold itself out as a present or former
franchisee of Franchisor.
B. Franchisee and each Franchisee Party shall immediately and
permanently cease to use, by advertising or in any manner whatsoever, any
Confidential Information or any other methods, procedures, and techniques
associated with the Network or any Marks and distinctive forms, slogans, signs,
symbols, logos, or devices associated with the Network. In particular,
Franchisee shall cease to use, without limitation, all signs, advertising
materials, stationery, forms, and any other articles which display the Marks
associated with the Network.
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C. Franchisee shall take such action as may be necessary to
cancel or assign to Franchisor, at Franchisor's option, any assumed name rights
or equivalent registration filed with state, city, or county authorities which
contains Marks associated with the Network, and Franchisee shall furnish
Franchisor with evidence of compliance with this obligation satisfactory to
Franchisor within thirty (30) days after termination or expiration of this
Agreement.
D. In the event Franchisee or any Franchisee Party continues
to operate or subsequently begins to operate any other business, Franchisee or
such Franchisee Party shall not use any reproduction, counterfeit, copy or
colorable imitation of the Marks either in connection with such other business
or the promotion thereof, which is likely to cause confusion, mistake or
deception, or which is likely to dilute Franchisor's rights in and to the Marks
and further, Franchisee shall not utilize any designation of origin or
description or representation which falsely suggests or represents an
association or connection with Franchisor so as to constitute unfair competition
or a deceptive trade practice.
E. Franchisee shall promptly pay all sums owing to Franchisor.
In the event of termination for any default of Franchisee, such sums shall
include all damages, costs, and expenses, including reasonable attorneys' fees,
incurred by Franchisor as a result of the default.
F. Franchisee shall pay to Franchisor all damages, costs and
expenses, including reasonable attorneys' fees, incurred by Franchisor
subsequent to the termination or expiration of the franchise herein granted in
obtaining injunctive or other relief for the enforcement of any provisions of
this Agreement.
G. Franchisee shall immediately turn over to Franchisor all
manuals and copies thereof, including the Confidential Operations Manual,
records, customer lists, files, instructions, brochures, agreements, disclosure
statements, and any and all other Confidential Information or other materials
provided by Franchisor to Franchisee relating to the operation of the Franchised
Business (all of which are acknowledged to be Franchisor's property), including
but not limited to any such Confidential Information or materials which have
been or are stored or maintained electronically.
H. Franchisor shall acquire all right, title and interest to
any sign or sign faces bearing the Marks. Franchisee hereby acknowledges
Franchisor's right to access the Franchised Premises should Franchisor elect to
take possession of any signs or sign faces bearing the Marks. If this Agreement
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has been terminated for cause as provided in Paragraph XIX. herein, such sign
removal shall be at Franchisee's cost. In the event of nonrenewal of this
Agreement, Franchisor shall not charge Franchisee for the cost of sign removal.
I. Franchisor shall have the right (but not the duty), to be exercised
by notice of intent to do so within thirty (30) days after termination or
expiration, to purchase for cash any or all signs (except those signs owned by
Franchisor), Advertising Materials, and all items bearing Franchisor's Marks, at
Franchisee's cost or fair market value, whichever is less. If the parties cannot
agree on fair market value within a reasonable time, the determination shall be
made by arbitration in accordance with Paragraph XL. of this Agreement. If
Franchisor elects to exercise any option to purchase herein provided, it shall
have the right to set off all amounts due from Franchisee under this Agreement,
and the cost of the arbitration, if any, against any payment therefor.
20.02. All obligations of Franchisor and Franchisee which expressly or by
their nature survive the expiration or termination of this Agreement shall
continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied or by their nature
expire.
XXI. TRANSFERABILITY OF INTEREST.
21.01. This Agreement and all rights hereunder can be assigned and
transferred by Franchisor and, if so, shall be binding upon and inure to the
benefit of Franchisor's successors and assigns.
21.02. This Agreement and all rights hereunder may be assigned and
transferred by Franchisee and, if so, shall be binding upon and inure to the
benefit of Franchisee's successors and assigns, subject to the following
conditions and requirements, and Franchisor's right of first refusal as set
forth herein:
A. Neither Franchisee nor any Franchisee Party may sell,
assign (including, but not limited to, assignments by operation of law) or
transfer (collectively, "Assign") this Agreement without Franchisor's prior
written consent. Franchisor may condition such consent on, among other things,
transferee's completion of Franchisor's then-current training program to
Franchisor's satisfaction. Franchisor has an absolute and unqualified right to
withhold consent to such proposed Assignments. Any attempt by Franchisee to
Assign this Agreement without Franchisor's prior written consent shall be void
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and of no force and effect. The sale, transfer, transfer by operation of law, or
other disposition of Franchisee's interest, or any part thereof, in the
Franchised Business, or any Franchisee Party's or other Person's ownership or
other interest in Franchisee, if Franchisee is a corporation, partnership or
other business entity, shall be an assignment requiring Franchisor's prior
written consent. Franchisee's written request for Franchisor's approval of any
assignment must be received by Franchisor not less than ninety (90) days prior
to the effective date of such requested assignment.
B. Franchisor shall have the preferential right to meet the
bona fide offer of any proposed assignee; such right to be exercised by
Franchisor within sixty (60) days following the date Franchisor receives a copy
of Franchisee's written request for Franchisor's approval of any assignment.
Franchisee shall include in such written request the name and address of the
proposed assignee and the price, terms, and conditions contained in the bona
fide offer. Franchisor's failure to exercise this preferential right shall not
terminate this Agreement or the preferential right or release Franchisee from
any of its obligations under this Agreement.
C. In the event of sale, transfer, or assignment of this
Agreement by Franchisee during the term of this Agreement, or at the expiration
date of this Agreement, Franchisor will charge Franchisee a Transfer and
Training Fee of Twenty-Five Thousand Dollars ($25,000.00) ("Transfer and
Training Fee"). Notwithstanding the foregoing, if the transfer or assignment is
approved in writing by Franchisor pursuant to Subparagraph A above, and such
transfer or assignment is to (i) an immediate family member of Franchisee (if
Franchisee is an individual), or (ii) an immediate family member of a Franchisee
Party, or (iii) a principal operator of the Franchised Business, the Transfer
and Training Fee will not be charged.
21.03. During the term of this Agreement, neither Franchisee nor any
Franchisee Party shall encumber all or any part of its interest in or rights
under this Agreement (or the franchise granted hereby) without the prior written
consent of Franchisor.
XXII. DEATH OR INCAPACITY OF FRANCHISEE.
22.01. In order to prevent any interruption of the Franchised Business,
in the event of (a) the death or Incapacity of an individual Franchisee or any
Franchisee Party; or (b) Franchisee's inability to operate the Franchise (due to
absence, illness or death of one or more key personnel, or for any other
reason), or (c) Franchisee's failure to cure a default timely under this
Agreement, Franchisor may, at its option (and for such period(s) of time as it
determines in its sole discretion), enter upon the Franchised Premises and
exercise complete authority with respect to the operation of the business for
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such period of time as Franchisor determines is necessary or practical.
Franchisee specifically agrees that Franchisor may take over, control, and
operate the Franchised Business under such circumstances, and that Franchisee
shall pay to Franchisor a service fee of not less than Five Hundred Fifty
Dollars ($550.00) per day plus all travel and living expenses, room and board
and other expenses reasonably incurred by Franchisor in connection with such
services. All revenues and expenses (including Franchisor's service fee) from
the operation of the Franchised Business during such period of operation by
Franchisor shall be accounted for separately. Franchisee further agrees that if
Franchisor exercises such right of operation, Franchisee will indemnify and hold
harmless Franchisor and its agents, employees, and contractors who may act
hereunder against all claims or losses which may be asserted against Franchisor
in connection therewith, except to the extent the claims or losses are
attributable to the Gross Negligence or Willful Misconduct of Franchisor. During
any period of temporary management by Franchisor all personnel working at the
Franchised Premises, except those provided by Franchisor, shall be deemed
employees, agents or contractors of Franchisee. Franchisor's exercise of its
rights hereunder shall not constitute a waiver of any other rights or remedies
Franchisor may have under this Agreement.
22.02. Notwithstanding anything to the contrary herein, in the event of
the death or Incapacity of an individual Franchisee, or any Franchisee Party,
the heirs, beneficiaries, devisees, or legal representatives of such person may,
within one hundred eighty (180) days of such death or Incapacity, apply to TA,
in writing, for the right to continue to operate the Franchised Business for the
duration of the term of this Agreement. Such application shall be treated by
Franchisor as a request for an assignment, and shall be subject to the terms and
provisions of Section XXI above. If no such application is made within such one
hundred eighty (180) day period, this Agreement shall automatically terminate.
XXIII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION.
23.01. This Agreement does not create a fiduciary relationship between
the parties nor does it constitute Franchisee as an agent, legal representative,
joint venturer, partner, employee, or servant of Franchisor for any purpose
whatsoever; and it is understood between the parties hereto that Franchisee
shall be an independent contractor and is not authorized to make any contract,
agreement, warranty or representation on behalf of Franchisor, or to create any
obligation, express or implied, on behalf of Franchisor. Franchisee shall not,
without the prior written approval of Franchisor, have any power to obligate
Franchisor for any expenses, liabilities or other obligations, other than as is
specifically provided for in this Agreement. Franchisor shall not have the power
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to hire or fire Franchisee's employees and, except as herein expressly provided,
Franchisor may not control or have access to Franchisee's funds or the
expenditure thereof, or in any other way exercise dominion or control over
Franchisee's Franchised Business. It is expressly understood and agreed that
neither Franchisee nor any employee of Franchisee whose compensation for
services is paid by Franchisee may, in any way, directly or indirectly,
expressly or by implication, be construed to be an employee of Franchisor for
any purpose, most particularly with respect to any mandated or other insurance
coverage, tax or contributions, or requirements pertaining to
withholdings-levied or fixed by any city, state or federal governmental agency.
23.02. FRANCHISEE SHALL CONSPICUOUSLY IDENTIFY ITSELF AND ITS
FRANCHISED BUSINESS IN ALL DEALINGS WITH ITS CLIENTS, CONTRACTORS, SUPPLIERS,
PUBLIC OFFICIALS AND OTHERS, AS AN INDEPENDENT FRANCHISEE OF FRANCHISOR, AND
SHALL PLACE SUCH NOTICE OF INDEPENDENT OWNERSHIP IN SUCH FASHION AS FRANCHISOR
MAY, IN ITS SOLE AND EXCLUSIVE DISCRETION, SPECIFY AND REQUIRE FROM TIME TO
TIME, IN ITS CONFIDENTIAL OPERATIONS MANUAL OR OTHERWISE.
23.03. EXCEPT AS OTHERWISE EXPRESSLY AUTHORIZED BY THIS AGREEMENT,
NEITHER PARTY HERETO SHALL MAKE ANY EXPRESS OR IMPLIED AGREEMENTS, WARRANTIES,
GUARANTEES OR REPRESENTATIONS OR INCUR ANY DEBT IN THE NAME OF OR ON BEHALF OF
THE OTHER PARTY, OR REPRESENT THAT THE RELATIONSHIP BETWEEN FRANCHISOR AND
FRANCHISEE IS OTHER THAN THAT OF Franchisor AND FRANCHISEE. FRANCHISOR DOES NOT
ASSUME ANY LIABILITY, AND WILL NOT BE DEEMED LIABLE, FOR ANY AGREEMENTS,
REPRESENTATIONS, OR WARRANTIES MADE BY FRANCHISEE WHICH ARE NOT EXPRESSLY
AUTHORIZED UNDER THIS AGREEMENT, NOR WILL FRANCHISOR BE OBLIGATED FOR ANY
DAMAGES TO ANY PERSON OR PROPERTY WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR
RELATE TO THE OPERATION OF THE FRANCHISED BUSINESS.
23.04. Franchisee agrees to indemnify, defend, protect and hold
harmless Franchisor (and the directors, officers, employees, agents, Affiliates,
designees, representatives, stockholders, successors and assigns of each
Franchisor entity) (collectively, "Indemnified Parties") from and against all
losses, liens, liabilities, damages, deficiencies, demands, claims, actions,
judgments or causes of action, assessments, costs or expenses (including,
without limitation, interest, penalties and reasonable attorneys', consultants',
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and other experts' fees and disbursements) ("Losses") based upon, arising out of
or otherwise in respect of Franchisee's Franchised Business; provided, however,
Franchisee shall not be required to indemnify, defend and hold harmless the
Indemnified Parties from and against any Losses, arising out of the gross
negligence ("Gross Negligence") or willful misconduct ("Willful Misconduct") of
Franchisor and/or any other Indemnified Party. For the purpose of this Paragraph
23.04., the term "Gross Negligence" shall mean a conscious and voluntary act or
omission which is in reckless disregard of the rights or property of another and
the term "Willful Misconduct" shall mean intentional, purposeful conduct of an
Indemnified Party but does not include instances where an Indemnified Party is
strictly liable for breach of any warranty. It is agreed that neither Franchisee
nor its insurance carrier shall have the power or authority under this Agreement
to make a determination as to whether an Indemnified Party caused liabilities,
losses, claims, liens or demands as the result of Gross Negligence or Willful
Misconduct. If there is a disagreement between Franchisee, its insurance carrier
and the Indemnified Parties as to whether or not the actions of an Indemnified
Party(ies) meet the test of Gross Negligence or Willful Misconduct, such a
dispute shall be submitted for resolution to a court having jurisdiction over
such disputes.
Promptly after receipt by any Indemnified Party of notice of any
demand, claim or circumstance which, with the lapse of time, would or might give
rise to a claim or the commencement (or threatened commencement) of any action,
proceeding or investigation ("Asserted Liability") that may result in a Loss,
the Indemnified Party shall give notice thereof ("Claims Notice") to Franchisee.
The Claims Notice shall describe the Asserted Liability in reasonable detail and
shall indicate the amount (estimated, if necessary and to the extent feasible)
of the Loss that has been or may be suffered by an Indemnified Party.
Franchisee may elect within thirty (30) days of receipt of the Claims
Notice to compromise or defend, at its own expense and by its own counsel, any
Asserted Liability if Franchisee acknowledges to such Indemnified Party
Franchisee's obligation to fully indemnify such party with respect to such
Asserted Liability; provided, however, that a condition to any settlement by
Franchisee shall be a complete and unconditional release of the Indemnified
Party with respect to such claim. If Franchisee elects to compromise or defend
such Asserted Liability as provided in this Paragraph 23.04., the Indemnified
Party shall cooperate, at the expense of Franchisee, in the compromise or
defense of such Asserted Liability. The Indemnified Party may select its own
legal counsel to participate in such compromise or defense, at Franchisee's
expense, to the extent such Indemnified Party, or its counsel, reasonably
believes that a conflict of interest exists between Franchisee and such
Indemnified Party.
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Franchisor will reimburse reasonable attorneys' fees incurred by
Franchisee in a court-sought resolution if Franchisor or any other Indemnified
Party is found to be Grossly Negligent or guilty of Willful Misconduct. If
Franchisee elects not to compromise or defend the Asserted Liability, fails to
notify the Indemnified Party of its election as herein provided or contests its
obligation to indemnify under this Agreement, the Indemnified Party may pay,
compromise or defend such Asserted Liability; provided, however, that such
payment, compromise or defense shall in no way relieve Franchisee of its
indemnification responsibilities pursuant to this Agreement.
23.05. Without limiting or detracting from the indemnity provision
above or elsewhere in this Agreement, Franchisee shall comply with the
applicable federal, state and local laws, rules, regulations, orders and
ordinances concerning pollution and protection of the environment, with special
attention to the regulations governing the storage, dispensing, and sale of
unleaded gasoline; shall procure and maintain all permits and licenses required
thereunder; and shall defend, indemnify, and hold harmless the Indemnified
Parties from and against any and all penalties, interest, costs, expenses,
claims, judgments, and orders with respect to such laws, ordinances, rules,
orders, and regulations, except those determined to have been caused by the
Gross Negligence or Willful Misconduct of an Indemnified Party.
23.06. Because Franchisee has the day-to-day occupation and control of
the business at the Franchised Premises, Franchisee shall:
A. Immediately clean up and properly dispose of all
contaminants, pollutants, toxic substances, and hazardous substances which are
dumped, spilled, or otherwise deposited, or which appear anywhere on, or which
originate from, the Franchised Premises from whatever cause or source. All such
cleanup and disposal actions shall be in compliance with all applicable laws,
regulations and ordinances, and the requirements of governmental agencies,
relating to pollution or protection of the environment. If the matter cleaned up
and disposed of is determined after non-appealable final judgment to have been
deposited through the Gross Negligence or Willful Misconduct of an Indemnified
Party, Franchisor shall reimburse Franchisee the reasonable clean-up and
disposal costs.
B. Comply with the Occupational Safety and Health Act and
rules, orders, and regulations issued and promulgated thereunder applicable to
Franchisee's operation of the Franchised Business. Franchisee shall also defend,
indemnify, and hold harmless the Indemnified Parties from and against any and
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all penalties, interest, cost, expenses, claims, judgments, and orders arising
out of or incident to Franchisee's non-compliance with said Act and the rules,
orders, and regulations issued and promulgated thereunder applicable to
Franchisee's operation of the Franchised Business.
C. Comply with the Americans with Disabilities Act and rules,
orders, and regulations issued and promulgated thereunder applicable to
Franchisee's operation of the Franchised Business. Franchisee shall also defend,
indemnify, and hold harmless the Indemnified Parties from and against any and
all penalties, interest, cost, expenses, claims, judgments and orders arising
out of or incident to Franchisee's non-compliance with said Act and the rules,
orders, and regulations issued and promulgated thereunder applicable to
Franchisee's operation of the Franchised Business.
D. Immediately advise Franchisor verbally and in writing of
defects in or deterioration of storage tanks, submerged pumps, and/or piping as
listed in the Lease Agreement, for which Franchisor has replacement
responsibility. In this regard, storage tanks, submerged pumps, and/or piping at
the Franchised Premises may result in major environmental and property damage.
One of the recommended methods used to warn of a potential leak is the
implementation and adherence to a motor fuel inventory program that includes a
daily stick measurement of the volume of motor fuel in storage and recording of
the volume of motor fuel received and sold. Franchisee agrees to implement and
adhere to a daily inventory plan incorporating the above described elements.
Franchisee shall immediately notify Franchisor when a loss of motor fuel is
equal to or greater than one thousand (1,000) gallons reflected in its daily
inventory system, but not later than the next day, by the fastest means
available. This loss may be considered a paper shortage of motor fuel even
though the motor fuel may be reflecting an overage. Franchisee should use his
best judgment and past historical data in determining losses during periods of
fuel expansion or shrinkage during storage. If Franchisee's first notification
to Franchisor of a loss is verbal, Franchisee shall confirm such notice in
writing immediately after giving the verbal notice. Franchisor shall have the
sole right to determine what tests are required to confirm any leaks and what
corrective measures are to be taken. If Franchisee keeps a daily inventory
system and notifies Franchisor immediately upon detecting a motor fuel loss,
Franchisee shall be released from its obligation to defend, indemnify, and hold
the Indemnified Parties harmless from any claims, costs, fines, penalties, and
damages related to a leak in the underground tanks, submerged pumps, or piping,
except for any leak arising from the negligent or willful acts or omissions of
Franchisee, its contractors, agents, or employees. If Franchisee, its employees
or agents is negligent, or if Franchisee does not maintain a daily inventory
system and/or fails to immediately advise Franchisor of an indicated loss,
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Franchisee shall be responsible for and shall indemnify, defend, and hold the
Indemnified Parties harmless from, any and all claims, costs, fines, penalties,
or damages of every nature related to any leak not detected and/or reported.
Such failure to maintain an inventory system or immediately notify Franchisor of
an indicated loss or water contamination shall be grounds for termination or
nonrenewal of this Agreement.
23.07. Indemnified Parties do not assume any liability whatsoever for
acts, errors, or omissions of those with whom Franchisee may contract,
regardless of the purpose. Franchisee shall hold harmless and indemnify
Indemnified Parties for all losses and expenses which may arise out of any acts,
errors or omissions of these third parties.
23.08. Franchisor shall not, by virtue of any approvals, advice or
services provided to Franchisee, assume responsibility or liability to
Franchisee or any third parties to which Franchisor would not otherwise be
subject.
XXIV. RESTRICTIVE COVENANTS.
24.01. During the term of this Agreement, neither Franchisee nor any
Franchisee Party shall, without the prior written consent of TAFSI, at the
Franchised Premises, be affiliated with, participate in or have any interest in
any franchise agreement, licensing agreement, marketing plan or other system of
any Person other than TA Operating.
24.02. Except for the continued operation of those businesses or
facilities described on EXHIBIT B attached hereto (under the brand or name
identified thereon), during the term of this Agreement, Franchisee and each
Franchisee Party covenants and agrees that it or he, as the case may be, shall
not, without the prior written consent of Franchisor, either directly or
indirectly (for itself or himself or on behalf of or in conjunction with any
person, persons, partnership, corporation or other entity) own, maintain, engage
in, participate in or have any interest in the operation, within the United
States, of the whole or any part of any truckstop, travel center business,
fueling business, vehicle repair facility, truckstop or travel center restaurant
or other business offering or selling any services or products similar to that
sold in the Network, pursuant to a franchise agreement, licensing agreement or a
prescribed marketing plan or system of another truckstop company or other
Person, the primary purpose of which is the marketing of fuel and services to
the traveling public, (including but not limited to Petro, Flying J, Pilot,
Speedway, Sapp Bros., Travelport, Mobil or Tosco, or their successors or
assigns). Notwithstanding the foregoing, these restrictions shall not apply to
ownership by Franchisee or any Franchisee Party of outstanding securities of any
corporation whose securities are publicly held and traded; provided, that the
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securities are held for investment purposes only and that the combined total of
Franchisee and any Franchisee Parties holdings do not constitute more than five
percent (5%) of the outstanding securities of the corporation.
XXV. APPROVALS.
25.01. Whenever this Agreement requires the prior approval or consent
of Franchisor, Franchisee shall make a timely written request to Franchisor
therefor, and, except as otherwise provided herein, any approval or consent
granted must be in writing to be binding upon Franchisor.
25.02. Franchisor makes no warranties or guarantees upon which
Franchisee may rely and assumes no liability or obligation to Franchisee or any
third party to which it would not otherwise be subject, by providing any waiver,
approval, advice, consent or services to Franchisee in connection with this
Agreement, or by reason of any neglect, delay or denial of any request therefor.
XXVI. AMENDMENTS; WAIVERS; REMEDIES.
26.01. Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by Franchisee and Franchisor, or in the case of a waiver, by the
party against whom the waiver is to be effective.
26.02. No waiver by either party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent occurrence. No single or partial exercise by
either party in exercising any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any right or remedies provided by law.
XXVII. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
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XXVIII. GOVERNING LAW; JURY TRAIL WAIVER.
This Agreement shall be construed in accordance with and governed by
the laws of the State of Ohio, without regard to conflict of laws principles
thereof. Each of Franchisor, Franchisee and any Franchisee Party hereby
irrevocably waives trial by jury in any action, proceeding or counterclaim,
whether at law or in equity, brought by Franchisor against Franchisee or any
Franchisee Party on the one hand, or by Franchisee or any Franchisee Party
against any Franchisor entity on the other hand, whether or not there are other
parties in such action or proceeding.
XXIX. COUNTERPARTS; EFFECTIVENESS.
This Agreement may be signed in any number of counterparts, each of
which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received a counterpart hereof signed
by the other party hereto.
XXX. ENTIRE AGREEMENT.
This Agreement, together with the Lease Agreement and any other
documents referred to herein or therein, or executed or delivered in connection
herewith or therewith, including but not limited to the Confidential Operations
Manual, constitute the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. Neither this Agreement nor any provision
hereof is intended to confer upon any person or entity other than the parties
hereto any rights or remedies hereunder (except the rights given generally to
Affiliates of TAFSI, by virtue of the fact that the definition of "Franchisor"
includes such Affiliates, and the rights given to the Indemnified Parties in
Paragraph XXIII.).
XXXI. JURISDICTION.
Each of the parties hereto irrevocably submits to the jurisdiction of
any state or federal court sitting in Cuyahoga County, Ohio, and further agrees
that any action or proceeding arising out of or relating to this Agreement (or
any agreement referred to herein or executed or delivered in connection
herewith) shall be heard and determined in such court, and agrees not to bring
48
<PAGE>
any action or proceeding arising out of or relating to this Agreement (or any
agreement referred to herein or executed or delivered in connection herewith) in
any other court or to contest the jurisdiction (in rem or in personam) or power
or decision of such court over or pertaining to the party or with respect to the
subject matter in any other court within or outside of the United States other
than appropriate appellate courts. Each of the parties hereto irrevocably waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required
of the other party hereto with respect thereto.
XXXII. CAPTIONS.
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
XXXIII. SEVERABILITY.
If any provisions of this Agreement, or the application thereof to any
Person, place or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable or void, the remainder of this
Agreement and such provisions as applied to other Persons, places and
circumstances shall remain in full force and effect only if, after excluding the
portion deemed to be unenforceable, the remaining terms shall provide for the
consummation of the transactions contemplated hereby in substantially the same
manner as originally set forth at the later of the date this Agreement was
executed or last amended.
XXXIV. CONSTRUCTION.
Whenever required by the context, any gender shall include any other
gender, the singular shall include the plural and the plural shall include the
singular.
XXXV. INCONSISTENCY.
In the event of any conflict between the terms and provisions of this
Agreement and the terms and provisions of the Lease Agreement and other
agreements between the parties, the terms and provisions of the Franchise
Agreement shall govern and control.
XXXVI. FORCE MAJEURE.
49
<PAGE>
The period of time during which either party hereto is prevented or
delayed in the performance or fulfilling any obligation, or any other fees or
sums and charges due hereunder, due to unavoidable delays caused by force
majeure, including but not limited to earthquake, fire, flood, or the elements,
malicious mischief, riots, strikes, lockouts, boycotts, picketing, labor
disputes or disturbance, war, refinery disruption, fuel rationing or allocation,
compliance with any directive, order or regulation of any governmental authority
or representative thereof acting under claim or color of authority, or any other
reason beyond such party's reasonable control, whether or not similar to the
foregoing (collectively, "Force Majeure"), shall be added to such party's time
for performance thereof, and such party shall have no liability by reason
thereof.
XXXVII. NOTICE.
All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) if personally delivered,
when so delivered, (ii) if mailed, two (2) business days after having been sent
by registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, (iii) if given by telex
or telecopier, once such notice or other communication is transmitted to the
telex or telecopier number specified below and the appropriate answer back or
telephonic confirmation is received; provided, that such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (ii) above or (iv) if sent through a reputable overnight delivery service
in circumstances to which such service guarantees next day delivery, the day
following being so sent:
Notices to Franchisor: TA FRANCHISE SYSTEMS, INC.
24601 Center Ridge Road, Suite 300
Westlake, Ohio 44145-5634
Attention: Manager of Franchising
Telecopy: (216) 808-3307
Notices to Franchisee:
--------------------------
--------------------------
--------------------------
Attention:
--------------
Telecopy:
---------------
50
<PAGE>
Either party may serve any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it is
actually received by the individual for whom it is intended. Either party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
XXXVIII. COST OF ENFORCEMENT OR DEFENSE.
If a claim for amounts owed by Franchisee to Franchisor is asserted in
any legal proceeding before a court of competent jurisdiction, or if Franchisor
or Franchisee is required to enforce this Agreement in a judicial proceeding,
the prevailing party shall be entitled to reimbursement of its costs, including
reasonable accounting and legal fees, in connection with such proceeding.
XXXIX. INJUNCTIVE RELIEF.
Franchisor shall have the right to obtain injunctive relief against any
threatened or actual conduct by Franchisee that could cause Franchisor loss or
damages, including but not limited to Franchisee's or any Franchisee Party's
material misuse or unauthorized use of the Marks or Franchisee's or any
Franchisee Party's threatened or actual violation of the provisions of Sections
VII, VIII or XXIV. Such injunctive relief shall be governed under the usual
equity rules, including the applicable rules for obtaining restraining orders
and preliminary injunctions.
XL. ARBITRATION.
40.01. Any monetary claim of less than ONE HUNDRED THOUSAND Dollars
($100,000.00) in dispute arising out of or relating to this Agreement, or any
breach thereof, shall be submitted to arbitration before a single arbitrator in
Cuyahoga County, Ohio in accordance with the rules of the American Arbitration
Association and judgment upon the award may be entered in any court having
jurisdiction thereof. The arbitrator is explicitly authorized to award
attorney's fees as part of his or her award. Nothing contained herein shall,
however, be construed to limit or to preclude Franchisor from bringing any
action in any court of competent jurisdiction for injunctive or other
provisional relief as Franchisor deems to be necessary or appropriate to compel
Franchisee to comply with its obligations hereunder or to protect Franchisor's
Marks or other property rights of Franchisor. In addition, nothing contained
51
<PAGE>
herein shall be construed to limit or to preclude Franchisor from joining with
any action for injunctive or provisional relief all monetary claims that
Franchisor may have against Franchisee which arise out of the acts or omissions
to act giving rise to the action for injunctive or provisional relief. This
arbitration provision shall be deemed to be self-executing and in the event that
Franchisee fails to appear at any properly noticed arbitration proceeding, award
may be entered against Franchisee notwithstanding its failure to appear.
40.02. Nothing herein contained shall bar the right of either party to
seek and obtain temporary injunctive relief from a court of competent
jurisdiction (subject to Section XXXI) in accordance with applicable law against
threatened conduct that will cause loss or damage, pending completion of the
arbitration.
40.03. It is the intent of the parties that any arbitration between
Franchisor and Franchisee shall be of Franchisee's individual claim and that the
claim subject to arbitration shall not be arbitrated on a classwide basis.
XLI. LINE OF CREDIT.
In order to guaranty Franchisee's performance of its monetary
obligations to Franchisor pursuant to this Agreement, Franchisee shall establish
a line of credit with Franchisor's Credit Department in an amount determined by
Franchisor's Credit Department. In the event that Franchisee fails to pay any
amounts due pursuant to this Agreement, Franchisor may refuse to extend credit
to Franchisee.
XLII. CAVEAT.
The success of the business venture contemplated to be undertaken by
Franchisee by virtue of this Agreement is speculative and depends, to a large
extent, upon the ability of Franchisee as an independent business entity, and
its active participation in the daily affairs of the business as well as other
factors. Franchisor does not make any representation or warranty express or
implied as to the potential success of the business venture in this Agreement.
XLIII. ACKNOWLEDGMENTS
43.01. Franchisee and each Franchisee Party represents and acknowledges
that it or he, as the case may be, has received, read and understood this
52
<PAGE>
Agreement and Franchisor's Uniform Franchise Offering Circular; and that
Franchisor has fully and adequately explained the provisions of each to
Franchisee's satisfaction; and that Franchisor has accorded Franchisee and each
Franchisee Party ample time and opportunity to consult with advisors of its own
choosing about the potential benefits and risks of entering into this Agreement.
43.02. Franchisee and each Franchisee Party acknowledges that it or he,
as the case may be, has received a copy of this Agreement and the attachments
thereto, at least five (5) business days prior to the date on which this
Agreement was executed. Franchisee further acknowledges that Franchisee has
received the disclosure document required by the Trade Regulation Rule of the
Federal Trade Commission entitled Disclosure Requirements and Prohibitions
Concerning Franchising and Business Opportunity Ventures, at least ten (10)
business days prior to the date on which this Agreement was executed. Franchisee
and each Franchisee party acknowledges that Franchisor has made no
representation or warranty in connection with this Agreement other than those
expressly set forth herein or in the Lease Agreement, and that Franchisee and
the Franchisee Parties have not relied on any such representations or warranties
in entering into this Agreement.
43.03. Franchisee has been advised to consult with its own advisors
with respect to the legal, financial and other aspects of this Agreement, the
business franchised hereby, and the prospects for that business. Franchisee has
either consulted with such advisors or has deliberately declined to do so.
43.04. Franchisee affirms that all information set forth in any and all
applications, financial statements and submissions to Franchisor is true,
complete and accurate in all respects, with Franchisee expressly acknowledging
that Franchisor is relying upon the truthfulness, completeness and accuracy of
such information.
43.05. Franchisee has conducted an independent investigation of the
business contemplated by this Agreement and recognizes that, like any other
business, an investment in a Franchised Business involves business risks and
that the success of the venture is primarily dependent upon the business
abilities and efforts of Franchisee.
43.06. Franchisee and each Franchisee Party represents and acknowledges
that, except as may be disclosed on EXHIBIT B hereto, it or he, as the case may
be, does not (i) operate under a franchise agreement, licensing agreement, or a
prescribed marketing plan or system of another company or organization or (ii)
own, maintain, engage in, participate in or have any interest in the operation,
within the United States, of any truckstop, travel center business, fueling
business, vehicle repair facility or other business offering or selling any
53
<PAGE>
services or products similar to that sold in the Network, pursuant to a
franchise agreement, licensing agreement or a prescribed marketing plan or
system of another truckstop company or other Person, the primary purpose of
which is the marketing of fuel and services to the traveling public (including
but not limited to Petro, Flying J., Pilot, Speedway, Sapp Bros., Travelport,
Mobil or Tosco, or their successors or assigns), and that Franchisee and its
officers, directors and shareholders are not subject to any agreements limiting
or restricting Franchisee's ability to conduct said business as a Franchisee
hereunder. Operation of a business similar to the Franchised Business without
Franchisor's prior written approval is a material default and grounds for
termination of this Agreement.
43.07. Franchisee understands and acknowledges that all representations
of fact made by Franchisor herein are made solely by Franchisor. All documents,
circular and all exhibits thereto, have been prepared solely in reliance upon
representations made and information provided by Franchisor, its officers and
its directors. Franchisee further agrees that it has no claim against, and will
indemnify and hold harmless, the preparer of any and all such franchise
agreements, offering circulars and exhibits thereto, with respect to any and all
loss, costs, expenses (including attorneys' fees), damages and liabilities
resulting from any representations and/or claims made by Franchisor in such
documents.
54
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, sealed and delivered this Agreement in multiple
copies the day and year first above written.
WITNESS: TA FRANCHISE SYSTEMS, INC.
By:
- --------------------------------- ------------------------------
ITS:
- --------------------------------- ------------------------------
WITNESS/ATTEST: FRANCHISEE:
By:
- --------------------------------- ------------------------------
ITS:
-----------------------------
ACKNOWLEDGEMENT
The undersigned hereby acknowledges and agrees that he or she is a
Franchisee Party under this Agreement, and covenants and agrees to be bound by
and subject to all of the terms or provisions herein that are applicable to
Franchisee Parties.
-----------------------------------
55
<PAGE>
TRUCKSTOPS OF AMERICA
EXCLUSIONS FROM THE PROTECTED TERRITORY
EXHIBIT A TO THE FRANCHISE AGREEMENT
<PAGE>
TA FRANCHISE SYSTEMS INC.
ADDENDUM TO FRANCHISE AGREEMENT
This Addendum to the Franchise Agreement (the "Addendum") is
executed this day of , 1997, by and between TA Franchise
----- --------------
Systems, Inc., a Delaware corporation, having its principal place of business at
24601 Center Ridge Road, Suite 300, Westlake, Ohio 44145-5634 (hereinafter
referred to as "TAFSI"), and
---------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(hereinafter referred to as "Franchisee").
- ------------------------
WITNESSETH:
WHEREAS, TAFSI and Franchisee have executed a Franchise
Agreement, of even date herewith (the "Franchise Agreement"), pertaining to the
operation of the Franchised Business at the Franchised Premises (as such terms
are defined in the Franchise Agreement); and
WHEREAS, the parties desire to amend and modify certain terms
and provisions of the Franchise Agreement in accordance with the terms of this
Addendum;
NOW, THEREFORE, in consideration of the premises above and in
the Franchise Agreement, and in consideration of the mutual covenants,
agreements and obligations set forth herein, the parties hereto agree as
follows:
1. Unless otherwise defined herein, capitalized terms which
are used herein shall have the meanings ascribed thereto in the Franchise
Agreement.
2. Section 5.01 of the Franchise Agreement shall be and hereby
is deleted in its entirety, and the following shall be and hereby is added in
lieu thereof:
"5.01 This Agreement shall be effective and binding for an
initial term of five (5) years, commencing on
, 19 (the "Initial Term")."
----------------------- ---
3. Section 19.01(D) of the Franchise Agreement shall be and
hereby is deleted in its entirety, and the following shall be and hereby is
added in lieu thereof:
"D. Franchisor agrees that in the event of: (a) a nonrenewal
of this Agreement pursuant to Subparagraph 19.01.A.4 above; or
(b) a nonrenewal of this Agreement pursuant to Subparagraph
19.01.B.1 or 19.01.B.4 above; Franchisor will not, during the
one hundred eighty (180) day period following the expiration
of the then-current Initial Term or Renewal Term, as the case
may be, contract with another Person for the operation of the
Franchised Business at the Franchised Premises upon terms that
are materially different from those that Franchisor offered to
Franchisee, without first giving Franchisee a 30-day
<PAGE>
preferential right to accept a renewal of this Agreement upon
such modified or different terms. Notwithstanding anything to
the contrary herein, Franchisor shall not be subject to the
restrictions above, and Franchisee shall not be entitled to
any such preferential right if Franchisee has not otherwise
complied with the terms and provisions of Section 5.02 of this
Agreement."
4. The first three (3) sentences of Section 21.02(A) of the
Franchise Agreement shall be and hereby are deleted, and the following shall be
and hereby is added in lieu thereof:
"A. Neither Franchisee nor any Franchisee Party may sell,
assign (including, but not limited to, assignments by
operation of law) or transfer (collectively, "Assign") this
Agreement without Franchisor's prior written consent, which
consent shall not be unreasonably withheld. Franchisor may
condition such consent on, among other things, transferee's
completion of Franchisor's then-current training program to
Franchisor's satisfaction."
5. If Franchisee has executed, or is required to execute, an
Amendment to Franchise Agreement, attached as Exhibit C to Franchisor's offering
circular (the "Amendment"), Section XLV of the Franchise Agreement (which is
added to the Franchise Agreement by Item 13 of the Amendment) shall be and
hereby is amended by changing the words "two (2) years" to "one hundred eighty
(180) days."
6. Exhibit A to the Franchise Agreement, entitled "Exclusions
from the Protected Territory," shall be and hereby is amended by adding the
following to Exhibit A as new item 4:
"4. Specifically excluded from the Protected Territory (as
defined in the Franchise Agreement) are the geographic areas
within a five (5) mile radius of each of the truckstops or
travel centers which, as of January 1, 1997, were being
operated by National Auto/Truckstops, Inc., either as a
company operated or a franchisee operated facility."
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto intending to be legally
bound hereby, have duly executed and delivered this Addendum to Franchise
Agreement on the day and year first above written.
TAFSI:
TA FRANCHISE SYSTEMS INC.
By:
--------------------------------
(sign)
-----------------------------------
(print)
-----------------------------------
(title)
FRANCHISEE:
By:
--------------------------------
(sign)
-----------------------------------
(print)
-----------------------------------
(title)
FRANCHISEE PARTIES:
By:
-------------------------------
(sign)
-----------------------------------
(print)
-----------------------------------
(sign)
-----------------------------------
(print)
3
EXHIBIT 10.30
1/30/97
AUTO/TRUCKSTOP LEASE AGREEMENT
<PAGE>
INDEX TO AUTO/TRUCKSTOP LEASE AGREEMENT
PARAGRAPHS AND EXHIBITS
SUBJECT PAGE
1. PROPERTY.................................................................2
2. TERM.....................................................................3
3. RENT.....................................................................4
4. RECORDS AND AUDIT........................................................4
5. SERVICES AND USES........................................................4
6. PROHIBITED USES..........................................................8
7. OPERATING EXPENSES.......................................................9
8. ALTERATIONS.............................................................10
9. MAINTENANCE AND REPAIRS.................................................10
10. DAMAGE/DESTRUCTION.....................................................11
11. TRANSFERABILITY OF INTEREST............................................11
12. UNDERLYING LEASE.......................................................12
13. OPERATION BY LESSEE....................................................13
14. INDEMNIFICATION AND COMPLIANCE WITH LAWS...............................13
15. ENVIRONMENTAL..........................................................16
16. INSURANCE..............................................................18
17. TERMINATION............................................................20
18. MUTUAL TERMINATION.....................................................24
19. ESTOPPEL CERTIFICATE...................................................24
20. TERMINATION BY LESSEE..................................................24
21. DEATH OR INCAPACITY OF LESSEE..........................................25
22. BANKRUPTCY.............................................................26
23. TAXES AND ASSESSMENTS..................................................26
24. INDEPENDENT CONTRACTOR.................................................26
25. CREDIT CARD SALES......................................................26
26. SURRENDER OF PREMISES..................................................26
27. INSPECTION OF LEASED PREMISES..........................................27
28. AMENDMENTS; WAIVERS; REMEDIES..........................................27
29. SUCCESSORS AND ASSIGNS.................................................27
30. ARBITRATION............................................................27
31. GOVERNING LAW..........................................................28
32. COUNTERPARTS; EFFECTIVENESS............................................28
33. ENTIRE AGREEMENT.......................................................28
34. JURISDICTION...........................................................28
35. CAPTIONS...............................................................29
36. SEVERABILITY...........................................................29
37. CONSTRUCTION...........................................................29
38. INCONSISTENCY..........................................................29
39. NOTICES................................................................29
i
<PAGE>
40. APPROVALS..............................................................30
41. FORCE MAJEURE..........................................................30
42. SUBORDINATION AND NON-DISTURBANCE......................................30
44. EXISTING CONDITION OF PREMISES.........................................31
45. COST OF ENFORCEMENT OR DEFENSE.........................................31
46. INJUNCTIVE RELIEF......................................................32
47. LINE OF CREDIT.........................................................32
48. CAVEAT.................................................................32
49. ACKNOWLEDGMENTS........................................................32
EXHIBIT A-I DESCRIPTION AND DEPICTION OF REAL
PROPERTY
EXHIBIT A-II BUILDING, IMPROVEMENTS, FIXTURES AND
EQUIPMENT
EXHIBIT B RENTAL SCHEDULE
EXHIBIT C MAINTENANCE RESPONSIBILITY
SCHEDULE
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC.
*****
AUTO/TRUCKSTOP LEASE AGREEMENT
Location # Date: , 19
------------- ------------- ---
LESSOR: NATIONAL AUTO/TRUCKSTOPS, INC.
a Delaware corporation
Address: 24601 Center Ridge Road, Suite 300
Westlake, Ohio 44145-5634
Attn: Franchise Manager
LESSEE:
------------------------------------------------------
-------------------------------------------------------------
Residence Address
--------------------------------------------
City and State Zip Code
----------------------------- ----------
PROPERTY:
Street Address
-----------------------------------------------
City
---------------------------------------------------------
County and State Zip Code
---------------------------- ---------
See Exhibits A-I and A-II for leased property description.
A subject matter index will be found at the end of the Lease.
LESSOR: LESSEE:
NATIONAL AUTO/TRUCKSTOPS, INC.
------------------------------------
By: By:
---------------------------- ---------------------------------
Name: Name:
Title: Title:
<PAGE>
LEASE AGREEMENT
This Lease Agreement (the "Agreement" or the "Lease"), dated
as of , 199 , is entered into by and between NATIONAL
------------------ ---
AUTO/TRUCKSTOPS, INC., a Delaware corporation (the "Company"), and
, a ("Lessee").
- ------------------------------ -------------------------------
W I T N E S S E T H:
WHEREAS, TA Franchise Systems, Inc. ("TAFSI"), an affiliate of
the Company, and Lessee have entered into a Franchise Agreement of even date
herewith (as the same may hereafter be amended, the "Franchise Agreement"; all
terms used and not defined herein shall have the meanings set forth in the
Franchise Agreement) which, among other things, defines the franchise
relationship between TAFSI and Lessee in connection with TAFSI's and TA
Operating Corporation's (together "TA") auto/truckstop network ("TA's Network");
and
WHEREAS, Lessee is obligated under the Franchise Agreement to
enter into this Lease, pursuant to which, among other things, (i) the Company
agrees to lease and demise the Leased Premises (as defined herein) to Lessee and
(ii) Lessee agrees to take and lease from the Company the Leased Premises, each
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises,
representations, warranties, covenants and agreements set forth herein, the
parties hereby agree as follows:
1. PROPERTY. The Company leases to Lessee and
Lessee leases from the Company the improved portion of the Company's land
located in the County of , State of , as described
--------------- ---------------
and depicted in Exhibit A-I attached hereto and made a part hereof, together
with such buildings, improvements, fixtures, and equipment existing on the
Leased Premises (as hereinafter defined) as of the date of this Lease which
includes, in part, those buildings, improvements, fixtures and certain equipment
as listed in Exhibit A-II attached hereto and made a part hereof, said land,
buildings, improvements, fixtures, and equipment being collectively referred to
herein as the "Leased Premises." The Leased Premises shall also include all
equipment and fixtures acquired for, attached to, or incorporated into the
Leased Premises after the date hereof, to the extent said equipment and fixtures
have an initial purchase price or fair market value of $2,500 or greater. All
the Company's property not included in the Leased Premises described or depicted
in Exhibit A-I (the "Surplus Property") may be developed, improved, leased or
sold by the Company for such purposes and to such persons as the Company selects
in its sole discretion; provided that, the Company shall prohibit the Surplus
Property from being used for or in connection with any business engaged
principally in gasoline or diesel fuel sales.
2
<PAGE>
2. TERM
(a) The term of the Lease shall be for a period
of five (5) years commencing on , 19 , and
------------------------------- --
expiring on , 19 , (the "Initial Term") subject to the
---------------------- --
renewal terms set forth in this Paragraph 2. The Lease shall terminate
automatically and without notice on the expiration date of the Initial Term or
the Renewal Term (as hereinafter defined), if applicable.
(b) Should the Lessee receive the Company's
permission pursuant to Paragraph 8 to improve the Leased Premises, or any
portion thereof, or make any additions requiring large capital expenditures,
where the term of this Lease is a factor determining Lessee's ability to raise
funds or justify the expenditure to itself, the Company will, at its option,
enter into negotiations with Lessee to extend the term of this Lease.
(c) Subject to the Company's rights under Paragraph
17 to terminate or not renew this Lease, Lessee shall have the right to renew
the Lease at the expiration of the Initial Term for five (5) additional
successive terms of three (3) years each (each being a "Renewal Term"), provided
that all of the following conditions have been fulfilled:
(i) Lessee has, during the Initial Term,
complied with all the provisions of this Lease
and during any Renewal Term complied with all
the provisions of this Lease;
(ii) Lessee is not in default of the provisions
of Paragraph 17 of this Lease;
(iii) Lessee has given notice of renewal to the
Company as provided in Paragraph 17 herein and
has notified TAFSI in accordance with the terms
of the Franchise Agreement;
(iv) Lessee has satisfied all monetary
obligations owed by Lessee to the Company and
the Company's Affiliates, including TAFSI under
the terms of the Franchise Agreement and has
timely met these obligations throughout the term
of this Lease;
(v) Lessee is in compliance with TA's current
qualification and training requirements as of
the Renewal Date (as defined in Paragraph 17)
and covenants to maintain such compliance during
any Renewal Term;
(vi) Lessee has, as of the Renewal Date,
executed a general release, in the then current
form prescribed by the Company, of any and all
Claims against the Company and
3
<PAGE>
its Affiliates, and their respective officers,
directors, agents, stockholders and employees;
and
(vii) Lessee, on the Renewal Date,
simultaneously renews the Franchise Relationship
in accordance with the terms and provisions of
the Franchise Agreement.
(d) The Company may terminate or not renew this
Agreement by written notice to Lessee, as provided in Paragraph 17 herein.
(e) Notwithstanding the foregoing or any other
provision hereof, the Lease shall end automatically and without notice on the
date of expiration or termination of the Franchise Agreement.
3. RENT. Lessee shall promptly pay the Company rentals
for the Leased Premises without offset or deduction as stated in the attached
Exhibit B attached hereto and made a part hereof. Lessee shall pay all rentals
and all other sums Lessee owes the Company in accordance with the Company's
credit policies. No payment made to the Company by check or other instrument
shall contain a restrictive endorsement of any kind. A restrictive endorsement
shall have no legal effect even if the document restrictively endorsed is
processed for payment and the Company retains the proceeds. Any rental and any
other sums owed by Lessee to the Company not paid when due shall bear interest
from the due date until paid at the rate of eighteen percent (18%) per annum, or
the highest rate allowed by law (the "Default Rate"), whichever is less. Rentals
shall be paid by Lessee by electronic fund transfer of funds to an account
maintained by the Company.
4. RECORDS AND AUDIT. [INTENTIONALLY OMITTED.]
5. SERVICES AND USES. Lessee agrees to use the Leased Premises
to operate an auto/truckstop as TAFSI's Franchisee as part of TA's Network (an
"Auto/Truckstop"), in accordance with the terms of the Franchise Agreement, and
for no other purpose. Lessee agrees to operate the Auto/Truckstop in a manner
that will assure: (i) full and complete compliance with the terms of the
Franchise Agreement; and (ii) that customers receive quality merchandise and
courteous and efficient service in a clean and orderly business establishment.
Lessee shall comply with all requirements set forth in this Lease, the
Confidential Operations Manual and other written policies supplied to Lessee by
the Company. All references herein to this Lease shall include all such
mandatory specifications, standards and operating procedures and rules. Lessee
shall comply with the entire set of specifications and standards for TA's
Network including, but not limited to, the provisions of this Paragraph 5.
Lessee's operation shall include the following minimum obligations:
(a) Sell merchandise and service with care, courtesy,
and regard for customer satisfaction. This will be
determined by mystery shops or other methods as
required received by TA. The Company and TA shall have
the right to enter the
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Leased Premises to conduct, but are not obligated to
conduct on-site surveys and leave comment cards. Should
the Company or TA receive negative comments dealing
with the same issue in any 30 day period, the Lessee
will be expected to take action to correct the
situation which generated the comments.
(b) Take prompt action to respond to or correct all
complaints received by the Company or TA concerning
Lessee's operation, or the condition of the Leased
Premises, or the conduct of any employee of Lessee. A
written reply must be made to TA within 14 days
outlining Lessee's actions or plans to resolve.
(c) Follow such procedures or take such action as the
Company or TA may from time to time require to maintain
the appearance and efficient operation of the Leased
Premises and to meet or exceed TA's annually published
minimum acceptable score as part of any quality
inspection program adopted and published by TA from
time-to-time (the "Quality Inspection Program"). If at
any time in the Company's or TA's judgment the general
state of repair or appearance of the Leased Premises or
its equipment, fixtures, signs, or decor does not meet
the Company's or TA's standards, the Company or TA
shall so notify Lessee, specifying the action to be
taken by the Company to correct such deficiency.
Failure to timely correct such deficiency is a material
default of this Agreement and grounds for termination
of this Agreement subject to the provisions of
Paragraph 17 herein. Lessee acknowledges that it has
received a copy of the Quality Inspection Program, has
reviewed it and understands the program. The terms of
said program are incorporated herein by reference.
(d) Devote full-time and business expertise to the
operation of the Leased Premises. The Leased Premises
shall, at all times be under the direct supervision of
the Manager (as defined in Paragraph 13 herein), or a
trained and competent employee approved by TA or the
Company, acting as full-time general manager or
assistant general manager. Lessee shall keep the
Company informed at all times of the identity of any
employees acting as managers of the Leased Premises.
(e) Operate the Leased Premises and any restaurant
contained thereon so as not to pose a threat or danger
to public health or safety, or to the environment. Mail
a copy of each and every Health Inspection Report
prepared for the Leased Premises and any restaurant
contained thereon by the local, county, or state
governmental authorities to:
5
<PAGE>
TA Franchise Systems, Inc.
24601 Center Ridge Road
Suite 300
Westlake, Ohio 44145-5634
Attn: Manager of Franchising
(f) Provide reasonable security at the parking facility
of the Leased Premises for vehicles and drivers, and
exert a reasonable effort to maintain an absence of
outside elements that negatively affect the image of
the Auto/Truckstop. Specifically, "outside elements"
refers to, but is not limited to, prostitutes,
gamblers, drug dealers, and stolen goods dealers
("Outside Elements").
(g) Provide, or have made outside arrangements for
providing, emergency service for passenger cars
including, tire service, road towing, belt replacement,
and light replacement, but not to be limited to same.
(h) Keep the Leased Premises open for business 24 hours
each day 365 days per year, including the diesel &
gasoline islands, vehicle service garage, convenience
store, and full-service restaurant, but not limited to
the same. The fast-food style restaurant, if any, shall
remain open at least 18 hours per day. Lessee's closing
the Leased Premises or any part thereof, shall
constitute abandonment by Lessee and shall be a
material breach of this Lease and be subject to the
Company's rights under Paragraph 17 hereof.
(i) Not engage in dishonest, fraudulent, or scare
selling practices.
(j) Perform all services in a good and workmanlike
manner.
(k) Maintain a complete inventory of merchandise to
satisfy the reasonable demands of customers.
(l) Operate the Leased Premises in a clean, safe and
healthful manner that will assure that customers
receive quality merchandise and courteous and efficient
service, which shall include the following minimum
obligations:
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<PAGE>
(i) Operate or cause the Manager to at all times
operate the Leased Premises in compliance with the
standards prescribed in this Lease and the Franchise
Agreement.
(ii) Provide a sufficient number of trained, courteous,
and neat personnel who can personally and effectively
communicate and correspond with customers to operate
the Leased Premises in an efficient and organized
manner.
(m) [INTENTIONALLY OMITTED.]
(n) Comply with the requirements of any conditional use
permit or other approval ("Permit") covering the
construction, maintenance, and/or operation of the
Leased Premises. If the Leased Premises are subject to
a Permit, a copy shall be delivered to Lessee and
Lessee shall acknowledge receipt of the copy on a form
provided by the Company.
(o) Secure and maintain in force, at Lessee's expense,
all required licenses, permits and certificates
relating to the operation of the Leased Premises, and
operate the Leased Premises in full compliance with all
applicable federal, state and local laws, ordinances,
rules, and regulations, including, without limitation,
all such laws, ordinances, rules, and regulations
relating to the dispensing of food products,
occupational hazards and health, general liability
regulations relating to the dispensing of food
products, general liability and pollution liability
insurance requirements, consumer protection,
environmental protection, underground storage
facilities and dispensing of fuel, trade regulation,
workers' compensation, unemployment insurance and
withholding and payment of federal and state income
taxes and social security taxes, and sales, use and
property taxes. Further, throughout the term of this
Lease, Lessee shall cause the Leased Premises to be in
full and strict compliance with the Americans with
Disabilities Act, as amended from time-to-time.
(p) Designate a qualified full-time shift manager for
each shift established by Lessee.
(q) Have on duty or available at all times during
regular business hours a qualified mechanic experienced
in truck service to provide prompt, courteous and
workmanlike service, and to otherwise fulfill Lessee's
responsibilities under this Lease and the Franchise
Agreement. Such mechanic shall meet the requirements
set forth in the Confidential Operations Manual.
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<PAGE>
(r) Notify the Company in writing within five (5) days
of the commencement of any action, suit, or proceeding,
and of the issuance of any order, writ, injunction,
award, or decree of any court, agency, or other
governmental instrumentality, which may adversely
affect the operation or financial condition of the
Franchised Business conducted on the Leased Premises.
(s) At any full service Auto/Truckstop facility,
maintain a minimum of fifty (50) paved truck parking
spaces.
6. PROHIBITED USES. The Leased Premises shall be
utilized as a TAFSI franchised Auto/Truckstop and for no other purpose. In
addition, Lessee shall not:
(a) Obstruct any entrance, exit, or pump island, or
otherwise restrict access to the Leased Premises, or
any part thereof, or block delivery carrier's access to
storage tank fill pipes.
(b) Except for that signage required or imposed by law,
erect, construct, place or affix any sign or placard on
the Leased Premises without first obtaining the prior
written approval of the Company for all display signs,
and such signs shall comply with the signage provisions
and requirements of this Lease, the Franchise
Agreement, and all applicable laws, ordinances, rules,
and regulations of governmental authorities having
jurisdiction over the Leased Premises.
(c) [INTENTIONALLY OMITTED.]
(d) Store or sell illegal drugs or substances, and any
related paraphernalia, or permit the same to be used,
stored or consumed at the Leased Premises.
(e) Discharge or permit the discharge of petroleum
products or other products or materials onto the Leased
Premises or adjacent properties or in violation of any
applicable federal, state or local law, rule,
regulation or order.
(f) Place or install amusement, music, or vending
machines, coin or token operated devices, telephones or
telecommunication devices without the Company's consent
or at locations that interfere with, or restrict, the
safe and free flow of vehicles and pedestrian traffic
on the Leased Premises or as may violate applicable
laws, rules and regulations, or the terms of the
Franchise Agreement.
8
<PAGE>
(g) Create, commit or permit waste at the Leased
Premises, or any part thereof, or allow or condone any
activity on the Leased Premises, or any part thereof,
that shall constitute a nuisance.
(h) Enter into any service contract or agreement
relating to the furnishing of any services to the
Leased Premises unless such contract or agreement
shall, by its terms, be terminable by Lessee on no more
than thirty (30) days notice, or it shall expressly
provide that such agreement or contract shall not be
binding upon the Company upon expiration or termination
of this Lease.
Lessee understands and acknowledges that uniformity of standards, products and
services is essential to TA's Network. To that end, the Company reserves the
right to reject any category of product or services offered for sale at the
Leased Premises. Should Lessee elect to offer and sell additional product or
service categories to customers at the Leased Premises, Lessee shall provide the
Company and TA with an advance written request for the desired product or
service, and the Company shall not unreasonably withhold its approval of any
such category of product or service. In addition:
(i) Lessee shall immediately cease offering for sale or
selling any product or service if the Company, in its
sole discretion, deems such product or service to be
detrimental to the Marks or the image of TA's Network.
(ii) Lessee is prohibited from displaying, offering and
selling any alcoholic beverages, packaged or otherwise
and any sexual or pornographic materials (as determined
by the Company or TA in their sole discretion),
including, without limitation, books, magazines,
videotapes, cassettes, calendars, novelty and related
items. The Company reserves the right, in its sole
discretion, to expand the categories of products and
services which Lessee is prohibited from offering or
selling from the Leased Premises upon notice to Lessee.
7. OPERATING EXPENSES. Lessee shall pay all charges and
expenses connected with the operation of the Leased Premises, including (without
limitation to): license, permit, and inspection fees; expenses incurred for
monitoring, testing and inspections of all UST Systems (as defined in Paragraph
15 hereof) and related dispensing equipment, the calibration of dispensing
equipment and the costs of fuel dispensing; the registration of UST's;
occupation and license taxes, water, sewer, gas, telephone, electricity, and
other power and utility charges assessed or charged on or against the Leased
Premises, Lessee's use or occupancy thereof, or the
9
<PAGE>
business conducted thereon. Lessee shall have all meters and accounts for water,
sewer, gas, telephone, electricity, power, and other utilities transferred to
and maintained in Lessee's name. If Lessee fails or refuses to make timely
payment of any charge, expense, and/or tax, the Company may, but is not
obligated to, make payment for the account of Lessee, and the amount paid by the
Company shall be additional rental and shall be due and payable by Lessee on
demand of the Company together with interest at the Default Rate (as defined on
Exhibit B hereto.)
8. ALTERATIONS. Subject to the provisions of
Paragraph 9, Lessee shall not make, or permit anyone to make any modifications
in or to the Leased Premises of a permanent nature, including but not limited to
permanent improvements, alterations, decorations, or additions, structural or
otherwise, in or to the Leased Premises without first obtaining the written
consent of the Company. Lessee agrees that it shall make all reasonable
alterations to the interior and exterior of the Leased Premises, as may be
reasonably required by the Company, from time-to-time in order to modify the
Leased Premises to reflect the then current image of the Company's Franchised
Business. All such Company required alterations shall be paid for by Lessee, at
its own expense, unless the aggregate cost of such Company required alteration
exceeds $2,500. If the cost exceeds $2,500, the Company may require such
alteration to be performed by Lessee, and the Company shall promptly reimburse
Lessee, based on paid receipts submitted to the Company by Lessee, for the
portion of the total cost that exceeds $2,500. All improvements, alterations,
decorations, or additions made by Lessee shall be made in accordance with plans
and specifications approved by the Company, and shall be promptly paid for and
completed in a good and workmanlike manner in accordance with all applicable
laws and requirements, and Lessee shall defend, indemnify, and hold the Company
harmless from and against any and all costs, expenses, claims, liens, and
damages to person or property resulting from the making of any such
improvements, alterations, decorations, or additions in or to the Leased
Premises.
Lessee shall not do or suffer anything to be done whereby the
Leased Premises may be encumbered by a mechanic's lien or liens. If, however,
any mechanic's lien is filed against the Leased Premises, Lessee shall discharge
the same of record within ten days after the date of filing. If Lessee fails to
discharge any such lien as provided herein, such failure shall be a default of
this Lease.
The Company shall not be liable for any labor, services or
materials to be furnished to Lessee upon credit, and no mechanic's or other lien
for any such labor, services or materials shall attach to or affect the
reversionary or other estate or interest of the Company in and to the Leased
Premises.
9. MAINTENANCE AND REPAIRS. Lessee shall, at its expense,
clean, maintain, repair, and make replacements to the Leased Premises as set
forth in Exhibit C attached hereto and made a part hereof. If Lessee fails, or
refuses, to perform any obligations set forth in Exhibit C, the Company may do
so, and Lessee shall reimburse the cost to the Company on demand.
10
<PAGE>
Lessee shall employ, on a full-time basis, an individual
qualified to accomplish Lessee's obligations set forth in Exhibit C. This
individual's primary duties shall be limited to maintenance responsibilities as
defined.
The Company is responsible for the replacements not required
of Lessee and imposed upon the Company by Exhibit C, except for damage to or
destruction of the Leased Premises as set forth below. Notwithstanding the
Company's obligations set forth in Exhibit C, Lessee has the primary obligation
to keep the Leased Premises safe for all persons in, on or about the Leased
Premises. Therefore, Lessee shall undertake interim repairs or maintenance to
keep the Leased Premises safe for all persons, until such time as Lessee
notifies the Company of the unsafe condition the Company is obligated to remedy
and the Company performs the repair or replacement within a reasonable time
after notice.
10. DAMAGE/DESTRUCTION.
If the Leased Premises, or any part thereof, is damaged or
destroyed, Lessee shall advise the Company immediately of such damage or
destruction by the fastest means possible, but in no event later than 2 hours
after the damage or destruction occurs, and shall confirm the damage or
destruction within 7 days of its occurrence by completing and sending the
Company its Loss/Incident Report. Lessee is responsible for damage to or
destruction of the Leased Premises, or any part thereof, not caused by the
Company, its employees, agents, or contractors, or Acts of God. "Acts of God"
for the purposes of this Paragraph 10 shall include only damage or destruction
caused by wind, rain, hail, floods, ice, snow, earthquakes, volcanoes, thunder,
or lightning; fire is not an Act of God, other than caused by lightning.
11. TRANSFERABILITY OF INTEREST.
(a) This Lease and all rights hereunder can be
assigned and transferred by the Company and, if so, shall be binding upon and
inure to the benefit of the Company's successors and assigns.
(b) This Lease and all rights hereunder may be
assigned and transferred by Lessee and, if so, shall be binding upon and inure
to the benefit of Lessee's successors and assigns, subject to the following
conditions and requirements, and the Company's right of first refusal as set
forth herein:
(i) Lessee may not sell, assign (including, but not
limited to, assignments by operation of law), pledge,
sublet, or transfer (collectively, "Assign") this Lease
or any interest therein without the Company's prior
written consent. The Company has an absolute and
unqualified right to withhold consent to such proposed
assignments. Any attempt by Lessee to Assign this Lease
without the Company's prior written consent shall be
void and of no force and effect. The sale, transfer,
transfer by operation of law, or other
11
<PAGE>
disposition of Lessee's interest, or any part thereof,
in the Lease, or any Person's ownership or other
interest in Lessee, if Lessee is a corporation,
partnership or other business entity, shall be an
assignment requiring the Company's prior written
consent. Lessee's written request for the Company's
approval of any assignment must be received by the
Company not less than ninety (90) days prior the
proposed effective date of the requested assignment.
(ii) The Company shall have the preferential right to
meet the bona fide offer of any proposed assignee; such
right to be exercised by the Company within sixty (60)
days following the date the Company receives a copy of
Lessee's written request for the Company's approval of
any assignment. Lessee shall include in such written
request for the Company's approval of any assignment
the name and address of the proposed assignee and the
price, terms, and conditions contained in the bona fide
offer. The Company's failure to exercise this
preferential right in one event as to any subsequent
assignments shall not terminate this Agreement or the
preferential right, nor shall it release Lessee from
any of its obligations under this Lease.
(c) If the Lessee proposes to sell, transfer, assign
or sublet this Lease or any interest therein, the Company or TA will perform a
Quality Inspection of the Leased Premises to determine necessary corrections to
be made to bring the Leased Premises up to a Quality Inspection score equal to
or greater than TA's annually published minimum acceptable score. The Company or
TA will also perform an engineering and maintenance inspection and, if deemed
necessary by the Company or TA, an environmental inspection, of the Leased
Premises to determine what actions are necessary to bring the Lessee into
compliance with all of the provisions of Paragraph 9 and Exhibit C hereof. The
results of the foregoing inspections will be made in writing to Lessee and
corrections shall be made by Lessee, before the sale, assignment, transfer or
subletting is approved.
(d) Notwithstanding any provision of the foregoing
subparagraphs (a) through (c), any attempted assignment of this Lease (including
an assignment by operation of law) shall be void and of no force and effect
unless the Franchise Relationship is also transferred to the assignee in
accordance with the provisions of the Franchise Agreement.
12. UNDERLYING LEASE. (If the Company leases the Leased
Premises or part of the Leased Premises from others, this paragraph will be
completed.) The Company leases the Leased Premises by virtue of an underlying
lease dated for a term that expires on .
--------------- ---------------
The Company is under no obligation to extend or renew such
12
<PAGE>
underlying lease. Lessee acknowledges and confirms that it was notified in
writing by the Company of the facts set forth in this Paragraph prior to the
execution of this Lease.
13. OPERATION BY LESSEE. The Company's
normal business practice and procedure is to enter into Auto/Truckstop leases
with individuals only, to assure that the Company and TA will receive the
benefit of the business expertise and management of the named individual. If
Lessee is an individual, any attempt by Lessee to operate the Leased Premises
through a corporation shall not relieve the individual of, and the Company shall
require Lessee to perform, Lessee's obligations under this Lease, unless and
until the Company approves the assignment of this Lease to the corporation.
The Company may enter into Auto/Truckstop leases with
corporations or other entities, but only upon the assurance of the entity that
an individual acceptable to the Company and TA shall direct the management and
operation of the Auto/Truckstop. If the Lessee is a corporation or any other
entity, it agrees that the day-to-day management and operation of the Leased
Premises shall be directed by ("Manager"). If the
-------------------------
Lessee is an individual, then Lessee shall be the Manager and, as Manager,
Lessee agrees to comply with the terms of Paragraph 5(d) hereof.
If the Manager as named is not the Lessee, and if, in the
Company's or TA's opinion, the operation of the Leased Premises under the
Manager is not equivalent to, or better than the operation under Lessee's
operation, the Company shall so advise Lessee and the Lessee shall name a new
Manager which Manager shall be acceptable to the Company and TA in their sole
discretion.
If, during the term of this Lease, Manager dies or becomes
physically incapacitated and cannot continue the direct day-to-day management
and operation of the Leased Premises, this Lease shall not terminate, but Lessee
shall name a new Manager, in writing, delivered to the Company not more than 60
days following the death or incapacity of Manager which Manager shall be
acceptable to the Company and TA in their sole discretion.
14. INDEMNIFICATION AND COMPLIANCE WITH LAWS.
(a) Lessee agrees to indemnify, defend, protect and
hold harmless the Company (and its directors, officers, employees, agents,
Affiliates, designees, representatives, stockholders, successors and assigns
(collectively, "Indemnified Parties")) from and against all losses, liens,
liabilities, damages, deficiencies, demands, claims, actions, judgments or
causes of action, assessments, costs and expenses (including, without
limitation, interest, penalties and reasonable attorneys', consultants', and
other experts' fees and disbursements) ("Losses") based upon, arising out of or
otherwise in respect of the Franchised Business and Lessee's use and occupancy
of the Leased Premises, and any breach of or default under the terms of this
Lease or any violation of applicable federal, state, local or administrative
law, rule, regulation or order ("Applicable Law") by Lessee, its agents,
employees, representatives, successors and assigns relating to the Leased
Premises, or this Lease and Lessee's use of the Leased Premises; PROVIDED,
HOWEVER, Lessee shall not be required to indemnify, defend and hold harmless the
Indemnified
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<PAGE>
Parties from and against any Losses, arising directly out of the Gross
Negligence ("Gross Negligence") or Willful Misconduct ("Willful Misconduct") of
the Company and/or any other Indemnified Party. For the purpose of this
Paragraph 14, the term "Gross Negligence" shall mean a conscious and voluntary
act or omission which is in reckless disregard of the rights or property of
another and the term "Willful Misconduct" shall mean intentional, purposeful
conduct of an Indemnified Party but does not include instances where an
Indemnified Party is strictly liable for breach of any warranty. It is agreed
that neither Lessee nor its insurance carrier shall have the power or authority
under this Lease to make a determination as to whether an Indemnified Party
caused liabilities, losses, claims, liens, actions, deficiencies, damages or
demands as the result of Gross Negligence or Willful Misconduct. If there is a
disagreement between Lessee, its insurance carrier and the Indemnified Parties
as to whether or not the actions of an Indemnified Party(ies) meet the test of
Gross Negligence or Willful Misconduct, such a dispute shall be submitted for
resolution to a court having jurisdiction over such disputes.
Promptly after receipt by any Indemnified Party of notice of
any demand, claim or circumstance which, with the lapse of time or otherwise,
would or might give rise to a claim or the commencement (or threatened
commencement) of any action, proceeding or investigation ("Asserted Liability")
that may result in a Loss, the Indemnified Party shall give notice thereof
("Claims Notice") to Lessee. The Claims Notice shall describe the Asserted
Liability in reasonable detail and shall indicate the amount (estimated, if
necessary and to the extent feasible) of the Loss that has been or may be
suffered by an Indemnified Party.
Lessee shall elect within thirty (30) days of receipt of the
Claims Notice to either compromise or defend, at its own expense and by its own
counsel (acceptable to the Indemnified Party), any Asserted Liability for which
Lessee has the obligation to indemnify the Indemnified Party with respect to
such Asserted Liability, PROVIDED, HOWEVER, that a condition to any settlement
by Lessee shall be a complete and unconditional release of the Indemnified Party
with respect to such claim. If Lessee elects to compromise or defend such
Asserted Liability as provided in this Paragraph 14, the Indemnified Party shall
cooperate, at the expense of Lessee, in the compromise or defense of such
Asserted Liability. The Indemnified Party may select its own legal counsel to
participate in such compromise or defense, at Lessee's expense, to the extent
such Indemnified Party, or its counsel, reasonably believes that a conflict of
interest exists between Lessee and such Indemnified Party.
If Lessee fails to either compromise or fully defend the
Asserted Liability, fails to notify the Indemnified Party of its election as
herein provided or contests its obligation to indemnify under this Agreement,
the Indemnified Party may pay, compromise or defend such Asserted Liability;
PROVIDED, HOWEVER, that such payment, compromise or defense shall in no way
relieve Lessee of its indemnification responsibilities pursuant to this Lease
and all claims and damages resulting from Lessee's failure to satisfy its
indemnification responsibilities, and the Company may charge back to Lessee, all
expenses paid or incurred by the Indemnified Party in connection with the
payment, compromise, or defense of the Asserted Liability.
(b) Without limiting or detracting from the indemnity
provision above or any other provision of this Lease, Lessee covenants that
Lessee shall comply with and shall
14
<PAGE>
cause to Leased Premises to remain, during this term of this Lease, in full
compliance with all Applicable Laws including, without limitation to, all
Environmental Laws (as defined in Paragraph 15). Lessee shall procure and
maintain all permits and licenses required thereunder; and shall defend,
indemnify, and hold harmless the Indemnified Parties from and against any and
all penalties, interest, costs, expenses, claims, judgments, and orders with
respect to such Applicable Laws and regulations and any violations thereof by
Lessee or which result from Lessee's use and occupancy of the Leased Premises.
(c) Lessee acknowledges that its obligations under
this Paragraph 14 of Lease include, without limiting the foregoing, the
obligation during the term of this Lease, to:
(i) Comply with and cause the Leased Premises to comply
with the Occupational Safety and Health Act ("OSHA")
and rules, orders, and regulations issued and
promulgated thereunder applicable to Lessee's operation
of the Leased Premises. Lessee shall also defend,
indemnify, and hold harmless the Indemnified Parties
from and against any and all penalties, interest, cost,
expenses, claims, judgments, and orders arising out of
or incident to Lessee's noncompliance with OSHA and the
rules, orders, and regulations issued and promulgated
thereunder applicable to Lessee's operation of the
Leased Premises; and
(ii) Comply with and cause the Leased Premises to
comply with the Americans with Disabilities Act ("ADA")
and rules, orders, and regulations issued and
promulgated thereunder applicable to Lessee's operation
of the Leased Premises. Lessee shall also defend,
indemnify, and hold harmless the Indemnified Parties
from and against any and all penalties, interest, cost,
expenses, claims, judgments, and orders arising out of
or incident to Lessee's noncompliance with ADA and the
rules, orders, and regulations issued and promulgated
thereunder applicable to Lessee's operation of the
Leased Premises.
(d) Indemnified Parties do not assume any liability
whatsoever for acts, errors or omissions of those with whom Lessee may contract
with, regardless of the purpose. Lessee shall hold harmless and indemnify
Indemnified Parties for all losses and expenses which may arise out of any acts,
errors or omissions of these third parties.
(e) The Company shall not, by virtue of any
approvals, advice or services provided to Lessee, assume responsibility or
liability to Lessee or any third parties to which the Company would not
otherwise be subject.
15
<PAGE>
15. ENVIRONMENTAL.
(a) Because Lessee has the day-to-day occupation and
control of the business at the Leased Premises, without limiting any of the
other terms of this Lease, Lessee shall:
(i) Become and remain informed about, and comply and
cause the Leased Premises to remain in compliance with
all Applicable Laws concerning pollution, environmental
protection and compliance, the protection of human
health and safety, materials handling, discharges,
releases and emissions from the Leased Premises, and
the storage, treatment and disposal of wastes and waste
materials whether currently in effect or which may be
enacted in the future, including, but not limited to,
the Resource Conservation and Recovery Act, Clean Water
Act, Clean Air Act, Safe Drinking Water Act, Hazardous
Materials Transportation Act, Toxic Substances Control
Act, Comprehensive Environmental Response, Compensation
and Liability Act ("Environmental Laws").
(ii) Comply with all Environmental Laws governing
storage tanks, underground storage tanks, and all
related pumps and piping ("UST Systems"), including,
but not limited to, required permits, monitoring,
installation, inspections and maintenance of release
detection and/or tank gauging equipment, and vapor
extraction and/or recovery equipment.
(iii) Make physical daily measurements of all products
stored in UST Systems and perform daily and monthly
inventory reconcilations of such measurements with
metered sales and product deliveries. Lessee shall
submit evidence satisfactory to the Company and TA of
its compliance with these requirements within ten (10)
days of a request by the Company or TA.
(iv) Maintain written records of all maintenance,
inspections and inventory reconcilations of UST Systems
for at least three (3) years, or longer if required by
Environmental Laws.
(v) Immediately notify the Company and any appropriate
regulatory agencies of discovery of any suspected or
confirmed inventory loss, release from, on or
16
<PAGE>
to the Leased Premises, or condition that may result in
a release from, on or to the Leased Premises of any
regulated substance; defects in, deterioration of,
leakage, a release, or a condition that may result in a
release of a regulated substance from UST Systems.
Lessee shall make a full written report to the Company
and TA, and appropriate regulatory agencies if required
by Environmental Laws, when a loss of inventory or a
release of regulated substances has triggered a
violation of Environmental Laws or any reporting
obligation thereunder, by the fastest means available.
Lessee shall be solely responsible for and shall
indemnify, defend, and hold the Indemnified Parties
harmless from, any and all claims, costs, fines,
penalties, actions, liabilities, demands or damages of
every nature related to any leak or release not
detected, not reported, or not properly remedied by
Lessee. A failure to maintain an inventory monitoring
system, as required herein, or immediately notify the
Company and TA of an indicated loss or release of a
regulated substance, or contamination of or from the
Leased Premises shall be grounds for termination or
nonrenewal of this Lease pursuant to Paragraph 17
hereof.
(vi) Immediately clean up and properly dispose of all
contaminants, pollutants, toxic substances, and
hazardous substances and wastes which are dumped,
spilled, released, buried or otherwise deposited or
disposed of, or which appear anywhere on, or which
originates from, the Leased Premises from whatever
cause or source. All such cleanup and disposal actions
shall be in compliance with Environmental Laws, and the
requirements of governmental agencies, relating to
pollution or protection of the environment.
(b) The Company may, without obligation, investigate
and undertake any appropriate action in response to any suspected or confirmed
release. If the Company so chooses to make any investigation of the Leased
Premises or any incident reported under this Paragraph 15, or take such action,
it does so without admitting any liability or responsibility and the Company
shall not be obligated to continue or complete such action. Lessee shall
cooperate with the Company at all times during any such investigation or action.
(c) The Company, TA and its representatives shall be
permitted to enter the facility from time to time to perform physical
measurements, test equipment and check records used for complying with
environmental protection requirements of this Paragraph 15. The Company and TA,
however, shall not be obligated to make such inspections or tests.
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(d) Lessee shall cooperate with the Company and TA in
all current and future environmental programs sponsored by the Company or TA.
Lessee shall cooperate and participate in any applicable local programs
established for protection of the environment.
(e) The terms of this Paragraph 15 shall survive the
termination or expiration of this Lease.
16. INSURANCE. With respect to operations
performed under or incident to this Lease, Lessee shall obtain and maintain
insurance acceptable to the Company and TA which is primary as to any other
existing, valid, and collectible insurance and, except for Workers' Compensation
and Employers' Liability Insurance, names the Company and TA as additional Named
Insured Party with a Cross Liability Clause. All such insurance required to be
maintained by Lessee in this Section 16 shall specify a maximum deductible limit
per occurrence of $50,000.00. Such insurance shall include (except as different
coverages and policy limits may reasonably be specified for all Franchised
Businesses from time to time by the Company or TA in the Confidential Operations
Manual or otherwise in writing):
(a) Comprehensive General Liability Insurance, or
Garage Liability Insurance, covering Premises Operations, Completed Operations,
Products Liability, and Contractual Liability, all with a minimum combined
single limit of $1,000,000 each occurrence for Bodily Injury and Property
Damage, including Personal Injury or Death.
(b) Comprehensive Automobile Liability Insurance
covering all owned, hired, or otherwise operated non-owned vehicles with a
minimum combined single limit of $1,000,000 each occurrence for Bodily Injury
and Property Damage, including Personal Injury.
(c) Garagekeepers' Legal Liability Insurance covering
customers' vehicles in Lessee's care, custody, and control, including coverage
for loss by fire, explosion, theft, vandalism, and/or malicious mischief, and
collision or upset with a minimum limit of $300,000 each occurrence.
(d) "All Risk" or "Special Form" Property Insurance,
including Agreed Amount Endorsement, but excluding coverage for Acts of God as
defined in Paragraph 10 of this Lease, which contains a waiver of co-insurance
covering the Leased Premises for loss or damage with a minimum insurance
requirement of $250,000. Lessee's maximum liability for Property loss covered by
such All Risk or Special Form Property Insurance is $400,000, for each
occurrence. The Lessee may elect to self-insure the difference between the
minimum requirement ($250,000) and the maximum liability ($400,000) or insure to
the maximum liability ($400,000). The Company is to be the loss payee.
(e) Workers' Compensation Insurance covering Lessee
and, as required by law, Lessee's Employees, and
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(f) Employers' Liability Insurance with a minimum
limit of $1,000,000 each occurrence.
Such policy or policies shall be written by a licensed
insurance company satisfactory to the Company and TA in accordance with
standards and specifications set forth in the Confidential Operations Manual or
otherwise in writing. The Company reserves the right to review and amend the
amounts and types of the required insurance coverage annually, and the minimum
amounts as required above may be modified from time to time, as conditions
require, by written notice to Lessee. The insurance afforded by the policy or
policies respecting liability shall not be limited in any way by reason of any
insurance which may be maintained by the Company or TA. At the Company's request
or direction, any mortgagee of the Company or TA shall be named as an additional
insured party on all such policies of insurance (excepting those set forth in
subparts (e) and (f) above).
Within thirty (30) days after execution of this Lease, Lessee
shall furnish the Company and TA with policies or Certificates of Insurance
showing compliance with the foregoing requirements, which policies or
Certificates shall provide that coverage will not be cancelled or altered prior
to ninety (90) days' advance written notice to the Company and TA (and, if
named, the Company's mortgagee), which shall reflect proof of payment of
premiums. However, the Company's failure to demand or receive said Certificates
shall in no event be or be construed as a waiver by the Company to require
delivery of said Certificates or the underlying insurance policies of Lessee.
Subrogation rights of Lessee and any party claiming through Lessee, against the
Company or TA, shall be waived with respect to all of the insurance policies set
forth above.
The insurance required hereunder in no way limits or restricts
Lessee's obligations under this Lease as to indemnification of the Company or TA
and the Indemnified Parties, and further, the insurance to be carried shall in
no way be limited by any limitation placed on the indemnity herein given as a
matter of law. Any deductible amounts are the responsibility of Lessee;
provided, however, that no insurance policies required to be maintained by
Lessee pursuant to this Section 16 shall have a deductible amount in excess of
$50,000 per occurrence.
Lessee shall immediately notify its insurance carrier in
writing, with a copy to the Company and TA, of all third party lawsuits, or
claims, that involve the Leased Premises and/or operations thereon.
Should Lessee, for any reason, not procure and maintain
insurance coverage as required by this Lease, the Company shall have the right
and authority (without, however, any obligation to do so) immediately to procure
such insurance coverage and to charge same to Lessee, which charges, together
with a reasonable fee for expenses incurred by the Company in connection with
such procurement, shall be payable by Lessee immediately upon notice.
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17. TERMINATION.
(a) The Company may terminate or not renew this Lease
by written notice to Lessee, upon the occurrence of any of the following:
(i) Lessee's failure to comply with any provision of
this Lease, the Franchise Agreement or any other
agreement between the parties, which provision is
reasonable and of material significance to the
Franchise Relationship between the Company and Lessee.
The Company is not required to give Lessee an
opportunity to remedy any such failure prior to
termination or not renewing this Lease; or
(ii) Lessee's failure to exert good faith efforts to
carry out the terms and conditions of this Lease, the
Franchise Agreement, or any other agreement between the
parties. Prior to terminating or not renewing this
Lease under the provisions of this subsection (ii), the
Company shall advise the Lessee in writing of such
failure and give Lessee a reasonable opportunity to
remedy it; or
(iii) The happening of any one or more events which are
relevant to the Franchise Relationship, including, but
not limited to, the following: (The Company is not
required to give Lessee an opportunity to remedy any
such happening prior to terminating or not renewing
this Lease.)
(A) Lessee's fraud or criminal misconduct in the
operation of the Lease Premises.
(B) Declaration of bankruptcy or judicial
determination of insolvency of Lessee.
(C) If Lessee is an individual, the death of or
the continuing severe physical or mental disability of
Lessee of at least three (3) months' duration, which
renders Lessee unable to provide for the continued
proper operation of the Leased Premises.
(D) The loss of the Company's right to grant
possession under this Lease through expiration of any
underlying lease, if Lessee was notified in writing,
prior to the commencement of the term of this Lease, of
the duration of the underlying lease and of the fact
that such
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underlying lease might expire and not be renewed during
the term of this Lease or at the end of this Lease.
(E) The condemnation or other taking, in whole or
in part, of the Leased Premises under the power of
eminent domain. The condemnation award paid to the
Company, or the payment received by the Company in
exchange for its voluntary conveyance in lieu of
condemnation, shall belong solely to the Company, and
Lessee shall not, by virtue of this Lease, be entitled
to any part thereof; PROVIDED, HOWEVER, that nothing in
this Lease shall preclude Lessee from prosecuting any
claim directly against the condemning authority for
loss of business, or depreciation to, damage to, or
cost of, removal of, or for the value of stock,
inventory and other personal property of Lessee; and
FURTHER PROVIDED, HOWEVER, that no such claim shall
diminish or otherwise adversely affect the Company's
award or proceeds.
(F) The Company's loss of the right to grant
Lessee the use of any Mark, unless the loss is due to
the Company's trademark abuse, violation of federal or
state law, or other fault or negligence of the Company
related to bad faith action by the Company.
(G) The destruction, other than by the Company, of
all or substantially all of the Leased Premises. If
Lessee is occupying the Leased Premises under a Lease
from the Company and the Company rebuilds or replaces
the Leased Premises and elects to offer the operation
of the rebuilt or replaced Leased Premises in
accordance with the terms of this Lease, Lessee shall
have the preferential right to again be the operator of
the Leased Premises.
(H) Lessee's failure to pay the Company in a
timely manner, when due, all sums to which the Company
is legally entitled.
(I) Lessee's failure to pay to operate the Leased
Premises for seven (7) consecutive days, or shorter
period of time which, under the facts and
circumstances, is an unreasonable period of time.
(J) Lessee's willful adulteration, mislabeling or
misbranding of Motor Fuel sold at the Leased Premises,
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or other trademark, trade name, service mark, or other
identifying symbol or name violations.
(K) Lessee's knowing failure to comply with
federal, state or local laws or regulations that are
relevant to the operation of the Leased Premises.
(L) Lessee commingles any fuel.
(M) Lessee's conviction of any felony involving
moral turpitude; or
(iv) The Company's good faith determination, made in
the normal course of business, to withdraw from the
marketing of Motor Fuel through retail outlets in the
state, county or parish in which the Leased Premises is
located.
(b) In addition to the rights of termination or
nonrenewal by the Company set forth in subsections (i), (ii), (iii) and (iv)
above, the Company may decline to renew this Lease:
(i) If the Company and Lessee fail to agree to changes
or additions to this Lease made by the Company in good
faith and in the normal course of business, and the
Company does not insist on such changes or additions
being made for the purpose of preventing the renewal of
this Lease.
(ii) If the Company receives numerous bona fide
complaints concerning Lessee's operation of the Leased
Premises and the Company promptly notifies Lessee of
each complaint and the reason it was communicated to
the Company, and as to those complaints relating to the
condition of the Leased Premises or the conduct of any
employee of Lessee, Lessee does not take prompt action
to cure or correct the basis for such complaints. The
Company will communicate these complaints to Lessee in
writing using the Company's Customer Complaint Form
("Customer Complaint Form"). A written statement from
Lessee as to the outcome is required by the Company.
(iii) If Lessee fails on at least three (3) occasions
during the term of this Lease, to operate the Leased
Premises in a clean, safe and healthful condition and
the Company notified Lessee of each such failure.
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(iv) If the Company makes a good faith determination in
the normal course of business not to renew this Lease
because such renewal would be uneconomical to the
Company, despite any changes or additions to the
provisions of this Lease that may be acceptable to
Lessee; PROVIDED, HOWEVER, that such nonrenewal is not
made for the purpose of converting the Leased Premises
to operation by employees or agents of the Company for
the Company's own account.
(c) The Company may also decline to renew this Lease
if the Company makes a good faith determination, in the normal course of
business, to:
(i) Convert the Leased Premises to a use other than for
the operation of an Auto/Truckstop; or
(ii) Materially alter, add to or replace the Leased
Premises if such alteration, addition or replacement is
not made for the purpose of converting the Leased
Premises to operation by employees or agents of the
Company for the Company's own account; or
(iii) Sell the Leased Premises.
(d) The Company agrees that in the event of a
nonrenewal pursuant to subparagraph (b) hereof, the Company will not sell the
Leased Premises for at least 90 days following the expiration of this Lease,
during which time Lessee shall be free to tender to the Company a purchase offer
pertaining to the Leased Premises; PROVIDED, HOWEVER, that nothing herein shall
be deemed to (a) prevent or restrict the Company from negotiating with third
parties for the sale of the Leased Premises during such 90 day period, or (b)
grant to Lessee any rights of first refusal with respect to any such offer to
purchase which the Company may receive from any third party.
(e) The Company's written notice of termination or
nonrenewal shall include a statement that this Lease is being terminated or not
renewed and shall set forth the reason or reasons for termination or nonrenewal.
Except as otherwise provided in this Section 17, the effective date of the
termination or nonrenewal shall be at least 30 days after the date of notice of
termination or nonrenewal.
(f) Although at least 30 days written notice of
termination or nonrenewal is provided for in most circumstances, there may be
times when the giving of a 30 day notice is not reasonable. If such a
circumstance occurs, the Company may terminate or not renew this Lease by giving
Lessee written notice of termination or nonrenewal on the earliest date that is
reasonably practical.
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(g) Nothing in this Lease shall prohibit or restrict
the Company from terminating or not renewing this Lease in any lawful manner
under applicable federal, state and local laws or regulations, as such laws or
regulations may be amended from time to time.
(h) Provided there is no event of termination or
non-renewal as provided for in this Paragraph 17, Lessee may be entitled to
renew this Lease by exercising the renewal options, as set forth in and subject
to the terms of Paragraph 2, provided Lessee gives the Company written notice of
the election to renew at least 90 but not more than 180 days prior to the
expiration of the Initial Term, or any Renewal Term (each such date on which
notice is delivered during said period being referred to herein as a "Renewal
Date"). Rent during each Renewal Term shall be calculated in accordance with the
terms of Exhibit B.
18. MUTUAL TERMINATION. Lessee and the Company may agree by a
mutual written agreement to terminate or not renew this Lease. The effective
date of such termination or nonrenewal shall be the date agreed to by Lessee and
the Company but may not be a date that is more than 180 days after the date of
such agreement. The Company shall send by certified mail, or personally deliver
to Lessee, a copy of the agreement promptly after it is signed by the Company
and Lessee. Lessee may repudiate such agreement by written notice to the
Company, sent by certified mail, postmarked not more than seven (7) days
following the date Lessee receives a copy of such agreement.
19. ESTOPPEL CERTIFICATE. Lessee shall from time to time,
within five (5) days after being requested to do so by the Company or TA,
execute, acknowledge and deliver to the Company (or, at the Company's request,
to any existing or prospective purchaser, transferee, assignee or mortgagee of
any or all of the Leased Premises, any interest therein or any of the Company's
rights under this Lease) an instrument in recordable form:
(a) certifying (i) that the Lease is unmodified and
in full force and effect (or, if there has been any modification thereof, that
it is in full force and effect as so modified, stating therein the nature of
such modification); (ii) as to the dates to which the guaranteed Fixed Rent
Amount and additional charges arising hereunder have been paid; (iii) as to the
amount of any prepaid rent or any credit due to Lessee hereunder; (iv) that the
Lessee has accepted possession of the Leased Premises, and the date on which the
term commenced; (v) as to whether, to the best knowledge, information and belief
of the signer of such certificate, the Company or the Lessee is then in default
in performing any of its obligations under the Lease (and, if so, specifying the
nature of each such default); and (f) as to any other fact or condition
reasonably requested by the Company or such other addressee; and
(b) acknowledging and agreeing that any statement
contained in such certificate may be relied upon by the Company and any such
other addressee.
20. TERMINATION BY LESSEE. Lessee may terminate this Lease at
any time by 180 days' advance written notice to the Company, posted by certified
mail, but only if Lessee simultaneously terminates the Franchise Agreement as
permitted in accordance with the
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terms of the Franchise Agreement. Upon receipt of such notice by the Company,
it may not be withdrawn by Lessee without the Company's written approval.
21. DEATH OR INCAPACITY OF LESSEE.
(a) In the event of the death or Incapacity of an
individual Lessee, or any partner of a Lessee which is a partnership or any
stockholder owning fifty percent (50%) or more of the capital stock of a Lessee
which is a corporation, the heirs, beneficiaries, devisees, or legal
representatives of said individual, partner or stockholders shall notify the
Company and TA within fifteen (15) days of death or incapacity, and, within one
hundred eighty (180) days of such event:
(i) Apply to the Company for the right to continue to
operate the Franchised Business for the duration of the
term of this Lease, which right shall be granted upon
the fulfillment of all of the conditions set forth in
subparagraph 11(b) of this Lease; or
(ii) Sell, assign, transfer, or convey Lessee's
interest in compliance with the provisions of
subparagraph 11(b) of this Lease; PROVIDED, HOWEVER, in
the event a proper and timely application for the right
to continue to operate has been made and rejected, the
one hundred eight (180) days to sell, assign, transfer
or convey shall be computed from the date of said
rejection. For purposes of this Paragraph, the
Company's silence on an application made pursuant to
subparagraph 11(b) through the one hundred and eighty
(180) days following the event of death or incapacity
shall be deemed a rejection made on the last day of
such period.
(b) In the event of the death or Incapacity of an
individual Lessee, or any partner or stockholder of a Lessee which is a
partnership or corporation, where the aforesaid provisions of Paragraph 11 have
not been fulfilled within the time provided, all rights licensed to Lessee under
this Lease and Lessee's leasehold interest in the Leased Premises under this
Lease shall, at the option of the Company, terminate forthwith.
(c) In the event of the death of Incapacity of any
such individual Lessee or any partner of a Lessee as described in Paragraph
21(a) hereof, or any failure by Lessee to promptly cure any non-compliance with
the terms of this Lease, the Company shall have the right, but not the
obligation, to operate the Auto/Truckstop during the interim periods of time
specified in this Paragraph 21 for the heirs, beneficiaries, devisees, or legal
representatives of said individual, partner or stockholder to apply to the
Company or attempt to sell, assign, transfer, or convey Lessee's interest in the
Leased Premises or until Lessee cures its non-compliance prior to termination or
non-renewal by the Company.
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22. BANKRUPTCY. (Intentionally Omitted.)
23. TAXES AND ASSESSMENTS. The Company shall pay all real
estate taxes and assessments levied against the Leased Premises. Lessee shall
pay all taxes on the products, personal property, and improvements of the Lessee
on the Leased Premises. Lessee shall be exclusively liable for the payment of
any and all premiums, contributions, and taxes for Workers' Compensation
Insurance, Unemployment Insurance, old Age Benefits, annuities, and retirement
benefits now or hereafter imposed by or pursuant to any governmental law or
regulation which are measured by the wages, salaries, or remuneration paid by
Lessee to his employees and representatives.
24. INDEPENDENT CONTRACTOR. Lessee is an independent
contractor hereunder. It is agreed that, except as provided in the Franchise
Agreement, none of the provisions of this Lease reserves or shall be construed
as reserving to the Company any right to exercise control over the business
operations of Lessee upon the Leased Premises or to direct in any respect the
manner in which such business and operations shall be conducted (including the
price at which products and merchandise are to be sold), it being understood and
agreed that except as set forth to the contrary in the Franchise Agreement and
this Lease, the entire control and direction of such activities shall be and
remain with Lessee. Lessee shall have no authority to employ any persons as
employees or agents for or on behalf of the Company for any purpose, and neither
Lessee nor any other persons performing any duties or engaging in any work at
the request of Lessee shall be deemed to be the employees or agents of the
Company. Lessee will not erect nor permit any sign, insignia, or other
advertising device upon or near the Leased Premises which would in any way
indicate or imply that the Company is the owner or operator of the business
being conducted thereon by Lessee.
25. CREDIT CARD SALES. [INTENTIONALLY OMITTED.]
26. SURRENDER OF PREMISES. At the expiration or termination of
this Lease, Lessee shall yield immediate and peaceable possession of the Leased
Premises to the Company and shall, at such time, return the keys to all locks;
said Leased Premises to be surrendered to the Company in as good condition as
when received, except for reasonable wear and tear and damage or destruction not
caused by Lessee or Lessee's employees', agents', or contractors' negligent or
willful acts or omissions.
Upon the termination or nonrenewal of this Lease, (unless
state law provides to the contrary) neither the Company nor any incoming Lessee
shall be obligated to purchase any of Lessee's inventory, tools, equipment, or
supplies; provided, however, that the Company, at its option, may purchase any
of such inventory, tools, equipment, or supplies which are not obsolete and are
in a current and salable condition which Lessee purchased from the Company, for
the reasonable value thereof, but not to exceed the cost to Lessee, and credit
the amount thereof against any sums due the Company by Lessee. With respect to
property items owned by Lessee and not purchased by the Company, and
improvements, alterations, decorations, or additions', structural or otherwise,
made by Lessee, Lessee agrees to remove same immediately from the Leased
Premises prior to the end of the Lease and repair any and all damage to the
Leased
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Premises caused or occasioned by such removal. Any property not removed
by Lessee may be removed and the Leased Premises restored by the Company at
Lessee's expense. Any property not removed by either party shall become the
property of the Company and no compensation will be due Lessee therefore.
27. INSPECTION OF LEASED PREMISES. The Company and TA has the
right to enter and inspect the Leased Premises at any reasonable time with such
employees and equipment as it considers necessary to (a) determine if the
obligations of Lessee under this Lease are being fulfilled, (b) perform
replacements required of the Company under this Lease pursuant to Exhibit C
and/or (c) conduct a Quality Inspection. Lessee agrees to cooperate with the
Company in connection with the Company's activities pursuant to clauses (a), (b)
and (c) of the immediately preceding sentence, such cooperation to include
making employees and the Manager available at reasonable times for discussion
with the Company's employees and representatives.
28. AMENDMENTS; WAIVERS; REMEDIES.
(a) Any provision of this Lease may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by Lessee and the Company, or in the case of a waiver,
by the party against whom the waiver is to be effective.
(b) No waiver by either party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent occurrence.
No single or partial exercise by either party in exercising any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any right or remedies provided
by law.
29. SUCCESSORS AND ASSIGNS. This Lease shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
30. ARBITRATION.
(a) Any monetary claim of less than ONE HUNDRED
THOUSAND Dollars ($100,000.00) in dispute arising out of or relating to this
Lease, or any breach thereof, shall be submitted to arbitration before a single
arbitrator in the county and state where the Company's principal place of
business is located at the time such action is brought forth in accordance with
the rules of the American Arbitration Association and judgment upon the award
may be entered in any court having jurisdiction thereof. The arbitrator is
explicitly authorized to award attorney's fees as part of his or her award.
Nothing contained herein shall, however, be construed to limit or to preclude
the Company from bringing any action in any court of competent jurisdiction for
injunctive or other provisional relief as the Company deems to be necessary or
appropriate to compel Lessee to comply with its obligations hereunder to or
protect the Company's Marks or other property rights of the Company. In
addition, nothing contained herein
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shall be construed to limit or to preclude the Company from joining with any
action for injunctive or provisional relief all monetary claims that the Company
may have against Lessee which arise out of the acts or omissions to act giving
rise to the action for injunctive or provisional relief. This arbitration
provision shall be deemed to be self-executing and in the event that Lessee
fails to appear at any properly noticed arbitration proceeding, award may be
entered against Lessee notwithstanding its failure to appear.
(b) Nothing herein contained shall bar the right of
either party to seek and obtain temporary injunctive relief from a court of
competent jurisdiction, subject to Paragraph 34 hereof, in accordance with
applicable law against threatened conduct that will cause loss or damage,
pending completion of arbitration.
(c) It is the intent of the parties that any
arbitration between the Company and Lessee shall be of Lessee's individual claim
and that the claim subject to arbitration shall not be arbitrated on a classwide
basis.
31. GOVERNING LAW; JURY TRIAL WAIVER. This Lease shall be
construed in accordance with and governed by the laws of the State of Ohio,
Cuyahoga County. Each of the Company and Lessee hereby irrevocably waives trial
by jury and any action, proceeding or counterclaim, whether at law or in equity,
brought by the Company or TA against Lessee or by Lessee against the Company or
TA whether or not there are other parties in such action or proceeding.
32. COUNTERPARTS; EFFECTIVENESS32. COUNTERPARTS;
EFFECTIVENESS. This Lease may be signed in any number of counterparts, each of
which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Lease shall become
effective when each party hereto shall have received a counterpart hereof signed
by the other party hereto.
33. ENTIRE AGREEMENT33. ENTIRE AGREEMENT. This Lease, together
with the Franchise Agreement and all documents executed or delivered in
connection herewith or therewith, or referenced in this Lease or the Franchise
Agreement, together constitute the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Lease. Neither this Lease nor any
provision hereof is intended to confer upon any person or entity other than the
parties hereto any rights or remedies hereunder, except the rights given to the
Indemnified Parties in Paragraph 14.
34. JURISDICTION. Except to the extent required by the Company
to recover possession of the Leased Premises in another jurisdiction, each of
the parties hereto irrevocably submits to the jurisdiction of the state or
federal courts sitting in Cuyahoga County, Ohio, in any action or proceeding
arising out of or relating to this Lease, agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court, and
agrees not to bring any action or proceeding arising out of or relating to this
Lease in any other court or to contest the jurisdiction (in rem or in personam)
or power or decision of such court over or
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pertaining to the party or with respect to the subject matter in any other court
within or without the United States other than appropriate appellate courts.
Each of the parties hereto irrevocably waives any defense of inconvenient forum
to the maintenance of any action or proceeding so brought and waives any bond,
surety or other security that might be required of the other party hereto with
respect thereto.
35. CAPTIONS. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
36. SEVERABILITY. If any provision of this Lease, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Lease and such provisions as applied to other Persons, places
and circumstances shall remain in full force and effect only if, after excluding
the portion deemed to be unenforceable, the remaining terms shall provide for
the consummation of the transactions contemplated hereby in substantially the
same manner as originally set forth at the later of the date this Lease was
executed or last amended.
37. CONSTRUCTION. Whenever required by the context, any gender
shall include any other gender, the singular shall include the plural and the
plural shall include the singular.
38. INCONSISTENCY. In the event of any conflict between the
terms and provisions of this Lease and the terms and provisions of the Franchise
Agreement the terms and provisions of the Franchise Agreement as the case may
be, shall govern and control.
39. NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two business days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed-to the intended recipient as set forth below,
(iii) if given-by telex or telecopier, once such notice or other communication
is transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter mailed in accordance
with the provisions of clause (ii) above or (iv) if sent through a reputable
overnight delivery service in circumstances to which such service guarantees
next day delivery, the day following being so sent:
If to the Company or TA, to: National Auto/Truckstops, Inc.
c/o TAFSI
24601 Center Ridge Road, Suite 300
Westlake, OH 44145-5634
Attn: Franchise Manager
Phone: 216/808-3016
Telecopy: 216/808-3307
29
<PAGE>
If to Lessee, to:
------------------------------
------------------------------
------------------------------
Attention:
Phone:
Telecopy:
All notices given or required hereunder, by Lessee to TA or the Company, shall
also be simultaneously made and directed to TAFSI at the notice address provided
pursuant to the Franchise Agreement. Either party may give any notice, request,
demand, claim or other communication hereunder using any other means (including
ordinary mail or electronic mail), but no such notice, request, demand, claim or
other communication shall be deemed to have been duly given unless and until it
is actually received by the individual for whom it is intended. Either party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
40. APPROVALS.
(a) Whenever this Lease requires the prior approval
or consent of the Company, Lessee shall make a timely written request to the
Company therefor, and, except as otherwise provided herein, any approval or
consent granted must be in writing to be binding upon the Company.
(b) The Company makes no warranties or guarantees
upon which Lessee may rely and assumes no liability or obligation to Lessee or
any third party to which it would not otherwise be subject, by providing any
waiver, approval, advice, consent or services to the Company in connection with
this Lease, or by reason of any neglect, delay or denial of any request
therefor.
41. FORCE MAJEURE. The period of time during which either
party hereto is prevented or delayed in the performance or fulfilling any
obligation, other than payment of the Fixed Rent Amount (as defined in Exhibit
B), additional rent or any other fees or sums and charges due hereunder, due to
unavoidable delays caused by Acts of God, earthquake, fire, flood, or the
elements, malicious mischief, riots, strikes, lockouts, boycotts, picketing,
labor disputes or disturbance, war, compliance with any directive, order or
regulation of any governmental authority or representative thereof acting under
claim or color of authority, or for any reason beyond such party's reasonable
control, whether or not similar to the foregoing, shall be added to such party's
time for performance thereof, and such party shall have no liability by reason
thereof.
42. SUBORDINATION AND NON-DISTURBANCE
(a) This Lease shall be subordinate to each and every
underlying lease, deed of trust or mortgage encumbering the Leased Premises or
any portion thereof, whether now existing or in the future, and to any advances
made on the security thereof and to any renewals, modifications, consolidations,
replacements or extensions thereof, whenever made or recorded.
30
<PAGE>
The Company covenants that Lessee's right to quiet possession of the Leased
Premises during the term hereof shall not be disturbed if Lessee pays the rent
and performs all of Lessee's obligations under this Lease and is not otherwise
in default. The Company shall use commercially reasonable efforts to obtain a
non-disturbance agreement embodying the provisions of the immediately preceding
sentence from all current and future holders of mortgages or deeds of trust
affecting the Leased Premises (hereinafter collectively referred to as the
"Mortgagees"); provided, however, that the Company shall not be required to pay
any sum demanded by any Mortgagee as consideration for any such non-disturbance
agreement. If any ground lessor, beneficiary or mortgagee elects to have this
Lease prior to the lien of its ground lease, deed of trust or mortgage and gives
written notice thereof to Lessee, this Lease shall automatically be deemed prior
to such ground lease, deed of trust or mortgage whether this Lease is dated
prior or subsequent to the date of said ground lease, deed of trust or mortgage
or the date of recording thereof.
(b) If the Company's interest in the Leased Premises
is acquired by any ground lessor, beneficiary under a deed of trust, mortgagee,
or purchaser at a foreclosure sale, Lessee shall-attorn to the transferee of or
successor to the Company's interest in the Leased Premises and recognize such
transferee or successor as the Company under this Lease. Lessee waives the
protection of any statute or rule of law which gives or purports to give Lessee
any right to terminate this Lease or surrender possession of the Leased Premises
upon the transfer of the Company's interest. The Company shall not assert any
claim against Lessee for any sums due under this Lease paid by Lessee to a third
party after receipt by Lessee of notice in writing from the Company directing
Lessee to pay any such sums to such third party, and before Lessee receives
notice from the Company revoking such direction.
(c) Lessee shall sign and deliver any instrument or
documents necessary or appropriate to evidence any such attornment or
subordination or agreement to do so, provided that such instruments or documents
are consistent with the provisions of the immediately preceding subparagraphs
(a) and (b). If Lessee fails to do so within twenty (20) days after written
request, Lessee hereby makes, constitutes and irrevocably appoints the Company,
or any transferee or successor of the Company, the attorney-in-fact, coupled
with an interest, of Lessee to execute and deliver any such instrument or
document.
44. EXISTING CONDITION OF PREMISES. Lessee acknowledges that
the Leased Premises are and have been subject to active use by an operating
business either by Lessee or other third party and have experienced normal wear
and tear as a result thereof. Lessee has had reasonable opportunity to inspect,
and has inspected, the Leased Premises and accepts the Leased Premises in its
present condition as of the date hereof. The Company has no obligation to
perform any work or make any alterations, additions or improvements in order to
prepare the Leased Premises for Lessee's occupancy. Lessee acknowledges that
neither the Company nor any agent of the Company has made any representation as
to the condition of the Leased Premises or its suitability for Lessee's intended
use.
45. COST OF ENFORCEMENT OR DEFENSE. If a claim for amounts
owed by Lessee to the Company is asserted in any legal proceeding before a court
of competent jurisdiction, or if the Company or Lessee is required to enforce
31
<PAGE>
this Lease in a judicial proceeding, the prevailing party shall be entitled to
reimbursement of its costs, including reasonable accounting and legal fees, in
connection with such proceeding.
46. INJUNCTIVE RELIEF. Lessee shall have the right to obtain
injunctive relief against threatened or actual conduct by Lessee that will cause
the Company loss or damages, for Lessee's misuse or unauthorized use of the
Leased Premises, for Lessee's threatened actual violation of the provisions of
this Lease governing Confidential Information. Such injunctive relief shall be
governed under the usual equity rules, including the applicable rules for
obtaining restraining orders and preliminary injunctions.
47. LINE OF CREDIT. In order to guaranty the performance of
Lessee's monetary obligations to the Company pursuant to this Lease, Lessee
shall establish a line of credit with the Company's credit department in an
amount determined by the Company. In the event that Lessee fails to pay any
amounts due pursuant to this Lease, the Company may refuse to extend credit to
Lessee if Lessee fails to meet the terms of credit.
48. CAVEAT. The success of the business venture contemplated
to be undertaken by Lessee by virtue of this Lease is speculative and depends,
to a large extent, upon the ability of Lessee as an independent business entity,
and its active participation in the daily affairs of the business as well as
other factors. Franchisor does not make any representation or warranty express
or implied as to the potential success of the business venture in this Lease.
49. ACKNOWLEDGMENTS.
(a) Lessee represents and acknowledges that it has
received, read and understood this Lease; and that the Company has fully and
adequately explained the provisions herein to Lessee's satisfaction; and that
the Company has accorded Lessee ample time and opportunity to consult with
advisors of its own choosing about the potential benefits and risks of entering
into this Lease.
(b) Lessee acknowledges that its has received a copy
of this Lease and the attachments thereto, at least five (5) business days prior
to the date on which this Lease was executed. Lessee further acknowledges that
Lessee has received the disclosure document required by the Trade Regulation
Rule of the Federal Trade Commission entitled Disclosure Requirements and
Prohibitions Concerning Franchising and Business Opportunity Ventures, at least
ten (10) business days prior to the date on which this Lease was executed.
Lessee acknowledges that the Company and TA have made no representations or
warranties in connection with this Lease other than those expressly set forth
herein or in the Franchise Agreement, and that Lessee has not relied on any such
representations or warranties in entering into this Lease.
(c) Lessee has been advised to consult with its own
advisors with respect to the legal, financial and other aspects of this Lease,
the business franchised hereby, and the prospects for that business. Lessee has
either consulted with such advisors or has deliberately declined to do so.
32
<PAGE>
(d) Lessee affirms that all information set forth in
any and all applications, financial statements and submissions to the Company is
true, complete and accurate in all respects, with Lessee expressly acknowledging
that the Company is relying upon the truthfulness, completeness and accuracy of
such information.
(e) Lessee has conducted an independent investigation
of the business contemplated by this Lease and recognizes that, like any other
business, an investment in a Franchised Business and the Leased Premises
involves business risks and that the success of the venture is primarily
dependent upon the business abilities and efforts of the Lessee.
(f) LESSEE UNDERSTANDS AND ACKNOWLEDGES THAT ALL
REPRESENTATIONS OF FACT MADE BY THE COMPANY HEREIN ARE MADE SOLELY BY THE
COMPANY. ALL DOCUMENTS, INCLUDING THE COMPANY'S FRANCHISE AGREEMENT AND THIS
LEASE, HAVE BEEN PREPARED SOLELY IN RELIANCE UPON REPRESENTATIONS MADE AND
INFORMATION PROVIDED BY THE COMPANY, ITS OFFICERS AND ITS DIRECTORS. LESSEE
FURTHER AGREES THAT IT HAS NO CLAIM AGAINST, AND WILL INDEMNIFY AND HOLD
HARMLESS, THE PREPARER OF ANY AND ALL SUCH FRANCHISE AGREEMENTS, LEASES AND
OFFERING CIRCULARS AND EXHIBITS THERETO, WITH RESPECT TO ANY AND ALL LOSS,
COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), DAMAGES AND LIABILITIES RESULTING
FROM ANY REPRESENTATIONS AND/OR CLAIMS MADE BY THE COMPANY IN SUCH DOCUMENTS.
33
<PAGE>
NATIONAL AUTO/TRUCKSTOPS, INC. [LESSEE]
By: By:
--------------------------- ----------------------------
Name: Name:
Title: Title:
Witnessed By: Witnessed By:
- ----------------------------- ------------------------------
- ----------------------------- ------------------------------
STATE OF DELAWARE )
)
COUNTY OF )
-------------------------
On this day of in the year , before me
---- ----------------- ------
, a Notary Public in and for said state, personally appeared
- -------------
, of NATIONAL
- ---------------------- ----------------------------------
AUTO/TRUCKSTOPS, INC., known to me to be the person who executed the within
Agreement and acknowledged to me that executed the same for the
---------------
purposes therein stated.
------------------------------------
Notary Public
STATE OF )
--------------------------
)
COUNTY OF )
--------------------------
On this day of in the year , before me
---- ----------------- ------
, a Notary Public in and for said state, personally appeared
- -------------
, of [LESSEE], known to me to
- -------------------- -----------------------------
be the person who executed the within Agreement and acknowledged to me that
executed the same for the purposes therein stated.
- ---------------
------------------------------------
Notary Public
34
<PAGE>
EXHIBIT A-I
DESCRIPTION AND DEPICTION OF REAL PROPERTY
BEING A PART OF THE LEASED PREMISES.
[To be inserted.]
A-I-1
<PAGE>
EXHIBIT A-II
BUILDINGS, IMPROVEMENTS, FIXTURES AND EQUIPMENT
[To be inserted.]
A-II-1
<PAGE>
EXHIBIT B
RENTAL SCHEDULE
Lessee shall pay the Company as rental for the Leased Premises during the term
of this Lease the following:
The "Fixed Rent Amount", as defined below, payable monthly on or before
the 10th day of each calendar month during the term of this Lease;
provided, however, that if the term of this Lease begins and/or ends on
a day other than the first or last day of a calendar month, the
applicable payment of the Fixed Rent Amount shall be appropriately
prorated; and provided further, however, that the Fixed Rent Amount
with respect to the first full or partial calendar month of the term of
this Lease is payable upon execution of this Lease. The term "Lease
Year" shall mean the first consecutive 12 month period beginning on the
date of the Lease and each successive 12 month period thereafter,
whether fiscal or annual.
As used herein, the annual Fixed Rent Amount for the first Lease Year
from execution of this Lease by Lessee shall be equal to $ (the "Base
----------
Rent Amount"), and shall be payable in equal, consecutive monthly installments;
provided, however, that the Base Rent Amount shall permanently increase by: (1)
an amount (the "Improvement Rent") equal to fourteen percent (14%) of the cost
of all capital improvements, replacements and repairs made from time-to-time by
the Company costing $2,500 or more (or, pursuant to Paragraph 8, by Lessee at
the Company's expense over $2,500) (the "Improvements"), if any; and (2) the
amount the Inflator (as hereafter defined) for the current Lease Year shall have
increased over the Inflator for the immediately preceding Lease Year. Any
increase in the Fixed Rent Amount resulting from Improvements made by the
Company shall take effect upon completion of and payment by the Company for the
Improvements, and delivery to Lessee of thirty (30) days advance written notice
of the Fixed Rent Amount increase resulting from the Improvements, which notice
shall recite the nature of the Improvements, the date of completion of the
Improvements, the Fair Market Value of the Improvements and the new Fixed Rent
Amount. The first installment of the then current Fixed Rent Amount shall be
payable on the 10th of the month next following the expiration of the 30-day
notice period. Written notice of the resulting increase in the Fixed Rent Amount
resulting from the Inflator to be paid by Lessee will be sent to Lessee by the
Company within thirty (30) days prior to the commencement of each new Lease Year
under this Lease. The Fixed Rent Amount shall only increase once annually as a
result of the Inflator. As used herein, the "Inflator" shall mean the percentage
increase (and excluding any decrease) in the Consumers Price Index for all Urban
Consumers for all cities ("CPI"), using 1982-84 = 100 as the base year, as
published by the U.S. Bureau of Labor Statistics, in the last published index.
The increase in the Fixed Rent Amount determined using the Inflator shall be
calculated by multiplying the Fixed Rent Amount for the immediately preceding
Lease Year by the percentage increase in the CPI for the current Lease Year, and
adding the resulting amount to the Fixed Rent Amount paid in the preceding Lease
Year. Notwithstanding the foregoing, in no event shall the increase in the Fixed
Rent Amount as a result of the Inflator increase the Fixed Rent Amount more than
Twenty Percent
<PAGE>
(20%) during the period of the Initial Term or Twelve Percent (12%) for any
individual Renewal Term.
Rentals shall be paid by Lessee by electronic transfer of funds to an
account maintained by the Company.
B-2
<PAGE>
EXHIBIT C
MAINTENANCE RESPONSIBILITY SCHEDULE
C-1
<PAGE>
EXHIBIT C
TRAVEL CENTER
MAINTENANCE RESPONSIBILITY FORM
Fee Owned Single Lease
- --------------------------------------------------------------------------------
DEFINITIONS AND RESPONSIBILITIES
- --------------------------------------------------------------------------------
CLEANING
Cleaning shall mean all material, labor, and equipment required to keep
all dirt, dust, grease, trash, and foreign material from the identified item in
accordance with minimum maintenance standards. The methods and cleaning material
are furnished by Lessee at his discretion. Lessee is responsible for the damage
to any material or equipment caused by improper cleaning methods, materials, or
by the omission of proper cleaning.
MAINTENANCE
Maintenance shall mean operating and preventive maintenance and/or
repair or replacement of component parts required to keep equipment and material
in good operating condition, in accordance with the manufacturer's
recommendations and minimum maintenance standards. Equipment and material shall
be properly maintained in order that it may attain its expected life before
replacement is required.
It is not practical to list each component part of all equipment and
material and each maintenance responsibility of Lessee; therefore, in addition
to the maintenance responsibilities set forth in this Exhibit C, Lessee's
operating and preventive maintenance responsibility shall also include, but not
be limited to, oiling and greasing of equipment, adjustment of pressure and
temperature settings, filter replacement, oil changing and other similar routine
maintenance operations established by manufacturer's standards or minimum
maintenance standards, or by guidelines published by the Company or TA with at
least 30 day's prior written notice thereof to Lessee.
Lessee is also responsible for routine repairs and replacement of
component parts that are relatively minor as compared to the replacement of an
entire piece of equipment or material. These include, but are not limited to,
pump couplings, pump impellers, motor capacitors, belts, belt guards,
thermostats, thermocouples, individual circuit breakers, door closer parts,
relay switches, pressure relief valves, gate valves, and similar types of parts
and the labor required to install such parts.
REPLACEMENT
Replacement shall mean the physical replacement of equipment or
material due to normal wear and/or abuse or neglect. The anticipated life of
equipment or material shall be determined by combining manufacturer's
<PAGE>
information, usage of the item and experience comparison with similar equipment
or material.
If premature replacement of any equipment or material is required due
to Lessee's abuse or neglect, Lessee shall make the replacement at his expense,
regardless of the designated replacement responsibility set forth in this
Exhibit C. Equipment or material replaced by Lessee shall be with like type of
equipment or material, to the extent practicable.
The Company may, at its sole election, replace equipment or material
with like or different equipment or material.
Where Exhibit C indicates the Company is responsible for replacement of
an item, the Company may elect to replace or rebuild a major component part of
the equipment or material in lieu of replacing the entire unit of equipment or
material. As a general rule, a major component part shall be repaired if the
estimated cost versus replacement cost of the entire unit is not more than 50%
of such replacement cost; however the Company shall have the sole right to elect
to replace or rebuild a component part or replace the equipment or material.
The Leased Premises may not include all the buildings, improvements,
fixtures, equipment and machinery listed on this Exhibit "C"; therefore, the
cleaning, replacement and maintenance obligations of the Company and Lessee are
applicable only to the buildings, improvements, fixtures, equipment and
machinery located on the Leased Premises as of the effective date of this lease,
and the buildings, improvements, fixtures, equipment and machinery, if any,
placed on the Leased Premises by the Company during the term of this Lease. In
general, items not specifically listed on this Exhibit C and not placed on the
Leased Premises by Lessee shall be Lessor's responsibility to replace if the
initial cost or the fair market value of such item, exceeds $2,500.00 which
threshold shall increase by the CPI each year in accordance with Exhibit B of
this Agreement. In addition, any reference in this Exhibit C to the $2,500.00
threshold shall be increased annually by the CPI. The cleaning, maintenance and
replacement of buildings, improvements, fixtures, equipment and machinery,
placed on the Leased Premises by Lessee, is the obligation of Lessee. Lessor
shall not be responsible for replacement of items covered by Lessee's insurance
policies required to be maintained pursuant to this Lease.
----------------------------------------
Lessee Initial
2
<PAGE>
EXHIBIT C
TRAVEL CENTER
MAINTENANCE RESPONSIBILITY FORM
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SITE IMPROVEMENTS THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
1. APPROACHES
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Highway Berm Area X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Concrete Curbs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Culverts & Headwalls X X X
------- ------ -------- ------ ------ -------
2. UNDERGROUND TANK AREA
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Concrete Pad X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Fill Caps & Manholes X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Vents X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Identification & Maintenance Painting X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Padlocks for Fill Lines X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Underground Product Tanks & Lines X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Submerged Pumps & Leak Detectors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
H. Water In Tanks - Routine, Condensation X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
I. Annual Testing, Per Government Requirements X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. UST Tightness Testing X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. YARD PAVING
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Concrete (Lessee responsible for replacements less than
$2,500) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Blacktop (Lessee responsible for replacements less than
$2,500) X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Blacktop Repairs (Due to dropped trailers) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Gravel (Lessee responsible for replacements less than
$2,500) X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Parking Stall Striping
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Parking Stall Striping (New Pavement) X
------- ------ -------- ------ ------ -------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SITE IMPROVEMENTS THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
2. Parking Stall Striping Repainting X
------- ------ -------- ------ ------ -------
E. Fencing, Guard Rail -- Routine Repairs and Replacement
less than $2,500.00 X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Replacement more than $2,500.00 X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Yard Sewers, Manholes & Storm Drainage X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Drive Sweeping & Plowing Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
H. Canals & Drainage Ditches X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
I. Concrete Curbs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Concrete Bumpers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. ISLAND, CANOPIES, ALLIED EQUIPMENT
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Canopies
------- ------ -------- ------ ------ -------
1. Structural, Fascia, Drainage, Washing, Painting,
Signs (approved by the Company)
X X X
------- ------ -------- ------ ------ -------
2. Electrical Fixtures, Bulbs, Ballasts and Lens Covers
X X X
------- ------ -------- ------ ------ -------
3. Speakers & Wiring X X X
------- ------ -------- ------ ------ -------
4. Intercom Handsets X X X
------- ------ -------- ------ ------ -------
B. Islands
------- ------ -------- ------ ------ -------
1. Steel Forms X X X
------- ------ -------- ------ ------ -------
2. Steel Forms - Maintenance Painting X
------- ------ -------- ------ ------ -------
3. Island Oil Merchandisers X X X
------- ------ -------- ------ ------ -------
4. Pedestals X X X
------- ------ -------- ------ ------ -------
(a) Replacement Hoses & Automatic Nozzles
X X X
------- ------ -------- ------ ------ -------
(b) Recalibration, Per Government Requirements
X
------- ------ -------- ------ ------ -------
(c) Recalibration, Other X
------- ------ -------- ------ ------ -------
5. Hosetriever Replacement, Where Used X X X
------- ------ -------- ------ ------ -------
6. Island Shelters X X X
------- ------ -------- ------ ------ -------
7. Island Shelter Heaters X X X
------- ------ -------- ------ ------ -------
8. Island Water & Air Service Lines X X X
------- ------ -------- ------ ------ -------
9. Air & Water Hoses & Nozzles & Coxwell Units (Island X X X
Service)
------- ------ -------- ------ ------ -------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SITE IMPROVEMENTS THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
10. Air Hoses & Heads for Truck Air Tank X X X
------- ------ -------- ------ ------ -------
11. Island Light Fixtures & Poles X X X
------- ------ -------- ------ ------ -------
(a) Painting X
------- ------ -------- ------ ------ -------
(b) Lamps Replacement/Lens Replacement X X X
------- ------ -------- ------ ------ -------
12. Windshield Cabinets, Water Buckets & Other
Expendable Items X X X
------- ------ -------- ------ ------ -------
13. Waste Receptacles X X X
------- ------ -------- ------ ------ -------
5. GRASS AREA, LANDSCAPING, FERTILIZING, SPRINKLERS, NOZZLES &
WATER HOSE
------- ------ -------- ------ ------ -------
A. Underground Water Lines, Hydrants X X
------- ------ -------- ------ ------ -------
6. GREASE TRAP FROM KITCHEN X X X
------- ------ -------- ------ ------ -------
7. OIL-WATER SEPARATORS X X X
------- ------ -------- ------ ------ -------
8. SIGNAGE & LIGHTING (INCLUDING ALL BUILDINGS)
------
------- ------ -------- ------ ------ -------
Lessor shall be responsible for replacement of all items
associated with TA branded signs. Lessee shall be responsible
for cleaning and maintenance of all signage and replacement of
unbranded signs and lights.
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. SEWAGE DISPOSAL SYSTEM - MECHANICAL OIL SEPARATORS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Major equipment, including complete replacement of all piping and
valves, pumps and motors, compressors and blowers, chlorinators,
communutors and bar screens, electrical and pneumatic controls and
wiring, surge tanks, lift stations, aeration and clarifier tanks,
tertiary tanks, filter beds, spray fields, drain fields, unit
enclosures and housing, and grating
X X X
------- ------ -------- ------ ------ -------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SITE IMPROVEMENTS THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
1. All parts necessary for repair X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Structural enclosures X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Operating costs and operating equipment, including nozzles
and diffusers, belts, chemicals, test equipment, filters,
oiling and greasing, flexible tubing, and hoses
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Make Daily Inspections & All Tests X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Maintenance in Accordance with Manufacturer's and Health
Department Maintenance List
X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Control Weeds and Cut Grass From: All Areas, Control
Rodents and Insects X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Lagoons, Ponds X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Lagoons, Ponds including removing sediment and
vegetation X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Grass, Trash, Sand Traps, Septic Tanks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Drain or Remove Sludge X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Rodding All Lines X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
H. Oil Separators and Skimming Ponds
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Free Floating Collector Tube X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Operating Costs, All Supplies & Replacement of
Drive Wheels & Pressure Blocks, Rim Scrapers,
Pressure Block Ceramic Wear Pieces
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. Pump Out Skimmed Oil Tank X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. Swing Chains, Counterweights, Booms X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. Remove Oil from Oil Separator X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
10. WATER SYSTEM
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Operating Costs and All Materials X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Lubrication of Motors, Controls Etc. X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Periodically Drain and Flush Out Tanks X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Recharge and Clean Water Treating Equipment as Required by
Manufacturer X X
------- ------ -------- ------ ------ -------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SITE IMPROVEMENTS THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
E. Major equipment, including complete replacement of all piping and
valves, gauges, switches and controls, pressure tanks, aerator tanks,
mineral and brine tanks, water storage tanks, chlorinators, other
chemical feeder tanks, pumps, motors, and starters, compressors, and
pump houses
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. All parts necessary for repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Structural enclosures X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. 1. Testing if required by EPA X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
11. TRUCK SCALES X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Calibrating - Lubricating X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Coin Head or Electronic Head & Printer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Scale House X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Platform & Weigh Bridge X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Sump Pump & Pit Cleaning X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Contract Maintenance Service (for 90-Day Inspection
Interval) Must Be Approved by the Company
X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Concrete Approaches X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
12. LPG EQUIPMENT
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Installation and/or Replacement X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Underground electric for LPG X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Fire Extinguisher (Type to be Approved by the Company) X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Bumpers & Fence Protection X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
13. COMPACTOR (APPROVED BY TA)
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
Includes Original Cost, Installation, Repair,
Replacement & Operating Costs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
14. REFUSE - TRASH, GARBAGE & POLLUTANTS X
------- ------ -------- ------ ------ -------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SITE IMPROVEMENTS THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
A. Dumpster X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Barrels or Drums and Covers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Other Disposal Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Remove and properly dispose of all contaminants,
pollutants, toxic substances, and hazardous substances on
the Leased Premises. (NOTE: No Trash or Debris May Be
Buried on the Company Property)
X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
15. FLAG POLES X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
16. FLAGS (ORIGINAL & REPLACEMENT) X X X
------- ------ -------- ------ ------ -------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - EXTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
1. SIDEWALKS X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. COLUMNS X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. MASONRY X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. ALL WINDOWS, DOORS & STORE FRONT METAL (INCLUDES ALL INTERIOR
DOORS & WINDOWS)
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Door Closers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Glass, Door & Window X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Glass Breakage Caused By Obvious Building Settlement
X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Lock Re-keying X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. FASCIA & SOFFITS X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. FLASHINGS & COPINGS X X X
------- ------ -------- ------ ------ -------
7. GUTTERS & DOWNSPOUTS X X X
------- ------ -------- ------ ------ -------
8. ROOFING X X X
------- ------ -------- ------ ------ -------
9. EXHAUST FANS & GREASE TROUGHS X X X
------- ------ -------- ------ ------ -------
A. Belt Replacement & Lubrication X
------- ------ -------- ------ ------ -------
10. STAIRS EXTERIOR X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
11. PAINTING AND WASHING
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Maintenance Painting X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Washing X X
------- ------ -------- ------ ------ -------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - EXTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
1. Routine Washing & Cleaning All Surfaces X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Major Washing Program X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
12. STRUCTURAL SYSTEM X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
13. SIGN, BUILDING EXTERIOR
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. The Company Logo Buildings Signs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Other Signs Owned by the Company X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
14. ILLUMINATED AWNINGS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Framework and Fabric X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Lamps and Ballasts X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Electrical Wiring X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Soffit Grilles X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
15. EXTERIOR BUILDING LIGHTS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Fixtures X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Lamp Replacement X X X
------- ------ -------- ------ ------ -------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
1. ENTRANCE FLOOR MATS X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. FLOORS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Tile, Terrazzo, Concrete X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Carpeting X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. WALLS X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. CEILINGS, LIGHTING, GRILLS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Drywall & suspended Lay-In X X X
------- ------ -------- ------ ------ -------
B. Light Fixtures, Ballasts, Lens Covers X X X
------- ------ -------- ------ ------ -------
1. Branded Signs ,TA X
------- ------ -------- ------ ------ -------
C. Lamp Replacement X X
------- ------ -------- ------ ------ -------
D. HVAC Grills, Registers X X X
------- ------ -------- ------ ------ -------
E. Filters X X X
------- ------ -------- ------ ------ -------
5. TELEPHONES
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Phone Booths Enclosed or Open, Approval by TA as to
Number, Type and Location is Required before Installation
X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Cables & Service Lines X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Light Fixtures & Bulbs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. VENDING AREA
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Machines or Dispensers X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
7. RESTAURANT
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Dining Room, Coffee Shop, Truckers', Dining Room
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Open Shelf Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Refrigerated Display Case X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. Pantry Shelf Cabinet X X X
------- ------ -------- ------ ------ -------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
4. Pantry Utility Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. Coffee Urn Stand X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. Juice Dispensers X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
7. Milk Dispensers X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
8. Hot Food Server & Housing X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. Column Enclosure X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
10. Soup Wells X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
11. Hot Chocolate Dispensers X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
12. Coffee Urn X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
13. Counter Enclosures X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
14. Fountainette X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
15. Lowerator Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
16. Water Station X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
17. Beverage Counter X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
18. Refrigerator X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
19. Ice Chest X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
20. Hot Fudge Warmer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
21. Malt Mixer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
22. Drink Dispenser X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
23. Ice Tea Dispenser X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
24. Bus Box Enclosure X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
25. Divider Panels X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
26. Lunch Counters X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
27. Silver Dispensers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
28. Angle Slides X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
29. Undercounter Stations X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
30. Counter Stools X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) Reupholstery - Normal Wear, Abuse, or Damage
X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
31. Wall Bench X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
32. Booth Seating X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
33. Chairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
34. Table Tops & Bases X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
35. Waitress Station X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
36. Coat Rack X X X
------- ------ -------- ------ ------ -------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
37. Cashier Counter X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
38. Cash Register X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
39. Coffee Warmer X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
40. Coat Rail X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
41. Planters X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
42. Drapery (Repl. Requires the Company Specifications)
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
43. Wall Clock X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
44. Wainscot X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
45. Booth Costumers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
46. Carbonators X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B Kitchen Equipment
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Compressor Rack X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Syrup Tank Rack X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. Lockers & Coat Rack X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. Employee Dining Table X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. Employee Dining Chairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. Bulletin Board X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
7. Time Card Racks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
8. Time Clock X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. Stock Room Shelving X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
10. Receiving Scale X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
11. Ice Machine Assembly X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
12. Soiled & Clean Dishtable X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
13. Pre-Rinse Spray X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
14. Dishwasher X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
15. Dishwasher Hood X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
16. Booster Water Heater X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
17. Racks & Dollies X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
18. Dish Shelving Section X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
19. Walk-In Cooler/Freezer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
20. Walk-In Cooler/Freezer Shelving X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
21. Pan Shelving X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
22. Pot & Pan Sink X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
23. Wall Type Pan Rack X X X
------- ------ -------- ------ ------ -------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
24. File Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
25. Safe X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
26. Manager's Desk X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
27. Desk Chair X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
28. Side Chair X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
29. Linen Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
30. Worktable with Bain-Marie X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
31. Ranges with Oven or Range Battery X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
32. Range Ventilator X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
33. Convection Oven X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
34. Oven Ventilator X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
35. Worktable X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
36. Ingredient Bins X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
37. Mixer with Stand X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
38. Worktables X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
39. Spacer Tables X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
40. Fryers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
41. Two-Burner Range X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
42. Griddles X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
43. Griddle/Fryer Ventilator X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
44. French Fry Warmer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
45. Chef's Refrigerator X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
46. Fire Protection Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) Recharging Fire Extinguishers Immediately
After Discharge X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(b) Annual Recharging Fire Extinguishers (or per
Local Code) X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(c) Annual Maintenance Contract to Inspect &
Recharge X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(d) Cleaning of All Ventilators and Plenums
(90-Day Interval) X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
47. Toaster Stand X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
48. Conveyor Toaster X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
49. Compressor Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
50. Make-Up Table X X X
------- ------ -------- ------ ------ -------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
51. Work Counter X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
52. Hot Food Table X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
53. Hot Food Table Accessories X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
54. Stand with Sink X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
55. Waffle Baker X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
56. Bread Toasters X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
57. Steamer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
58. Bread & Bun Racks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
59. Worktable X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
60. Slicer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
61. Riser Filler X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
62. Pass Window Shelf X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
63. Pendant Heat Lamp (Ex Bulb) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
64. Pendant Heat Lamp Bulb Replacement X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
65. Waitress Call System (Company Owned) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
66. Order Wheel X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
67. Dish Trucks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
68. Worktable with Sink X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
69. Kitchen Wall Clock X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
70. Chef's Freezer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
71. Reach-In Refrigerator X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
72. Plenum for Ventilators X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
73. Stainless Steel Trim X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
74. Rattleware, Dishes, Pots, Pans, Silverware, Etc.
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
75. Other Food Preparation or Processing Equipment
(Must Have Prior Approval of the Company)
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
76. Juke Box Remote & Coin Station Heads (Location,
Type, Etc. Must Have Approval of the Company Before
Installation)
X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
77. Speakers & Wiring X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
8. RESTAURANT MANAGER'S OFFICE
------- ------ -------- ------ ------ -------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
All Furniture X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. JANITOR CLOSET
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
Mops, Brooms, Cleaning Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
10. EQUIPMENT ROOM
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Compressors, Remote, Owned by the Company X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Wire Shelving X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Other Contents X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
11. EMPLOYEE, PUBLIC, TRUCKERS REST ROOMS, WOMEN'S SHOWER, EMPLOYEE
LOUNGE, PRIVATE SHOWERS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. All major fixtures, including sinks and vanities, urinals,
toilets, light fixture, toilet partition wall and door
panels, faucets, and flush valves X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. All minor equipment and repair parts for item A, including
mirrors; soap dispensers and parts; towel dispensers;
toilet partition hinges and latches, repair holes and
damage to partitions; faucet washers, stems and repair
parts; toilet seats, flush valve kits, & repair parts for
tank valves and repair parts; sanitary napkin vendors and
disposals, coat racks, toilet paper dispensers and other
miscellaneous furniture
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. All Supplies for Operation X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Routine Washing of Surfaces X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Shower Curtains, Rods & Doors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Rodding Toilets & Sewer Lines X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Lockers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
H. Costumers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
I. Employee Lounge Furniture X X X
------- ------ -------- ------ ------ -------
J. Shower Stalls-Entire Units (if only one component, then
Lessee replaces) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
K. Re-Grout Ceramic Tile X X X
------- ------ -------- ------ ------ -------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
12. APPROACHES
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Plexiglass - Map Rack - Sign X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Tube Replacement - Sign X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Interstate Map Replacement X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
13. TRAVEL STORE
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Ash Trays X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Office Furniture X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Planter X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Safe X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Waste Baskets X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Shoe Sales Chairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Security Mirrors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
H. Stocking Carts X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
I. Store Fixtures X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
J. Cash Register X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
K. Store Department Signage (Must Have Prior Approval of the
Company) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
L. Additional Display Cabinets, Racks or Counters (Prior
Approval of the Company Required) X X X
------- ------ -------- ------ ------ -------
M. Fitting Room Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
14 TRAVEL STORE STOCK ROOM
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Storage Cabinets X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Storage Shelving X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Wire Shelving X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
15. CENTRAL CONTROL
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Ash Trays X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Truckers Bulletin Board X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Office Furniture X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Portable Linen Bin X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Room Key Tags X
------- ------ -------- ------ ------ -------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
F. Wall Clock X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Waste Baskets X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
H. Entrance Floor Mats X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
I. Communications Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
J. Transmitters, Receivers, Power Rack Communications
Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
K. Communications Speakers & Wiring Only X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
L. Control Counter X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
M. Back Bar Counter X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
N. Key Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
O. Employee Lockers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
P. Steel Shelving X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
Q. Cash Register X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
R. Time Clock & Time Card Racks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
S. Teletype Unit, Cables & Lines X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
T. Remote Ticket Printer Consoles, Computers & Power Packs
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
U. Water Cooler X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
V. Scale Electronic Head & Printer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
16. TRUCK STOP MANAGER'S OFFICE
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
Office Furniture, Drapery X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
17 BARBER SHOP
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
All Fixtures, Wall Cases & Lavatories X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
18. ACCOUNTING OFFICE
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Office Furniture, Files, Safe, Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Storage Shelving X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
19. TRUCKERS' LAUNDRY
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Washer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Dryer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Laundry Sorting Table X X X
------- ------ -------- ------ ------ -------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
D. Dryer Vent X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Detergent Vending Equipment X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Flexible Dryer Vent X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
20. LOUNGE & TRUCKERS' MOTEL
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Ash Trays X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Lounge Chairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Desk & Chair X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Television X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. T.V. Aerial & Wiring to Jacks (2) (Initial)
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. T.V. Aerial & Wiring Replacement or Additions
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Coat Rack X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Planters X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
H. Waste Baskets X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
I. Drapery X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
J. Bed Frames & Headboards X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
K. Mattresses & Box Springs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
L. Desks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
M. Side Chairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
N. Lamp Tables X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
O. Coat Rack Wall Mounted X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
P., Lamps (Desk & Bedside) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
Q. Maid Service Cart X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
R. Mirrors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
S. Shelving, Wire or Steel X X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
T. Linens, Pillows, Bed Spreads, Blankets, Soap, Towels
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
U. Wall Decor, If Any X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
V. Vacuum Cleaner X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
W. Waste Receptacles X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
X. Brokers' Office Furniture X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
Y. Water Cooler X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
21. TRUCKERS' MOTEL BATH ROOMS
------- ------ -------- ------ ------ -------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
Sale as Section 11 A-K
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
22. MECHANICAL EQUIPMENT
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Heating, Ventilating, Air Conditioning (HVAC) System:
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Design New or Replacement Equipment X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Re-Balancing the System (Per Original Design)
X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. Boilers or Furnaces X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. Chillers or Coils X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. Cooling Towers or Condensers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. Water Heaters, or Heat Exchangers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
7. Valves and Gauges X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
8. Controls and Thermostats X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. Oil Filters X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
10. Air Filters X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
11. Ducts X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
12. Registers & Grills X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
13. Piping X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
14. Underground Tanks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
15. Above-ground Tanks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
16. Dampers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
17. Louvers and Bird Screens X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
18. Exhaust Fans X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
19. Burner Nozzles, Transformers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
20. Motors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
21. Pulley Belts for Motors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
22. Compressors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
23. Maintain Coolant Levels in Compressors X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
24. Insulation and Pipe Wrapping X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
25. Fuel Oil Piping System X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
26. Cost of Monthly Maintenance Contract X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
27. Compressor & Pneumatic Control System X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
28. Air Handling Unit X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
29. Make-Up Air Unit X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
30. Water Circulating Pumps X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
31. Chemical Feeder Systems X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(a) All Parts Necessary for Repairs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
(b) All Chemicals X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
32. Expansion Tanks X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
23. ELECTRICAL SYSTEM
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. The Incoming System X S S
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Distribution System
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Switch Gear & Panelboard X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Fuses & Circuit Breakers X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. Conduit & Wires X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. Transformers X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Outlets
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Duplex Receptacles X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Wall Switches X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. Additional Receptacles (Must be Approved by the
Company) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Emergency Equipment
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Exit Signs X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Exit Signs Lamps X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Fencing for Electrical Switch Gear X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Furniture - Desk, Files, Workbenches, Cabinets X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
24. EMERGENCY EQUIPMENT
------- ------ -------- ------ ------ -------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
MAIN BUILDING - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
A. Fire Extinguishers & Cabinets X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Recharging Fire Extinguishers immediately after
discharge X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Annual Recharging Fire Extinguishers (or as per
Local Code) X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Emergency Lights X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Fire Alarm System X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Emergency Door Alarms X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Battery Replacement X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
25. PAINTING & WASHING (BUILDING INTERIOR)
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Maintenance Painting X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Washing
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Routine Washing & Cleaning of All Surfaces
X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Major Washing Program X X
------- ------ -------- ------ ------ -------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SERVICE BAYS - EXTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
1. RAMPS (CONCRETE) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. MASONRY & FACADE PANELS X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. OVERHEAD DOORS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Initial Doors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Motor Operators & Stations X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Normal Repair & Adjustment X
------- ------ -------- ------ ------ -------
D. Foot Doors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Glass Replacement X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. STRUCTURAL SYSTEM X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. ROOFING, GUTTERS, DOWNSPOUTS X X X
(Company replaces only if more than $2,500.00; Lessee replaces
if less than $2,500.00)
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. FLASHING & COUNTER FLASHING X X X
(Company replaces only if more than $2,500.00; Lessee replaces
if less than $2,500.000
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
7. WALLS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Maintenance Painting X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Washing
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Routine Washing & Cleaning of All Surfaces
X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. Major Washing Program X X
------- ------ -------- ------ ------ -------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SERVICE BAYS - EXTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
8. SIGNS - BAY EXTERIOR (TA BRANDED AND COMPANY APPROVED) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. BUMPERS, POSTS X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Maintenance Painting X
------- ------ -------- ------ ------ -------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SERVICE BAYS - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
1. FLOORS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Concrete X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Tile X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. WALLS X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. LIGHTING
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Light Fixtures, Ballasts, Lens X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Lamp Replacement X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Pit Lights and Wiring X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Replacement Lamps and Lens and Metal Grills X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. EMPLOYEES REST ROOMS (REFER TO ITEMS 11A-11K)
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. PARTS STORAGE
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Shelving, Parts Bins, Lockers, Cabinets X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Desk, Chair, File Cabinet X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. TIRE CHANGING ROOM
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Tire Changer X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Tire Spreader X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Tube Test Tank & Fill Hose X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Tire Cage X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Miscellaneous Tools &/or Added Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
F. Air & Water Lines X X X
------- ------ -------- ------ ------ -------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SERVICE BAYS - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
G. Nozzles X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
7. TIRE BANK ROOM & ALL RACKS & EQUIPMENT
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
8. OIL STORAGE
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Roller Racks for Unloading X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Other Racks or Equipment X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Fencing X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. BAYS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Floor Drains & Sumps (Company only replaces entire unit)
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Sump Pump & Pit (Company only replaces entire unit)
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Oil Trap (Company only replaces entire unit) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Rodding of All Drains & Sewer Lines X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
10. FIRE EXTINGUISHERS
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Recharging Fire Extinguishers - Immediately After Discharge
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Annual Recharging Fire Extinguishers (or per Local Code)
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
11. EQUIPMENT
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Air Compressors X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Draining - Oil Change, Belt Adjustment &
Replacement, Filter Cleaning & Replacement
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Air & Water Lines X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
C. Air & Water, Hoses, Nozzles X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
D. Chassis & Gear Lube Pump & Flexible Hose X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Metal Piping X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
E. Air Reel & Hose X X X
------- ------ -------- ------ ------ -------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SERVICE BAYS - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
F. Lube, Gear Hose & Heads X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
G. Intentionally Deleted
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
H. Exhaust Fans, Ducts X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Belt Replacement X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
I. Waste Oil Tank X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
J. Jacks, Tools X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
K. Time Clock & Card Rack X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
L. Service Order Desk & Stool X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
M. Work Benches X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
N. Trolley Beam X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
O. Chain Hoists X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
P. Drain Oil Equipment Portable X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
Q. Reel Lights, Initial X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
R. Reel Lights, Fixture Lamps, Cord, & Socket Replacement
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
S. Hoist Automobile X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Oil Replacement X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
T. Soiled Rag Bin X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
U. Welding Machines X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
V. Other Equipment (Prior Approval by the Company Required)
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
W. Chassis & Gear Reels X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
12. TRUCK WASHING (PRIOR APPROVAL BY THE COMPANY REQUIRED)
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Equipment Owned by the Company X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Necessary Sewer, Water & Electrical Services
(Rough-in Stubs Only) X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. All Connections, Wiring, Transformers, & Piping
(From Stubs Item 1 Above) to Equipment Components
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. Supplies & Power to Operate Equipment & Operating
Expendables X X X
------- ------ -------- ------ ------ -------
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SERVICE BAYS - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
4. Replacement of Belts, Nozzles, Hoses & Lubrication
as Recommended by Manufacturer's Maintenance Program
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. Roller Brushes X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. Water Treatment Facilities X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
7. Hot Water Heaters For Truck Washing Equipment
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
8. Fuel Storage &/or Supply Line for Heaters X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. Drains, Sumps, Traps (Company only replaces entire
system) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
10. Wash Water Reclaim System X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
B. Equipment Owned by Lessee X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
1. Necessary Sewer, Water, Electrical Services
(Rough-in Stubs Only) X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
2. All Connections, Wiring, Transformers, Controls, &
Piping, Etc. (From Stubs Item Above) to Equipment
Components X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
3. Supplies & Power to Operate Equipment & Operating
Expendables X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
4. Replacement of Belts, Nozzles, Hoses & Lubrication
as Recommend by Manufacturer's Maintenance Program
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
5. Roller Brushes X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
6. Water Treatment Facilities X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
7. Hot Water Heaters for Truck Washing Equipment
X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
8. Fuel Storage &/or Supply Line X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
9. Drains, Sump Traps X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
10. Wash Water Reclaim System X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
11. Rodding Drain Lines X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
13. SIGNS - BAY INTERIOR (COMPANY APPROVAL) X X X
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
14. WASHING & PAINTING
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
A. Maintenance Painting X
------- ------ -------- ------ ------ -------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------
Fee Owned Single Lease
CODE KEY: C = Cleaning
M = Maintenance
R = Replacement
S = Supplier of Equipment
X = Responsible Party
- -------------------------------------------------------------- ------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
ITEM NO. DESCRIPTION
- ---------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------- ----------------------- ---------------------
SERVICE BAYS - INTERIOR THE COMPANY LESSEE
- ----------------------------------------------------------------------- ----------------------- ---------------------
- ----------------------------------------------------------------------- ------- ------ -------- ------ ------ -------
C M R C M R
------- ------ -------- ------ ------ -------
------- ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
------- ------ -------- ------ ------ -------
B. Washing
------- ------ -------- ------ ------ -------
</TABLE>
29
<PAGE>
ADDENDUM TO LEASE AGREEMENT
This Addendum to the Lease Agreement (the "Addendum") is
executed this day of , 1997, by and between NATIONAL
----- --------------
AUTO/TRUCKSTOPS, INC., a Delaware corporation, having its principal place of
business at 24601 Center Ridge Road, Suite 300, Westlake, Ohio 44145-5634
(hereinafter referred to as the "Company"), and
----------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
(hereinafter referred to as the "Lessee").
- ------------------------
WITNESSETH:
WHEREAS, Company and Lessee have executed a Lease Agreement,
of even date herewith (the "Lease Agreement"), pertaining to the Leased Premises
(as such term is defined in the Lease Agreement); and
WHEREAS, the parties desire to amend and modify certain terms
and provisions of the Lease Agreement in accordance with the terms of this
Addendum.
NOW, THEREFORE, in consideration of the premises above and in
the Lease Agreement, and in consideration of the mutual covenants, agreements
and obligations set forth herein, the parties hereto agree as follows:
1. Unless otherwise defined herein, capitalized terms which are used
herein shall have the meanings ascribed thereto in the Lease Agreement.
2. The proviso following the "Base Rent Amount" definition as set forth in
Exhibit B (Rental Schedule) to the Lease Agreement shall be revised as
follows:
"provided, however, that the Base Rent Amount shall permanently
increase by: (1) an amount (the "Improvement Rent") equal to fourteen
percent (14%) of the cost of all capital improvements, agreed upon by
the Company and Lessee to enhance the value of the Leased Premises,
made and paid for by the Company, costing $2,500 or more (or, pursuant
to Paragraph 8 made by Lessee at the Company's expense over $2,500)
(the "Improvements"), if any; and (2) ...."
3. The third and fourth sentences of the first paragraph of Section 8
of the Lease Agreement shall be deleted and the following substituted
therefor:
"All such Company required alterations shall be paid for by Lessee, at
its own expense, unless the cost of such Company required alteration
exceeds $2,500. If the cost exceeds $2,500, the Company may require
such alteration to be performed by Lessee, and the Company shall
promptly reimburse Lessee, based on paid receipts submitted to the
Company by Lessee, for the portion of the total cost that exceeds
$2,500. In the event the Company and Lessee agree that an alteration or
capital improvement will enhance the value of the Leased Premises
(E.G., addition of a food court, fast food outlet or shop expansion)
the Base Rent Amount, as defined in Exhibit B to this Lease, shall be
permanently increased by an amount equal to the Improvement Rent (as
defined in Exhibit B). For purposes hereof, it is agreed that, subject
to the terms of Exhibit C to the Lease, the repair or replacement of
any "Item" which is described on Exhibit C to the Lease and for which
the "R" (Replacement) box has been marked with an "X" under "The
Company" column, shall not cause an increase in the Base Rent Amount.
The Base Rent Amount shall not be increased by the
1
<PAGE>
Improvement Rent in the event Lessee elects to pay for such alteration
or capital improvement using Lessee's own funds and, if the Company and
Lessee agree, prior to construction of such alteration or capital
improvement, upon an amortization schedule with respect to such
alteration or capital improvement, the Company will, upon the
termination of this Lease, reimburse to Lessee an amount equal to the
unamortized portion of the cost of such alteration or capital
improvement, determined as of the effective date of the termination of
this Lease."
4. The first two sentences of Section 11(b)(i) of the Lease shall be
deleted and the following substituted therefor:
"(i) Lessee may not sell, assign (including, but not limited to,
assignments by operation of law), pledge, sublet or transfer
(collectively, "Assign") this Lease or any interest therein without the
Company's prior written consent, which consent shall not be
unreasonably withheld."
5. Section 17(d) of the Lease shall be deleted and the following
substituted therefor:
"(d) The Company agrees that in the event of: (i) a non-renewal
pursuant to subparagraph (a)(iv) hereof; or (ii) a non-renewal pursuant
to subparagraph (b)(i) and (iv) hereof; the Company will not, during
the 180 day period following the expiration of the then-current Initial
Term or Renewal Term, as the case may be, sell or enter into an
agreement to sell the Company's interest in the Leased Premises,
without first granting Lessee a 30 day preferential right to meet the
bona fide offer of another person to purchase the Company's interest in
the Leased Premises. Notwithstanding anything to the contrary herein,
the Company shall not be subject to the restrictions above, and Lessee
shall not be entitled to any such preferential right if Lessee has not
otherwise complied with the terms and provisions of Section 2 of this
Agreement."
6. Section 6(h) of the Lease shall be deleted and the following
substituted therefor:
"(h) enter into any service contract or agreement relating to the
furnishing of any services to the Leased Premises unless such contract
or agreement shall, by its terms, be terminable by Lessee on no more
than thirty (30) days notice, or it shall expressly provide that such
agreement or contract shall not be binding upon the Company upon
expiration or termination of this Lease; provided, however, Lessee may
enter into service contracts or agreements which are terminable by
Lessee on more than thirty (30) days notice with the Company's
consent."
IN WITNESS WHEREOF, the parties hereto intending to be legally
bound hereby, have duly executed and delivered this Addendum to Lease Agreement
on the day and year first above written.
FRANCHISEE PARTIES: NATIONAL AUTO/TRUCKSTOPS, INC.
By: By:
----------------------------------- ---------------------------------
and LESSEE
By: By:
----------------------------------- ---------------------------------
2
Exhibit 10.31
TA FRANCHISE SYSTEMS INC.
CONVERSION FRANCHISE AGREEMENT
<PAGE>
TABLE OF CONTENTS
Paragraph Page
I. APPOINTMENT AND FRANCHISE FEE....................................... 2
II. TERM AND RENEWAL.................................................... 3
III. FRANCHISED FACILITY MODIFICATION.................................... 4
IV. EQUIPMENT, FIXTURES, FURNITURE AND SIGNS............................ 6
V. TRAINING AND ASSISTANCE............................................. 6
VI. CONFIDENTIAL OPERATIONS MANUAL...................................... 7
VII. CONFIDENTIAL INFORMATION............................................ 8
VIII. MODIFICATION OF THE SYSTEM.......................................... 8
IX. ADVERTISING......................................................... 9
X. CONTINUING SERVICES AND ROYALTY FEE; PAYMENT TERMS.................. 11
XI. ACCOUNTING AND RECORDS.............................................. 12
XII. STANDARDS OF QUALITY AND PERFORMANCE................................ 13
XIII. TA's OPERATIONS ASSISTANCE.......................................... 18
XIV. PROPRIETARY MARKS................................................... 19
XV. INSURANCE........................................................... 21
XVI. RESTRICTIVE COVENANTS............................................... 22
XVII. DEFAULT AND TERMINATION............................................. 23
XVIII. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION......... 26
XIX. TRANSFERABILITY OF INTEREST......................................... 28
XX. DEATH OR INCAPACITY OF FRANCHISEE................................... 29
XXI. RIGHT OF FIRST REFUSAL.............................................. 30
XXII. OPERATION IN THE EVENT OF ABSENCE, DISABILITY OR DEATH.............. 30
XXIII. INDEPENDENT CONTRACTOR AND INDEMNITY AND HOLD HARMLESS.............. 31
XXIV. NON-WAIVER.......................................................... 31
XXV. NOTICE.............................................................. 32
XXVI. SEVERABILITY AND CONSTRUCTION....................................... 32
XXVII. APPLICABLE LAW...................................................... 33
XXVIII. ARBITRATION......................................................... 33
XXIX. DEFINITIONS......................................................... 34
XXX. CAVEAT.............................................................. 35
XXXI. ENTIRE AGREEMENT.................................................... 35
XXXII. ACKNOWLEDGEMENTS.................................................... 36
i
<PAGE>
TA FRANCHISE SYSTEMS INC.
CONVERSION FRANCHISE AGREEMENT
This Franchise Agreement, made this day of , 19 , by and between
TA FRANCHISE SYSTEMS INC., a Delaware corporation, having its principal place of
business at 24601 Center Ridge Road, Suite 300, Westlake, Ohio, 44145-5634
(hereinafter referred to as "TA"), and (hereinafter referred to as
"Franchisee").
WITNESSETH:
WHEREAS, over a period of several years and as the result of the
expenditure of time, skill, effort and money, TA and its parent have developed
and own a unique system for establishing, developing and operating full-service
truckstop facilities adjacent to major interstate highways, which truckstop
facilities provide a full range of services and products to professional truck
drivers and the travelling public through unique fuel, restaurant, retail, truck
repair and service and other hospitality or related profit centers (the
"System"); and
WHEREAS, the distinguishing characteristics of the System include
unique and distinctive: exterior and interior decor, color scheme, design and
layout; fuel sales and storage procedures; food preparation, service, sales and
storage techniques and procedures; retail product mix, merchandising and sales
techniques and procedures; truck repair and vehicle parts sales techniques and
procedures; shower, motel, permit, facsimile, vending, scale and other
hospitality related sales techniques and procedures; operating procedures for
sanitation and maintenance; systems for product distribution and storage,
including dedicated distribution centers; the TRUCKSTOPS OF AMERICA Point of
Sale System ("TA POS Computer System"); a customized billing system; and methods
and techniques for inventory and cost control, record keeping and reporting,
personnel management and training, purchasing and marketing, sales promotion and
advertising and facility design and construction, all of which may be modified,
replaced, or further developed by TA from time to time; and
WHEREAS, TA Operating Corporation ("TA Operating") is the owner
of all right, title and interest in the trade name TRUCKSTOPS OF AMERICA; the
federally registered trademarks, service marks, federal trademark and service
mark applications set forth in Exhibit A hereto and designs, logos and other
symbols whether or not registered, together with the goodwill symbolized by such
trade names, trademarks, service marks, designs, exterior and interior decor,
logos or symbols and such other trade names, trademarks, service marks, designs,
logos or symbols as may be designated by TA from time to time as an integral
part of the System (hereinafter referred to collectively or any one of them as
the "Marks"; and
WHEREAS, TA Operating has granted a license to TA to sublicense
others to use of the Marks and the System; and
<PAGE>
WHEREAS, TA grants franchises to own and operate TRUCKSTOPS OF
AMERICA branded facilities offering products, merchandise and services
authorized and approved by TA and utilizing TA's System and Marks (the aggregate
from time to time are "TA Franchises" and one is "TA Franchise") and Franchisee
owns and operates a truckstop which Franchisee desires to convert to a TA
Franchise, as well as to receive the training in connection therewith; and
WHEREAS, Franchisee acknowledges that by becoming a Franchisee of
TA, it will be subject to covenants against competition, confidentiality
agreements, and standards of performance and quality which otherwise would not
attach to its business operations.
NOW, THEREFORE, the parties, in consideration of the undertakings
and commitments of each party to the other hereby agree as follows:
I. APPOINTMENT AND FRANCHISE FEE
A. TA hereby grants to Franchisee, upon and subject to the terms and
conditions herein contained, the right, license and privilege to use the Marks
and Franchisee hereby undertakes the obligation to operate a TA Franchise
consisting of fuel operations, restaurant, retail store, truck repair and
service, truck scale and such other business as approved by TA pursuant to
Section I(D) of this Franchise Agreement, and to use and operate solely in
connection therewith and in accordance with the System, as it may be modified,
replaced or further developed from time to time by TA, at one location only,
such location to be: described on Exhibit C hereof and hereinafter defined as
"Franchise Site."
The business described above, together with the truckstop
facility and the Franchise Site, is in the aggregate sometimes referred to
herein as "Franchised Facility".
B. TA will not, so long as this Franchise Agreement is in force and
effect and Franchisee is not in default under any of its terms, grant another TA
Franchise or itself operate a TA branded truckstop facility within the following
area: (hereinafter "Territory").
C. Franchisee shall pay to TA the sum of ONE HUNDRED THOUSAND
dollars ($100,000.00) due and payable as follows: Forty-Five Thousand Dollars
($45,000.00) upon execution of this Franchise Agreement, and the balance (less
credit for the application fee paid to TA by Franchisee) upon the earlier of
commencement of any training of Franchisee or any employee, or six (6) months
from the date of this Franchise Agreement. Upon the earlier of payment or the
due date for payment, such sums shall be deemed fully earned and non-refundable
in whole or in part, notwithstanding any termination of this Franchise Agreement
even prior to the commencement of the initial term, whereupon such sums shall be
kept by TA as consideration for expenses incurred by TA in furnishing assistance
and services to Franchisee and for TA's lost or deferred opportunity to
franchise others for which, although the exact amount of damages sustained by TA
could not be ascertained, Franchisee acknowledges the sums are reasonable.
2
<PAGE>
D. Franchisee may request approval to operate motel/lodging
facilities, fast food and deli operations or other business facilities on the
Franchise Site. If TA approves such request in writing, Franchisee agrees to
operate such businesses in accordance with TA's standards and specifications and
such businesses shall be included in the definition of "Franchised Facility."
Franchisee and each Franchisee Party agree not to operate any business or
facility on the Franchise Site other than as stated in Section I(A) or otherwise
approved by TA in writing in TA's sole discretion.
E. TA reserves the right and privilege, at its sole discretion, to
vary standards for any aspect of the System based upon the specifics of the
particular site or circumstance, density of population, business potential,
population of trade area, existing business practices or any other condition
which TA deems to be of importance to the successful operation of TA Franchises
and/or the System.
F. Certain terms used in this Franchise Agreement are defined in
Section XXIX. below.
II. TERM AND RENEWAL
A. The initial term of the TA Franchise shall be for a period of ten
(10) years commencing on the date which TA designates in writing to Franchisee
is the date upon which the Franchised Facility commenced normal operations
(which date shall be after branding). The phrase "term of this Franchise
Agreement" for all purposes other than determining the initial term and renewal
terms (if any) of this Franchise Agreement, shall include the period from the
date of execution of this Franchise Agreement through the date upon which the
Franchised Facility commences normal operations (as designated above).
B. If Franchisee desires to extend its TA Franchise for an
additional five (5) year period, Franchisee shall give TA written notice of such
desire at least six (6) but not more than twelve (12) months prior to the
expiration of the then-current term. Within ninety (90) days after its receipt
of timely notice, TA shall advise Franchisee in writing that either: (i) it
consents to the proposed extension; (ii) it consents to the proposed extension
subject to and provided that Franchisee complies, to TA's satisfaction, with
certain terms or conditions; or (iii) it does not consent to the proposed
extension. Among other things, TA may require, as a condition of its consent to
such an extension, that:
1. Franchisee satisfy TA's then-current requirements relating
to the image, appearance, decoration, furnishing, equipping and
stocking of TRUCKSTOPS OF AMERICA facilities;
3
<PAGE>
2. Franchisee maintains possession of the Franchised Facility
(and presents evidence satisfactory to TA that it has the right to
remain in possession of the Franchised Facility for the duration of
any extension term) and that, prior to the expiration date of the
then-current term of this Franchise Agreement, Franchisee brings the
Franchised Facility into full compliance with the specifications and
standards then applicable for TRUCKSTOPS OF AMERICA facilities;
3. Franchisee satisfies all monetary obligations owed by
Franchisee to TA and TA's subsidiaries, parents or affiliates;
4. Franchisee executes TA's then-current form of Franchise
Agreement (with appropriate modifications to reflect the fact that the
agreement relates to the grant of an extension of the franchise),
which agreement shall supersede in all respects this Franchise
Agreement and the terms of which may differ from the terms of this
Franchise Agreement, including, without limitation, a higher
percentage royalty fee and advertising contribution and a modified
Territory;
5. Franchisee pay a renewal fee, which fee shall not exceed the
amount of the then-current franchise fee being charged by TA for new
franchises;
6. Franchisee complies with TA's then-current qualification
and training requirements; and
7. Franchisee executes a general release in a form acceptable
to TA of any and all claims which it has or may have as of the date of
such renewal against TA or its subsidiaries and parents and their
respective officers, directors, agents and employees.
III. FRANCHISED FACILITY MODIFICATION
A. Prior to the initial term (as defined in Section II(A) above),
Franchisee must remove all inventory, fixtures, furniture, furnishings,
marketing materials, supplies and equipment which do not conform with the
System, are not approved by TA, or which do not meet the standards and
specifications prescribed in the Confidential Operations Manual (as amended from
time to time).
B. Immediately following the execution of this Franchise Agreement,
TA shall furnish to Franchisee the interior and exterior design criteria for the
truckstop facility. Franchisee must perform such construction, renovation and
refurbishing as is necessary to conform and comply with TA's standards,
specifications and criteria, in accordance with the Conversion Obligation
Schedule set forth in Exhibit D to this Franchise Agreement. Any architectural
or other fees required to utilize or modify the same will be Franchisee's
responsibility. Prior to the commencement of refurbishing of the premises,
Franchisee must submit to TA (or its designee) all pertinent architectural,
engineering, construction, layout and design plans, prints, drawings and related
4
<PAGE>
documents for review and final approval. Franchisee agrees to close the
operation of each department (or facility) for the time required to undertake
and complete all construction, renovation and refurbishing necessary to conform
and comply with the requirements herein. Failure to meet the Conversion
Obligation Schedule will give TA the right to terminate Franchisee in accordance
with Section XVII(C)(2).
C. Franchisee agrees that promptly after the execution of this
Franchise Agreement for the proposed Franchised Facility it will:
1. Prepare and submit to TA for approval a site survey and
layout showing any modifications to TA's basic architectural, plans,
and specifications and drawings for a TRUCKSTOPS OF AMERICA facility
(including System requirements for dimensions, exterior design and
layout, fuel storage and sales facilities, materials, interior design
and layout, equipment, fixtures, furniture, signs and decorating)
provided that Franchisee may modify TA's basic plans and
specifications only to the extent required to comply with all
applicable ordinances, building codes and permit requirements and with
prior notification to and approval by TA;
2. Obtain all required zoning changes; all required building,
utility, health, sanitation, and sign permits and licenses and any
other required permits and licenses;
3. Purchase or lease equipment, fixtures, furniture and signs
as provided herein;
4. Complete the construction and/or remodeling, equipment,
fixture, furniture and sign installation and decorating of the
Franchised Facility in full and strict compliance with plans and
specifications therefore approved by TA and all applicable ordinances,
building codes and permit requirements;
5. Obtain all customary contractors' sworn statements and
partial and final waivers of lien for construction, remodeling,
decorating and installation services;
6. Cause the premises of the Franchised Facility to be in full
and strict compliance with the Resource Conservation and Recovery Act
of 1976, as amended from time to time, and all other federal, state
and local laws relating to aboveground and underground storage
facilities and other applicable environmental matters; and
7. Otherwise complete development of and have the Franchised
Facility ready to open and commence the conduct of its business.
Notwithstanding anything to the contrary herein, in the event of a
conflict between the terms of the Conversion Obligation Schedule and
the provisions herein, the terms of the Conversion Obligation Schedule
shall govern.
D. Franchisee understands and agrees that from time to time TA may,
at its discretion, require Franchisee to make periodic capital expenditures to
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remodel, modernize and redecorate the Franchised Facility and to replace and
modernize the premises of the Franchised Facility so that the Franchised
Facility will reflect the then-current image intended to be portrayed by
TRUCKSTOPS OF AMERICA facilities, up to the following limits of aggregate
capital expenditures (which limits are measured by expenditures necessary to
accomplish the project(s) required by such notice(s) and as if the project(s)
are undertaken and the expenditures are made expeditiously, and without counting
those expenditures made, for example, to fulfill the tasks described in the
Conversion Obligation Schedule, Exhibit D hereof): Four Hundred Thousand Dollars
($400,000.00) during the first sixty (60) months of the initial term of this
Franchise Agreement, and thereafter Six Hundred Thousand Dollars ($600,000.00)
during each succeeding sixty (60) month period (or part thereof) during the term
of this Franchise Agreement. All remodeling, modernization or redecoration of
the Franchised Facility and its premises must be done in accordance with the
standards and specifications as prescribed by TA from time to time and with the
prior written approval of TA. All replacements must conform to TA's then-current
quality standards and specifications and must be approved by TA in writing.
E. In the event that the Franchised Facility is damaged or destroyed
in whole or in part, Franchisee shall use best efforts to repair, restore or
rebuild the Franchised Facility in accordance with TA's then-current standards
and specifications at the earliest possible date, but in no event shall such
repair, restoration or rebuild be completed later than six (6) months after the
occurrence of the damage to the Franchised Facility or its premises, unless a
later date is requested in writing by Franchisee within three (3) months after
the occurrence of the aforesaid damage or destruction and such date is consented
to in writing by TA.
F. Notwithstanding anything contained in this Franchise Agreement to
the contrary, TA shall not assume or incur any responsibility or liability for
any reason whatsoever to Franchisee or to any third party, by virtue or because
of or in connection with any drawing, information, approvals, advice,
assistance, services, inspection or specification (including but not limited to
the Confidential Operations Manual or its contents), given to, or omitted to be
given to, Franchisee under, in respect of or relating to, this Franchise
Agreement, the Franchised Facility or the Franchised Site, and Franchisee and
each of the Franchisee Parties, jointly and severally, agree to indemnify and
hold harmless TA and its parents, subsidiaries, and affiliates and their
shareholders, directors, officers, employees and agents, from and against any
losses, claims, costs, expenses, damages and liabilities in respect thereto.
IV. EQUIPMENT, FIXTURES, FURNITURE AND SIGNS
A. TA shall provide Franchisee with specifications for dispensing,
storage and display equipment, cash registers, other equipment, fuel facilities
and equipment, fixtures, furniture, exterior and interior signs and decorating
required for the Franchised Facility. Specifications may include minimum
standards for performance, warranties, design and appearance and local zoning,
sign and other restrictions. Franchisee may purchase or lease original and
replacement equipment, fixtures, furniture, signs and decorating materials and
services meeting such specifications from any source. If Franchisee proposes to
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purchase or lease any item of equipment or furniture or any fixture, sign or
decorating materials not theretofore approved by TA as meeting its
specifications, Franchisee shall first notify TA and TA may require submission
of sufficient specifications, photographs, drawings or other information and
samples to determine whether such item of equipment or furniture or such
fixture, sign or decorating materials meets its specifications. TA shall advise
Franchisee within a reasonable time whether such item of equipment or furniture
or such fixture, sign or decorating materials meets its specifications.
B. Franchisee shall strictly comply with all specifications for
brand and type of equipment used in the Franchised Facility as provided in
Sections XII and XIII herein.
V. TRAINING AND ASSISTANCE
A. Prior to the opening for business of the Franchised Facility,
Franchisee's employees performing the following functions: General Manager,
Assistant General Manager, Fuel Manager, Assistant Fuel Manager, Restaurant
Manager, Assistant Restaurant Manager, Retail Store Manager, Assistant Retail
Store Manager, Truck Repair Shop Manager and Assistant Truck Repair Shop Manager
(and such other functions which TA may from time to time designate), shall
successfully complete training for such positions, which training shall be
provided by TA in accordance with the Confidential Operations Manual and this
Franchise Agreement. TA shall not charge a training fee for the initial employee
to hold each of the above-listed job functions, but Franchisee shall be
responsible for all expenses incurred by such individuals in attending such
training, including, without limitation, travel and living expenses.
B. Unless waived in writing by TA, whenever an untrained person
subsequently assumes a position for which TA requires training, Franchisee shall
notify TA within three (3) days of the identity of the untrained personnel, and
such personnel shall attend and successfully complete the next training program
to be offered by TA, for which space is available. Training of such personnel
shall be at Franchisee's sole expense, including, without limitation, payment of
TA's then-current training fee.
C. If TA, in its sole discretion, determines that Franchisee, or any
employee holding a position for which TA requires training, has been unable to
complete the required training program satisfactorily, TA shall have the right
to terminate this Franchise Agreement. If this Franchise Agreement is terminated
pursuant to this Paragraph, TA shall return to Franchisee the franchise fees
paid by Franchisee to TA, minus the expenses incurred by TA as of such date.
D. During the initial three (3) months of operation of Franchised
Facility, TA will furnish to Franchisee, at the Franchised Facility and at TA's
expense, the assistance of one of TA's representatives for up to thirty (30)
working days. If Franchisee requests additional assistance in order to
facilitate the opening of the Franchised Facility or, if TA determines
additional assistance is needed, TA may provide such additional assistance at
Franchisee's expense. Additionally, TA will provide ongoing assistance as
described in Section XIII.
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E. TA may require previously trained and experienced Franchisees or
their managers or employees to attend and successfully complete refresher
training programs or seminars to be conducted by TA at Franchisee's expense
(including, without limitation, TA's then current training fee); provided,
however, that attendance will not be required of any individual at more than two
(2) such programs in any calendar year and will not collectively exceed five (5)
days in duration during any calendar year.
VI. CONFIDENTIAL OPERATIONS MANUAL
A. TA will loan to Franchisee during the term of the TA Franchise
one or more copies of a set of manuals containing mandatory and suggested
specifications, standards, operating procedures and rules prescribed from time
to time by TA for TRUCKSTOPS OF AMERICA facilities and information relative to
other obligations of Franchisee hereunder and the operation of its Franchised
Facility, as the same may be amended from time to time, the master copy of which
shall be kept at TA's Office (collectively, the "Confidential Operations
Manual"). The Confidential Operations Manual contains proprietary information of
TA and shall be kept confidential by Franchisee and the Franchisee Parties both
during the term of the TA Franchise and thereafter. TA shall have the right to
add to and otherwise modify the Confidential Operations Manual from time to time
to reflect changes in the specifications, standards, operating procedures and
rules prescribed by TA for TRUCKSTOPS OF AMERICA facilities, provided that no
such addition or modification shall alter Franchisee's fundamental status and
rights under this Franchise Agreement.
B. The Confidential Operations Manual shall at all times remain the
sole property of TA and shall promptly be returned upon the expiration or other
termination of this Franchise Agreement.
C. Franchisee shall at all times ensure that its copy of the
Confidential Operations Manual is kept current and up-to-date and, in the event
of any dispute as to the contents of the Confidential Operations Manual, the
terms of the master copy of the Confidential Operations Manual maintained by TA
at TA's home office shall be controlling.
VII. CONFIDENTIAL INFORMATION
A. Franchisee acknowledges that its knowledge of the System,
including operating procedures of a TRUCKSTOPS OF AMERICA facility, is derived
from information disclosed to Franchisee by TA and that such information,
including the contents of the Confidential Operations Manual, is proprietary,
confidential and a trade secret of TA. Franchisee agrees that it will maintain
the absolute confidentiality of all such proprietary information during and
after the term of the TA Franchise and that it will not use any such information
in any other business or in any manner not specifically authorized or approved
in writing by TA.
B. Franchisee shall divulge such confidential information only to
such of its employees as must have access to it in order to operate the
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Franchised Facility. Any and all information, knowledge and know-how, including,
without limitation, drawings, materials, TA POS Computer Systems, programs,
customer lists, billing programs, discounts, pumping fees, training materials,
user guides, system manuals, hardware and equipment, other equipment,
techniques, retail store systems, truck repair and maintenance systems, fuel
storage, sales and dispensing systems, restaurant systems, product formulae,
Confidential Operations Manual, similar documents provided to Franchisee from
time to time, and other data which TA designates as confidential, shall be
deemed confidential; except information which (1) Franchisee can demonstrate
came to its attention prior to disclosure thereof by TA; or (2) at the time of
disclosure by TA to Franchisee, had become a part of the public domain, through
publication or communication by others; or (3) after disclosure to Franchisee by
TA, becomes a part of the public domain (other than pursuant to a violation of
this Franchise Agreement or any other agreement), through publication or
communication by others.
C. Due to the special and unique nature of the confidential
information, the Marks and Confidential Operating Manual, Franchisee hereby
agrees and acknowledges that TA shall be entitled to immediate equitable
remedies, including but not limited to, restraining orders and injunctive relief
in order to safeguard such proprietary, confidential, unique, and special
information of TA and that money damages alone would be an insufficient remedy
with which to compensate TA for any breach of the terms of Sections VI, VII, and
XIV of this Franchise Agreement. Furthermore, Franchisee agrees that all
employees of Franchisee having access to confidential and proprietary
information of TA shall be required to execute confidentiality agreements in a
form acceptable to TA.
VIII. MODIFICATION OF THE SYSTEM
Franchisee recognizes and agrees that from time to time TA may change
or modify the System presently identified by the mark "TRUCKSTOPS OF AMERICA,"
including, but not limited to exterior and interior decor, the adoption and use
of new or modified trade names, trademarks, service marks or copyrighted
materials, new POS Computer Systems and programs, new accounting systems, new
sales and marketing programs, new products and services, new equipment or new
techniques, and Franchisee agrees to accept, use and display for the purpose of
this Franchise Agreement any such changes in the System, as if they were part of
this Franchise Agreement at the time of execution hereof. Subject to Section
III(D) above, Franchisee will make such expenditures and such changes or
modifications in the System as TA may reasonably require. Franchisee shall not
change, modify or alter the System in any way except as approved by TA in
writing.
IX. ADVERTISING
Recognizing the value of advertising and the importance of the
standardization of advertising and promotion to the furtherance of the good will
and the public image of TRUCKSTOPS OF AMERICA facilities, Franchisee agrees as
follows:
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A. Franchisee will submit to TA or its designated agency for prior
approval all promotional materials and advertising to be used by Franchisee,
including, but not limited to, billboards, newspapers, radio and television
advertising, specialty and novelty items, signs, boxes, napkins, bags, wrapping
papers, placemats and other point of purchase material. The submission of
advertising to TA for approval shall not affect Franchisee's right to determine
the prices at which Franchisee sells its products or services.
B. Franchisee agrees to contribute to the TA Advertising and
Development Fund (hereinafter "Fund"), an amount equal to one-fourth of one
percent (0.25%) of the aggregate gross receipts (as defined in Section X(B)(1)
below) derived from the Franchised Facility, including dollar fuel sales (as
defined in Section X(B) below) earned at the Franchised Facility, payable
monthly as provided in Section X(A) and (C) for the Continuing Services and
Royalty Fee. The Fund shall be maintained and administered by TA or its
designee, as follows:
1. TA shall direct all advertising programs with sole
discretion over the creative concepts, materials and media used in
such programs and the placement and allocation thereof. Franchisee
agrees and acknowledges that the Fund is intended to maximize general
public recognition and acceptance of the Marks for the benefit of the
System and that TA is not obligated in administering the Fund to make
expenditures for Franchisee which are equivalent or proportionate to
its contribution or to ensure that any particular franchisee benefits
directly or pro rata from the placement of advertising.
2. Franchisee agrees that the Fund may be used to meet any and
all costs of maintaining, administering, directing and preparing
advertising (including, without limitation, the cost of preparing and
conducting television, radio, magazine, billboard, poster, placemats
and newspaper advertising campaigns and other public relations
activities; employing advertising agencies, marketing specialists, or
placement agencies to assist therein; and providing promotional
brochures, location directories and other marketing materials to
franchisees in the System). All sums paid to the Fund shall be
maintained in a separate account from the other funds of TA (but need
not be held by a trustee or custodian) and shall not be used to defray
any of TA's general operating expenses except for such reasonable
administrative costs and overheads, if any, as TA may incur in
activities reasonably related to the administration or direction of
the Fund and advertising programs, including, without limitation,
conducting market research, preparing marketing and advertising
materials and collecting and accounting for assessments for the Fund.
3. It is anticipated that all contributions to the Fund shall
be expended for advertising and promotional purposes during TA's
fiscal year within which the contributions are made. If, however,
excess amounts remain in the Fund at the end of such fiscal year, all
expenditures in the following fiscal year(s) shall be made first out
of any current interest or other earnings of the Fund, if any, next
out of any accumulated earnings and, finally, from principal.
Notwithstanding the foregoing, it is understood and agreed that TA is
not obligated to maintain such funds in an interest-bearing account.
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4. Although TA intends the Fund to be of perpetual duration,
TA maintains the right to terminate the Fund. The Fund shall not be
terminated, however, until all monies in the Fund have been expended
for advertising and promotional purposes. TA may suspend collection of
contributions for and/or suspend expenditures by the Fund without
terminating the Fund.
5. An accounting of the operation of the Fund shall be prepared
annually and shall be made available to Franchisee upon request. At
its option, TA may have such accounting prepared by an independent
accountant selected by TA at the expense of the Fund.
C. Franchisee shall be required, at its sole expense, to maintain
not less than two (2) billboards advertising the Franchised Facility in a form
approved by TA which shall be located at sites approved by TA.
D. Franchisee shall spend a minimum of Ten Thousand Dollars
($10,000.00) for newspaper, direct mail or advertising through other media
during Franchisee's initial thirty (30) days of operation of the Franchised
Facility in accordance with TA's policy for "Business Opening" advertising.
E. TA may, from time to time, develop and market special promotional
items which will be made available to Franchisee at TA's cost plus a reasonable
mark up to cover TA's overheads, and Franchisee shall purchase and maintain a
representative inventory of such promotional items to meet public demand.
Franchisee shall have the right to purchase alternative promotional items from
other sources provided that such alternative goods conform to the specifications
and quality standards established by TA from time to time.
F. TA may, from time to time, develop, establish and market special
discount or free coupon programs, brand or product sales programs, or other
programs designed to induce use of motor fuel products or services from, or
patronage at, TRUCKSTOPS OF AMERICA branded facilities. Franchisee shall either
fully participate, or advise TA immediately in writing of its non-participation
in such programs. If Franchisee elects not to participate in any such program,
it shall prominently display signs approved by TA (both as to contents and
location) indicating Franchisee is not participating in such program(s).
Notwithstanding anything to the contrary herein, Franchisee shall fully
participate in and comply in all respects with any program which TA determines,
in its sole discretion, is or will become closely associated with the System.
G. Franchisee shall not advertise or use in advertising or any other
form of promotion the Marks without the appropriate Federal registration marks
or the symbol or the designation "TM" (which stands for trademark) or "SM"
(which stands for service mark) where applicable.
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X. CONTINUING SERVICES AND ROYALTY FEE; PAYMENT TERMS
A. Franchisee shall pay to TA without offset, credit or deduction of
any nature, so long as this Franchise Agreement shall be in effect, a monthly
Continuing Services and Royalty Fee equal to: (i) four percent (4%) of the gross
receipts derived from the Franchised Facility, excluding fuel sales (as defined
in Section (B)(2) below); plus (ii) two percent (2%) of the gross receipts
derived from sales at the Franchised Facility of any nationally branded fast
foods which are approved in writing by TA; plus (iii) four-tenths of a cent
($.004) per gallon on all fuel sales derived from the Franchised Facility.
B. As used in this Franchise Agreement, the following terms shall
have the meanings set forth below:
1. The term "gross receipts," shall mean all revenues earned
directly or indirectly by Franchisee (or any entities with which
Franchisee or any Franchisee Party is affiliated), from the Franchised
Facility and all businesses on the Franchised Site. Each charge or
sale upon credit shall be treated as a sale for the full price in the
calendar month during which such charge or sale was made, irrespective
of the time when Franchisee receives payment (whether full or partial)
therefor. Gross receipts shall not include (a) the amount of any sales
tax, excise tax or inspection fees imposed by any federal, state,
municipal or other governmental authority directly on sales and
collected from customers, provided that the amount thereof is included
in the selling price and is actually paid by Franchisee to such
governmental authority; (b) refunds to customers for merchandise,
provided that the amount received for such merchandise shall have
previously been included in gross receipts; (c) trade discounts; and
(d) in the case of nationally branded fast food approved by TA,
royalty and advertising fees paid to the franchisor of such fast food.
In the calculation of gross receipts, the following guidelines shall
be used: (i) in cases in which Franchisee receives funds for
conveyance to an unrelated third party and retains only a commission
from the funds so received (e.g., Western Union money orders, sale of
permits), only the commission portion of such funds shall be included
in gross receipts; (ii) subject to TA's approval, in cases in which
the Franchisee receives only a commission from a business activity
rather than the gross revenues from such activity (e.g., game
revenues, permit sales, lottery ticket sales, CAT scale sales,
telephone commissions and the like), only the commission received by
Franchisee shall be included in gross receipts, provided that such
commissions are reasonable and customary and are actually paid by
Franchisee to third parties; and (iii) in the event any portion of the
Franchise Site is leased to, and operated by, an unrelated third party
(subject to TA's approval and the restrictions of this Franchise
Agreement), then the rental income or other consideration (valued at
fair market value) received directly or indirectly from such third
party shall be included in gross receipts.
2. The term "fuel sales" shall mean the sale of gasoline,
diesel fuel and alternate fuel sold at the Franchised Facility. For
purposes of Section X(A)(iii) above, in determining the gallons of
fuel sales, each charge or sale, whether for cash or on credit, shall
be treated as a sale in the month during which such charge or sale was
made, irrespective of whether, or of the month when, Franchisee
receives payment therefor.
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C. The Continuing Services and Royalty Fee shall be paid in the
manner prescribed in the Confidential Operations Manual and shall be due on the
twenty-fifth (25th) day of each month for the preceding month. Notwithstanding
the foregoing, payment terms for all amounts due TA from Franchisee shall be in
accordance with terms established by TA which may be changed at any time at TA's
discretion. Among other things, TA shall have the right to require payment by
certified check or by electronic funds transfer. All Continuing Services and
Royalty Fees, and amounts due for purchases by Franchisee from TA and its
affiliates, and other amounts which Franchisee may owe to TA or its parents or
affiliates, shall bear interest after due date at the highest applicable legal
rate for open account business credit, not to exceed one and one-half percent
(1-1/2%) per month. Franchisee agrees to make all payments according to terms,
whether or not disputed, and waives any claim or right of offset, set-off, or
deduction for amounts disputed or otherwise, provided, however, that where
Franchisee claims in good faith that goods invoiced from the distribution center
were not delivered as invoiced, Franchisee may withhold payment for the disputed
amount of such goods for a period not to exceed thirty (30) days from the
claimed delivery date, in order to afford the parties an opportunity to resolve
the dispute. Franchisee's sole remedy, to the exclusion of all others, for
disputed amounts which are not resolved by agreement of the parties (including
amounts withheld for 30 days pursuant to the provision above) shall be to pay
the disputed amount to TA and then to invoke arbitration under the procedures
provided in Section XXVIII. If Franchisee obtains an award pursuant to
arbitration described herein, recovering the disputed amount from TA, the award
shall include interest at the rate specified above for the period from the date
of payment by Franchisee to TA, to the date of repayment by TA. Notwithstanding
anything to the contrary herein, TA may seek judgement in any court for any
amount due from Franchisee or with respect to any disputes hereunder, or may
invoke arbitration therefore under the procedures provided in Section XXVIII,
and may exercise termination rights under Section XVII. In addition, TA shall
have the sole discretion to apply any payments by Franchisee to any past due
indebtedness of Franchisee for Continuing Services and Royalty Fees, advertising
contributions, purchases from TA and its parents, subsidiaries or affiliates,
interest or any other indebtedness.
XI. ACCOUNTING AND RECORDS
A. Franchisee shall establish and maintain bookkeeping, accounting
and record-keeping procedures conforming to the requirements prescribed by TA,
including, without limitation, the use and retention of sales checks, cash
register tapes, purchase orders, invoices, payroll records, check stubs, sales
tax records and returns, cash receipts and disbursements, general journals,
general ledgers, bank statements and deposit slips.
B. Franchisee will supply to TA, in the form specified by TA, a
monthly profit and loss statement by the twenty-fifth (25th) day of the month
following each calendar month; and a sales and sales tax report by the
twenty-fifth (25th) day of each month, for the last preceding calendar month.
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Additionally, Franchisee shall submit to TA within ninety (90) days of the end
of each fiscal year during the term of this Franchise Agreement, a profit and
loss statement for such fiscal year and a balance sheet as of the last day of
such fiscal year, prepared on an accrual basis, including all adjustments
necessary for fair presentation of the financial statements. Such financial
statements shall, at Franchisee's expense, be compiled and prepared in
accordance with generally accepted accounting standards by a certified public
accountant.
C. Franchisee shall submit to TA such other periodic reports, forms,
information and records as specified, and in the manner and at the time as
specified, in the Confidential Operations Manual or otherwise in writing.
D. Franchisee shall keep true, complete and correct records of each
transaction of any activity affecting revenues, discounts, inventory, sales and
other related data of the Franchised Facility for a period of four (4) years
from the date thereof.
E. TA or its designated agents shall have the right at all
reasonable times to examine and copy, at its expense, the books, records, and
tax returns of Franchisee. TA shall also have the right at any time to have an
independent audit made of the books of Franchisee. If an inspection should
reveal that any payments to TA have been understated in any report to TA, then
Franchisee shall immediately pay to TA the amount understated in addition to
interest as specified in Section X(C). If an inspection discloses an
understatement of three percent (3%) or more in any period of ninety (90) days
or more, Franchisee shall in addition reimburse TA for any and all costs and
expenses connected with the inspection (including, without limitation,
reasonable accounting and attorneys' fees). The foregoing remedies shall be in
addition to any other remedies TA may have.
F. Franchisee hereby agrees to obtain at Franchisee's expense, such
cash registers, data terminals, printers, supplies and other equipment as
required by TA from time to time. If required by TA, Franchisee also agrees to
obtain, at Franchisee's expense, all modems, data phone lines and necessary
hardware, software and technical assistance to allow data communication between
TA's host computer, if any, and Franchisee's equipment.
XII. STANDARDS OF QUALITY AND PERFORMANCE
Franchisee understands and acknowledges the importance of TA's high
and uniform standards of quality and service and the necessity of operating the
TRUCKSTOPS OF AMERICA Franchise in conformity with TA's standards and
specifications. Accordingly, Franchisee agrees that it shall comply with the
System, including but not limited to the following:
A. Franchisee shall convert the operation of the Franchised Facility
in accordance with the Conversion Obligation Schedule or as otherwise agreed in
writing. Prior to such commencement, Franchisee shall have procured all
necessary licenses, permits, and approvals, including but not limited to
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construction, occupancy and operating permits, hired and trained personnel, made
all leasehold improvements, and purchased initial inventory.
B. Franchisee agrees to maintain the condition and appearance of the
premises of the Franchised Facility consistent with TA's standards for the image
of a TRUCKSTOPS OF AMERICA branded facility as an attractive, pleasant and
comfortable facility conducive to buying by its customers. Franchisee agrees to
maintain the appearance and efficient operation of the Franchised Facility
including replacement of worn out or obsolete fixtures and signs, repair of the
exterior and interior of the Franchised Facility and redecorating. If at any
time in TA's judgment, the general state of repair or the appearance of the
premises of the Franchised Facility or its equipment, fixtures, signs or decor
does not meet TA's standards, TA shall notify Franchisee, specifying the action
to be taken by Franchisee. Within thirty (30) days of such notice (or such
shorter period if required by law or required to protect person, property, or
the environment), Franchisee shall initiate and thereafter continue a bona fide
program to complete any required maintenance or repair. TA shall have the right,
in addition to all other remedies, to enter upon the premises of the Franchised
Facility and effect such maintenance, repairs, painting, decorating or
replacements of equipment, fixtures or signs on behalf of Franchisee and
Franchisee shall pay TA the entire costs thereof.
C. Franchisee shall make no material alterations to the Franchised
Facility nor shall Franchisee make material replacements of or alterations to
the equipment, fixtures or signs of the Franchised Facility (i) inconsistent
with the Basic Design (as described in the TA Planning and Design Standards
Manual) or System, without the prior written approval of TA in TA's sole
discretion, or (ii) otherwise, without the prior written approval of TA, such
approval not to be unreasonably withheld.
D. The Franchise Site shall be used solely for the Facility, except
as otherwise approved in advance in writing by TA.
E. Except to the extent that Franchisee is prohibited from selling
certain categories of products under the terms of the Franchised Facility lease,
if any, Franchisee agrees that it will offer for sale and sell at the Franchised
Facility all types of food, products and services that TA from time to time
authorizes and that it will not offer for sale or sell at the Franchised
Facility or the premises which it occupies any other category of products or use
such premises for any purpose other than the operation of a Franchised Facility
in full compliance with this Franchise Agreement. Franchisee is prohibited from
displaying, offering and selling any alcoholic beverages, packaged or otherwise,
and any sexual or pornographic materials, including, without limitation, books,
magazines, videotapes, cassettes, calendars, novelty and related items.
Additionally, Franchisee shall immediately remove any product it offers for sale
and cease offering any service which TA deems inappropriate in its sole
discretion.
F. TA shall provide Franchisee with a current list of approved
manufacturers, suppliers and distributors and approved food and non-food
products, signs, stationery, supplies, and other items or services necessary to
operate the Franchised Facility. TA may revise the list from time to time in its
sole discretion. Franchisee recognizes and acknowledges that TA may receive
fees, commissions and other considerations of value from approved manufacturers,
suppliers and distributors, that Franchisee has no objection or right thereto,
and that Franchisee shall receive only such part thereof, if any, as TA may in
its sole discretion allocate.
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G. Materials, supplies and products used in the operation of the
Franchised Facility or otherwise held for resale (including but not limited to
menu items, beverages, ingredients and other food and beverage products and
materials, containers, packaging materials, other paper and plastic products,
plates, cups, utensils, menus, uniforms, forms, cleaning and sanitation
materials) shall conform to the specifications and quality standards established
by TA from time to time and shall be procured from TA or suppliers approved by
TA. If Franchisee proposes to offer for sale at the Franchised Facility any
brand of product, or to use in the operation of the Franchised Facility, any
brand of food ingredient or other material or supply which is not then approved
by TA as meeting its minimum specifications and quality standards, or to
purchase any product, material or supply from a supplier that is not then
designated by TA as an approved supplier, then Franchisee shall first notify TA
in writing and shall submit samples and such other information as TA requests
for examination or testing or to otherwise determine whether such product,
material or supply, or such proposed supplier, meets TA's specifications and
quality standards or should otherwise be approved. If TA fails to disapprove the
product, material, supply or supplier, or request more samples or more
information, within fourteen (14) days of Franchisee's initial submission to TA,
then Franchisee is free to commence the procurement. A charge not to exceed the
reasonable cost of the inspection and evaluation and the actual cost of the test
shall be paid by Franchisee promptly upon TA's request. TA reserves the right to
re-inspect the facilities and products of any supplier and to revoke approval of
any item or any supplier which fails to continue to meet any of TA's criteria.
H. Franchisee agrees to comply fully with all specifications,
standards, operating procedures and rules prescribed from time to time by TA in
the Confidential Operations Manual (or other operations manual), or otherwise
communicated to Franchisee in writing and designated by TA as constituting
mandatory standards (the "Mandatory Standards"), including but not limited to
specifications, standards, operating procedures and rules as in effect from time
to time relating to the following:
1. The safety, maintenance, cleanliness, sanitation, function
and appearance of the Franchised Facility and its equipment, fixtures,
decor and signs and the maintenance and service agreements therefor;
2. Training, dress, uniform, general appearance and demeanor of
Franchised Facility employees;
3. Type, quality, taste, portion control and uniformity, and
manner of preparation, packaging, display and sale, of all food,
beverages, merchandise, fuel and other items sold by the Franchised
Facility;
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4. Maintaining the Franchised Facility open for business
twenty-four (24) hours per day, seven (7) days per week;
5. Advertising, promotional, and service programs;
6. Use and retention of standard business forms;
7. Use and illumination of signs, posters, displays, menu
boards and similar items;
8. Identification of Franchisee as the owner of the Franchised
Facility; and
9. The type, variety, and quality of customer service and the
handling of customer complaints and satisfaction guarantees.
I. In order to preserve the goodwill, validity and integrity of the
Marks and the System, and to ensure that Franchisee is properly employing both
the Marks and the System in the operation of its Franchised Facility, TA or its
agents shall have the right of entry and inspection of Franchisee's premises and
operating procedures at all reasonable times. TA or its agents shall have the
right at any time to observe the manner in which Franchisee is rendering its
services and conducting its operations, to confer with Franchisee's employees
and customers, and to select motor fuel and other petroleum products,
ingredients, food and non-food products, beverages and other items, products,
equipment, merchandise, sundries, materials and supplies for test of content and
evaluation purposes to make certain that they are satisfactory and meet the by
TA. In the event any products do not conform to TA's standards and
specifications, Franchisee shall upon learning of the non-conformance
immediately cease offering and selling such products.
J. Franchisee shall secure and maintain in force all required
licenses, permits and certificates relating to the operation of the Franchised
Facility and shall operate the Franchised Facility in full compliance with all
applicable laws, ordinances and regulations, including without limitation all
government regulations relating to compensation, general liability and pollution
liability insurance requirements, unemployment insurance and sales,use and
property taxes. Furthermore, Franchisee shall cause the Franchised Facility to
be and remain in full and strict compliance with all environmental laws and
regulations, including but not limited to the Resource Conservation and Recovery
Act of 1976, as amended from time to time, and other applicable federal, state
and local laws relating to aboveground and underground tanks and storage
facilities and the dispensing of fuel.
K. Franchisee agrees to refrain from any merchandising, advertising
or promotional practice which TA, in its sole discretion, determines is
unethical or may be injurious to the business of TA or other Franchised
Facilities or to the goodwill associated with the Marks.
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L. Franchisee agrees that the Franchised Facility shall at all times
maintain inventories sufficient to meet customer demands.
M. Franchisee shall in the operation of the Franchised Facility use
only displays, trays, boxes, bags, wrapping paper, labels, beverage cups, forms
and other paper and plastic products imprinted with the Marks in a form and
presentation prescribed from time to time by TA.
N. The Franchised Facility shall at all times be under the direct
supervision of Franchisee (or a trained and competent employee approved by TA
acting as full-time general manager or assistant general manager). Franchisee
shall keep TA informed at all times of the identity of any employees acting as
managers of the Franchised Facility.
O. Franchisee understands and acknowledges that each and every
detail of the System is important and advantageous not only to TA, but also to
its franchisees, including Franchisee hereunder; that benefits to both parties
will be derived from the uniformity and quality of services, products and
appearance of facilities among all franchisees; and that full compliance with
the System by all franchisees is essential to preserve, maintain and enhance the
reputation and goodwill built up by the System.
P. Whenever a service or product of the System requires the use of
a particular guarantee, as stated in the Confidential Operations Manual,
Franchisee shall execute and deliver to each customer to whom the System service
or product has been sold a guarantee on the form then currently furnished by TA.
Franchisee shall perform and fulfill promptly upon presentation of a valid
guarantee (whether issued by Franchisee or some other TRUCKSTOPS OF AMERICA
branded facility) the services requested by the customer, all in accordance with
the terms and conditions of the guarantee. Franchisee hereby authorizes TA to
charge Franchisee's account with such amount as shall be determined under the
provisions of the guarantee policy and the Confidential Operating Manual then in
effect in the event some other TRUCKSTOPS OF AMERICA branded facility performs
work under Franchisee's guarantee. TA shall credit Franchisee's account with
such amount as shall be determined under the provisions of the guarantee policy
and the Confidential Operating Manual then in effect in the event Franchisee
performs work under a guarantee issued by some other TRUCKSTOPS OF AMERICA
branded facility.
Q. Franchisee acknowledges that each and every detail of the quality
of workmanship, customer service, customer relations, warranty and guarantee
service, appearance and demeanor of Franchisee and its employees, and equipment
and materials utilized by Franchisee, and all other aspects of the System, is
important to TA and to other TRUCKSTOPS OF AMERICA businesses. TA shall endeavor
to maintain high standards of quality and service by all TRUCKSTOPS OF AMERICA
businesses. To this end, Franchisee agrees to cooperate with TA by maintaining
such high standards in the operation of its TA Franchise and in the work
performed by it and shall at all times give prompt, courteous and efficient
service to its customers. Franchisee shall in all dealings with its customers,
suppliers and the public adhere to the highest standards of honesty, integrity,
fair dealing and ethical conduct. If in any situation TA feels that Franchisee
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did not fairly handle a customer complaint, TA has the right to intervene and
attempt to satisfy the customer. In such event, TA may in its discretion
reimburse or pay the customer the amount TA deems necessary in its sole
discretion to satisfy the customer and (without limiting TA's rights in
connection therewith) Franchisee will reimburse TA for any such payment within
thirty (30) days of receipt of invoice from TA. If Franchisee disputes some or
all of the invoice, its sole recourse is, after paying the invoice, to invoke
arbitration under the procedures provided in Section XXVIII, and should
Franchisee get an award thereunder recovering the disputed amount from TA, then
the award shall include interest at the rate specified in Section X(C) for the
period from the date of payment by Franchisee to TA, to the date of repayment by
TA to Franchisee.
R. Franchisee shall use only such warranty and guarantee forms,
invoices and other forms as are approved by TA. Franchisee shall obtain such
forms from TA or from suppliers approved by TA to produce such forms utilizing
the Marks. All invoices shall be sequentially numbered. Copies of all invoices
issued by Franchisee shall be submitted to TA as requested.
S. Franchisee recognizes that certain trucking companies desire to
participate in national programs for the procurement and data processing of
diesel fuel, that TA, TA's parent, or an affiliate thereof, may from time to
time have one or more such programs in effect ("TA Billing System"), and that TA
desires to have, in every area in which there is a TRUCKSTOPS OF AMERICA branded
facility, an outlet which participates in the TA Billing System from which fuel
can be provided to participating trucking companies under such programs.
Franchisee may participate in the TA Billing System under separate agreement.
Should Franchisee choose not to participate in the TA Billing System, then TA or
TA's parent or an affiliate thereof shall have the right to cause Franchisee to
sell diesel fuel to such trucking companies as are specified by TA from time to
time, and to charge TA or TA's parent or affiliate for such fuel in accordance
with the following:
1. TA shall pay Franchisee's cost for the fuel plus a pumping
fee of three cents ($.03) per gallon (or TA's current published
pumping fee, whichever is higher). Franchisee shall not be required
to pay a royalty fee on fuel purchased pursuant to this Paragraph.
For purposes of this Section, Franchisee's cost for fuel shall be the
price (exclusive of taxes) that it pays its supplier less any rebates,
allowances or other discounts of any type or nature whatsoever;
2. The manner and method by which Franchisee shall deliver fuel
to drivers whom TA has specified to Franchisee will be detailed in the
Confidential Operations Manual as modified from time to time. Payment
by TA to Franchisee for the fuel shall be by credit to Franchisee's
account. If the parties cannot agree as to what constitutes
Franchisee's costs for any specific fuel, TA shall credit the account
as it believes appropriate and so advise Franchisee, who shall have
ten (10) days from the receipt of notice of the credit, to advise TA
in writing of its disagreement with the amount of the credit
identifying specifically the reasons for any disagreement. If TA and
Franchisee cannot resolve the dispute thereafter, Franchisee may
submit it to arbitration pursuant to the Arbitration Clause contained
in Section XXVIII of this Franchise Agreement; and
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3. TA shall also reimburse Franchisee for all taxes (federal,
state and local) which Franchisee must pay as a result of TA's direct
fuel sales. Franchisee shall cooperate with TA, at TA's option, in
exempting (or attempt to exempt) any transaction(s) from taxation
and/or seeking a refund of taxes paid. Furthermore, Franchisee shall,
at TA's option, pay any required taxes on behalf of TA or TA's
customers and complete and file all forms, reports and documentation
as required by any federal, state or local authorities.
XIII. TA'S OPERATIONS ASSISTANCE
A. TA may from time to time suggest resale prices to Franchisee for
the products and services offered for sale by the Franchised Facility. Such
recommendations will be based on the experience of TA and its franchisees in
operating Franchised Facilities and on competitive conditions. Franchisee shall
not be obligated to accept any such advice or guidance and shall have the sole
right to determine the prices to be charged by the Franchised Facility. No such
advice or guidance shall be deemed or construed to impose upon Franchisee any
obligation to charge any fixed, minimum or maximum prices for any product or
services offered for sale by the Franchised Facility.
B. During the term of the Franchise Agreement, TA may advise
Franchisee with respect to:
1. Proper utilization of procedures with respect to the sale of
motor fuel, food and non-food products, restaurant and retail store
operations, and truck parts and supplies;
2. New products and services authorized for TRUCKSTOPS OF
AMERICA facilities;
3. Purchase of motor fuel and other food and non-food items,
materials and supplies;
4. Retail store procedures and methods;
5. Truck repair and maintenance standards and procedures;
6. The institution of proper administrative, bookkeeping,
accounting, inventory control, supervisory and general operating
procedures for the effective operation of a TRUCKSTOPS OF AMERICA
facility; and
7. Advertising, sales, marketing and promotional programs.
C. TA may make periodic visits to the Franchised Facility for the
purposes of consultation, assistance, and guidance of Franchisee in all aspects
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of the operation and management of the Franchised Facility. TA shall prepare,
for the benefit of both TA and Franchisee, written reports of such visits
outlining and suggesting changes or improvements in the operations of the
Franchised Facility and detailing any defaults in its operations. A copy of each
such written report shall be provided to Franchisee.
D. TA shall offer Franchisee participation in such centralized
purchasing programs it may maintain for the System, including the right to
purchase products from its Distribution Center (or one operated by an affiliate)
as long as TA has a Distribution Center, upon terms and conditions identified in
the Confidential Operations Manual as modified from time to time. Nothing
contained herein shall require TA to have a Distribution Center in operation.
E. All of the specifications, lists of approved manufacturers,
merchandise, products, materials and supplies and training and operations
manuals to be provided by TA to Franchisee pursuant to this Franchise Agreement
shall be delivered prior to Franchisee's commencement of operation of the
Franchised Facility.
F. TA's parent, TA Operating, has developed a unique billing system
which it will offer to Franchisee separate from the Franchise Agreement between
Franchisor and Franchisee upon terms and conditions to be agreed between TA
Operating and Franchisee.
XIV. PROPRIETARY MARKS
A. Franchisee acknowledges that TA Operating is the owner and TA is
a licensee of the Marks and Franchisee's right to use the Marks is derived
solely from this Franchise Agreement and is limited to the conduct of business
by Franchisee pursuant to, and in compliance with, this Franchise Agreement and
all applicable standards, specifications, and operating procedures prescribed by
TA from time to time during the term of this TA Franchise. Any unauthorized use
of the Marks by Franchisee is a breach of this Franchise Agreement and an
infringement of the rights of TA Operating and TA in and to the Marks.
Franchisee acknowledges and agrees that all usage of the Marks by Franchisee and
any goodwill established by Franchisee's use of the Marks shall inure to the
exclusive benefit of TA and TA Operating and that this Franchise Agreement does
not confer any good will or other interests in the Marks upon Franchisee.
Franchisee shall not, at any time during the term of this Franchise Agreement or
after its termination or expiration, contest the validity or ownership of the
Marks or assist any other person in contesting the validity or ownership of the
Marks. All provisions of this Franchise Agreement applicable to the Marks apply
to any additional trademarks, service marks and commercial symbols authorized
for use by and licensed to Franchisee by TA after the date of this Franchise
Agreement.
B. Franchisee shall not use the Marks as part of any corporate or
trade name or with any prefix, suffix, or other modifying words, terms, designs
or symbols or in any modified form, nor may Franchisee use the Marks in
connection with the sale of any unauthorized product or service or in any other
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manner not expressly authorized in writing by TA. In any communication in which
Franchisee uses the Marks, the Franchisee agrees to give such notices of
trademark and service mark registrations and/or ownership as TA specifies from
time to time. Franchisee shall obtain such fictitious or assumed name
registrations as TA may request and as may be required under applicable law to
preserve, protect or promote the Marks. Franchisee shall not use the Marks in
any manner which has not been specified or approved by TA.
C. Franchisee shall immediately notify TA in writing of any apparent
infringement of, or challenge to, Franchisee's use of Marks and of any claim by
any person of any rights in the Marks or any similar trade name, trademark,
service mark, design or logo of which Franchisee becomes aware. Franchisee shall
not directly or indirectly communicate with any person other than TA and its
counsel in connection with any such alleged infringement, challenge or claim. TA
shall have sole discretion to take such action as it deems appropriate and the
right to exclusively control any litigation, U.S. Patent and Trademark Office
proceeding or other administrative proceeding arising out of such infringement,
challenge or claim or otherwise relating to the Marks. Franchisee agrees to
execute any and all instruments and documents, render such assistance and do
such acts and things as may, in the opinion of TA's counsel, be necessary or
advisable to protect and maintain the interests of TA in any such litigation,
U.S. Patent and Trademark Office proceeding or other administrative proceeding
or to otherwise protect and maintain the interests of TA and TA Operating in the
Marks.
D. TA agrees to indemnify Franchisee against, and to reimburse
Franchisee for, all damages for which it is held liable in any proceeding in
which Franchisee's use of the Marks pursuant to and in compliance with this
Franchise Agreement is held to constitute trademark infringement, unfair
competition or dilution and for all costs reasonably incurred by Franchisee in
the defense of any such claim brought against it or in any such proceeding in
which it is named as a party, provided that and has otherwise complied with this
Franchise Agreement and that TA shall have the right to defend any such claim.
E. If it becomes advisable at any time in TA's sole discretion for
TA or Franchisee to modify or discontinue use of the Marks and/or use one or
more additional or substitute trade names, trademarks, service marks or other
commercial symbols, Franchisee agrees to comply with TA's directions within a
reasonable time after notice to Franchisee by TA and TA shall have no liability
or obligation whatsoever with respect to Franchisee's modification or
discontinuance of the Marks.
XV. INSURANCE
A. Franchisee shall procure at its expense and maintain in full
force and effect during the term of this Franchise Agreement, an insurance
policy or policies protecting Franchisee and its officers, directors, partners
and employees, and TA and its parents, (hereinafter in this Section XV only "TA"
shall refer to TA and its parents) against any loss, liability, or expense
whatsoever arising or occurring upon or in connection with the Franchised
Facility, as TA may reasonably require for its own and Franchisee's protection.
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B. Such policy or policies shall be written by an insurance company
satisfactory to TA in accordance with standards and specifications set forth in
the Confidential Operations Manual or otherwise in writing, and shall include,
at a minimum (except as additional coverages and higher policy limits may
reasonably be specified for all franchisees from time to time by TA in the
Confidential Operations Manual or otherwise in writing) the following:
1. All risks coverage insurance on the Franchised Facility and
all fixtures, equipment, supplies and other property used in the
operation of the Franchised Facility, for full repair and replacement
value of the machinery, equipment, improvements and betterments,
without any applicable co-insurance clause except that an appropriate
deductible clause shall be permitted. The policies shall name TA as a
loss payee as its interest may appear;
2. Workers' compensation and employer's liability insurance as
well as such other insurance as may be required by statute or rule of
the state in which the Franchised Facility is located and operated;
3. Comprehensive general liability insurance with limits of
THREE MILLION Dollars ($3,000,000.00) combined single limit including
the following coverages: contractual, personal injury,
products/completed operations, premises/completed operations, broad
form property damage, independent contractors, liability coverages
and/or garage liability coverage including garage keepers liability
coverage, the foregoing insuring TA, TA Operating and Franchisee
against all claims, suits, obligations, liabilities and damages,
including attorneys' fees, based upon or arising out of actual or
alleged personal injuries or property damage resulting from, or
occurring in the course of, or on or about or otherwise relating to
the Franchised Facility, provided that the required amount herein may
be modified from time to time by TA to reflect inflation or future
experience with claims;
4. Automobile liability insurance, including owned, hired and
non-owned vehicle coverage, with a combined single limit for bodily
injury and property damage of at least THREE MILLION Dollars
($3,000,000.00);
5. Such additional insurance and types of coverage as may be
required by the terms of any lease for the Franchised Facility, or as
may be required from time to time by TA; and
6. Pollution Liability Insurance and aboveground and
underground tank insurance in compliance with all state, local or
federal requirements including, but not limited to, financial
responsibility requirements for underground and aboveground storage
tanks. This coverage provides protection for both sudden and
accidental as well as gradual seepage and pollution and provide
coverage for both on-site and off-site pollution liability clean-up
cost.
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C. Though Franchisee is not obligated hereunder to carry business
interruption insurance, in the event a payment under or pursuant to any such
type of insurance is made to Franchisee or any affiliate thereof in connection
with a business interruption at the Franchised Facility, then Franchisee will
immediately thereafter pay to TA a sum equal to the average daily Continuing
Services and Royalty Fees for the year preceding the interruption multiplied by
the number of days of the business interruption. TA shall be included in any
such insurance policy as a loss payee as its interest may appear.
D. The insurance afforded by the policy or policies respecting
liability shall not be limited in any way by reason of any insurance which may
be maintained by TA. Within twelve (12) months of the signing of this Franchise
Agreement, but in no event later than the date on which Franchisee acquires or
acquired an interest in the real property on which it will develop and operate
the Franchised Facility, a Certificate of Insurance showing compliance with the
foregoing requirements shall be furnished by Franchisee to TA for approval. Such
certificate shall state that said policy or policies will not be cancelled or
altered without at least twenty (20) days prior written notice to TA and shall
reflect proof of payment of premiums. Such certificate shall also state that TA
and its parents, subsidiaries and affiliates shall be named as an additional
insured under Franchisee's Comprehensive General, Automobile and Pollution
Liability Insurances and that all of Franchisee's insurances shall be primary to
any similar insurances carried by TA. Maintenance of insurance and the
performance by Franchisee of the obligations under this Section shall not
relieve Franchisee of liability under the indemnity provisions set forth in this
Franchise Agreement. Minimum limits as required above may be modified from time
to time, as conditions require, by written notice to Franchisee.
E. Should Franchisee, for any reason, not procure and maintain the
insurance coverage required by this Franchise Agreement, TA shall have the right
and authority (without, however, any obligation to do so and without limiting
any other right or remedy of TA under this Franchise Agreement) immediately to
procure such insurance coverage or any portion thereof (for the shortest
practicable successive time intervals of not less than thirty (30) days each,
until Franchisee procures and maintains such insurance coverage) and to charge
the cost thereof to Franchisee, which charges, together with a reasonable fee
for expenses incurred by TA, shall be payable by Franchisee immediately upon
notice.
XVI. RESTRICTIVE COVENANTS
A. During the term of this Franchise Agreement, and for two (2)
years thereafter if terminated by either party prior to expiration by its terms
(other than a termination by Franchisee under Section XVII(A)), Franchisee and
each Franchisee Party covenant and agree that they shall not, without the prior
written consent of TA, either directly or indirectly, for itself or themselves
or on behalf of or in conjunction with any person, persons, partnership or
corporation: (i) own, maintain, engage in, participate or have any interest in
the operation of any truckstop or travel center business (other than the
continued operation of a non-branded truckstop at the Franchise Site), or any
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fueling business, truck repair facility or other business offering or selling
services or products similar to that sold in the System, within the Territory;
or (ii) maintain or operate the truckstop located at the Franchise Site under or
pursuant to a franchise agreement, licensing agreement or a prescribed marketing
plan or system of another truckstop company or other organization, the primary
purpose of which is the marketing of fuel and services to the traveling public
(i.e., a branded facility); or (iii) own, maintain, engage in, participate or
have any interest in the operation of any truckstop or travel center business,
or any fueling business, truck repair facility or other business offering or
selling services or products similar to that sold in the System, pursuant to a
franchise agreement, licensing agreement or a prescribed marketing plan or
system of another truckstop company or other organization the primary purpose of
which is the marketing of fuel and services to the traveling public (i.e., a
branded facility), within a 150 mile radius of any TA branded facility which is
operating as of the date of such termination of this Franchise Agreement.
Notwithstanding the foregoing, these restrictions shall not apply to ownership
by Franchisee of outstanding securities of any corporation whose securities are
publicly held and traded, provided that the securities are held for investment
purposes only and that Franchisee's and each Franchisee Party's combined total
holdings do not constitute more than five percent (5%) of the outstanding
securities of the corporation, and shall not apply in any case as to which TA
gives Franchisee a written exemption, which exemption shall not be unreasonably
withheld.
B. During the term of this Franchise Agreement, and for two (2)
years thereafter if terminated by either party prior to expiration by its terms
(other than a termination by Franchisee under Section XVII[A]), Franchisee and
each Franchisee Party covenant and agree that they shall not, without the prior
written consent of TA, either directly or indirectly, for itself or themselves
or on behalf of or in conjunction with any person, persons, partnership or
corporation, own, maintain, engage in, participate or have any interest in the
operation, within the Adjacent Area (as hereinafter defined), of any enterprise
or activity which, in TA's reasonable judgment: (1) is detrimental to the System
or to the Franchised Facility, in respect to reputation, image, customer
traffic, operating or financial efficiency or success, or otherwise; or (2)
trades on, or gains advantage of (whether or not intentionally), any of the
brand, reputation, layout, facility, services, location, or customer traffic of
the System or of the Franchised Facility; or (3) competes with or offers or
sells services or products which are similar to any of those that are sold in
the System or in the Franchised Facility. As used herein, "Adjacent Area" is any
property adjacent to, contiguous with, or located within two thousand five
hundred (2,500) feet of any boundary of the Franchise Site.
C. In the event that any of the provisions of (A) or (B) above are
unenforceable by virtue of their scope in terms of area or length of time, but
may be made enforceable by reduction of either or both, Franchisee and TA agree
that this covenant shall be enforced to the fullest extent permissible under the
laws and public policies applied in the jurisdiction in which enforcement is
sought.
D. Franchisee and each Franchisee Party further covenant and agree
that during the term of this Franchise Agreement, neither Franchisee nor any
Franchisee Party, as the case may be, shall divert or attempt to divert any
business of or any customers of the Franchised Facility to any other competitive
establishment.
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XVII. DEFAULT AND TERMINATION
A. If Franchisee is in compliance with this Franchise Agreement and
TA materially breaches this Franchise Agreement and fails to cure or attempt to
cure such breach within a reasonable time after written notice thereof is
delivered to TA, Franchisee may terminate this Franchise Agreement. Such
termination shall be effective thirty (30) days after delivery to TA of notice
that such breach has not been cured and Franchisee elects to terminate this
Franchise Agreement.
B. TA may terminate this Franchise Agreement immediately upon
delivery of notice of termination to Franchisee, if Franchisee or any
Franchisee Party:
1. has made any material misrepresentation or omission in its
application for the franchise;
2. is convicted of or pleads no contest to a felony or other
crime or offense that may adversely affect the reputation of
Franchisee or the TRUCKSTOPS OF AMERICA Facility or System;
3. knowingly makes or permits any unauthorized use, disclosure
or duplication of any portion of the Confidential Operations Manual or
knowingly or deliberately duplicates or discloses or makes or permits
any unauthorized use of any trade secret or confidential information
provided to Franchisee by TA;
4. abandons or fails or refuses to operate the Franchised
Facility or any portion thereof for two (2) consecutive days, unless
the Franchised Facility has been closed either for a purpose approved
by TA or due to damage or destruction by an "Act of God" to
substantially all of the Franchised Facility (in which latter event
Section III(E) shall apply), or fails to relocate to a TA-approved
premises within a TA-approved period premises of the Franchised
Facility or other TA-agreed relocation;
5. submits to TA on two (2) or more separate occasions at any
time during the term of this Franchise Agreement any reports or other
data, information or supporting records which understate by more than
three percent (3%) the Continuing Services and Royalty Fees for any
two (2) periods of ninety (90) days or more each;
6. is subject to a liquidation proceeding pursuant to 11 U.S.C.
Section 707, a reorganization proceeding pursuant to 11 U.S.C. Section
1112, an order of confirmation pursuant to 11 U.S.C. Section 1330(b)
or a debt adjustment proceeding pursuant to 11 U.S.C. Section 1307;
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7. fails or refuses to make payments of any amounts due TA or
any parent or affiliate of TA, including but not limited to the
Continuing Services and Royalty Fees, advertising contributions,
amounts due for purchases from TA or its affiliates, or any other
amounts due according to the terms of this Franchise Agreement, and
does not correct such failure or refusal within the earlier of thirty
(30) days or ten (10) days after written notice of such failure is
delivered to Franchisee;
8. fails on three (3) or more separate occasions within any
period of twelve (12) consecutive months to submit when due reports or
other information or supporting records, or to pay when due any
amounts due to TA or any affiliate hereunder, including but not
limited to the Continuing Services and Royalty Fees, advertising
contributions, or amounts due for purchases from TA and its parents or
affiliates or other payments due to TA, whether or not such failure to
comply is subsequently remedied; or
9. breaches or violates Section XVI hereof.
C. TA may also terminate this Franchise Agreement if Franchisee
fails or refuses to comply with any terms of this Franchise Agreement and does
not correct such failure or refusal within thirty (30) days after written notice
thereof is delivered to Franchisee (or does not provide proof acceptable to TA
that it has made all reasonable efforts and will continue to make all reasonable
efforts to cure such default if such cure cannot reasonably be accomplished
within thirty (30) days after written notice is delivered to Franchisee). Such
termination shall be effective immediately upon TA's delivery (after the
expiration of such cure period), of a second written notice advising Franchisee
of its failure to cure such breach or default. Among other things, TA may
terminate this Franchise Agreement upon the occurrence of the following (whether
caused by Franchisee or any Franchisee Party) if the same are not cured in
accordance with the foregoing:
1. failure or refusal to comply with quality, cleanliness or
service standards of TA (including but not limited to any
specification, standard or operating procedure prescribed in the
Confidential Operations Manual or otherwise specified by TA in
writing), or any environmental, health, safety or sanitation law,
ordinance or regulation;
2. failure to satisfy and comply with the Conversion Obligation
Schedule, Exhibit D hereto, on a timely basis;
3. failure to decorate and equip the premises as provided in
Section IV hereof, or to remodel, modernize and redecorate as provided
in Section III(D);
4. failure to complete the training program as provided in
Section V hereof;
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5. failure to adhere to the terms and conditions of any lease
agreement or other agreement with TA;
6. the surrender or transfer of control of the operation of the
TA Franchised Facility, the unauthorized direct or indirect assignment
of the TA Franchise or an ownership interest in Franchisee, or the
failure or refusal to assign the TA Franchise or the interest in
Franchisee of a deceased or disabled controlling owner thereof as
herein required;
7. the misuse or unauthorized use of the Marks or the
commission of any act which can reasonably be expected to impair the
goodwill associated with the Marks;
8. the creation or maintenance during the term of this
Franchise Agreement of a business relationship with any person or
entity which, in TA's judgment, competes in any manner directly or
indirectly with TA, or any TRUCKSTOPS OF AMERICA branded facility
anywhere in the United States, except with TA's express written
permission, such permission not to be unreasonably withheld, (provided
however, that this provision shall not apply to ownership of
outstanding securities of any corporation where securities are
publicly held and traded, provided that the securities are held for
investment purposes only and that Franchisee's or the Franchisee
Party's combined total holdings do not constitute more than five
percent (5%) of the outstanding securities of the corporation); or
9. the purchase of products from the TA Distribution Center, a
national TA account program or TA corporate purchasing program, and
subsequent resale of any such products other than at retail at the
Franchised Facility.
D. To the extent that the provisions of this Franchise Agreement
provide for periods of notice less than those required by applicable law, or
provide for termination, cancellation, or non-renewal other than in accordance
with applicable law the minimum notice period specified in applicable law shall
be substituted for the non-conforming period.
XVIII. RIGHTS AND DUTIES OF PARTIES UPON EXPIRATION OR TERMINATION
Upon any termination of this Franchise Agreement, including the
expiration of this Franchise Agreement by its terms, Franchisee's TA Franchise
and all rights granted hereunder to Franchisee shall forthwith terminate, and
the following provisions shall apply.
A. Franchisee and each Franchisee Party shall immediately cease to,
and shall not thereafter, directly or indirectly, represent to the public or
hold itself out as a franchisee of TA.
B. Franchisee and each Franchisee Party shall immediately and
permanently cease to use in any manner whatsoever any confidential proprietary
methods, procedures, or techniques associated with the System, including the
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Marks and any other distinctive forms, slogans, signs, symbols, logos, or
devices associated with the System, including but not limited to all signs,
advertising materials, stationery, forms, and any other articles which display
the Marks associated with the System.
C. Franchisee shall take such action as may be necessary to assign
to TA or TA's designee or to cancel (at TA's option) any assumed name or
equivalent registration which contains the name "TRUCKSTOPS OF AMERICA" or any
other service mark or trademark of TA, and Franchisee shall furnish TA with
evidence satisfactory to TA of compliance with this obligation within thirty
(30) days after termination, or expiration of this Franchise Agreement.
D. Franchisee, and each Franchisee Party, agrees, in the event it
engages in any other business, not to use any reproduction, counterfeit, copy or
colorable imitation of the Marks, either in connection with such other business
or the promotion thereof, which is likely to cause confusion, mistake or
deception, or which is likely to dilute TA or its parents' exclusive rights in
and to the Marks, and further agrees not to utilize any designation of origin or
description or representation which falsely suggests or represents an
association or connection with TA so as to constitute unfair competition.
Franchisee shall make such modifications or alterations to the premises operated
hereunder (including, without limitation, eliminating, in the next publication,
any use of the Marks in any telephone directory) immediately as may be necessary
to prevent any association between TA or the System and any business thereon
subsequently operated by Franchisee or others, and shall make such specific
additional changes thereto as TA may reasonably request for that purpose,
including without limitation, removal of all distinctive physical and structural
features identifying the System. In the event Franchisee fails or refuses to
comply with the requirements of this Section XVIII, TA shall have the right to
enter upon the premises where Franchisee's Franchised Facility was conducted,
without being guilty of trespass or any other tort, for the purpose of making or
causing to be made such changes as may be required at the expense of Franchisee,
which expense Franchisee agrees to pay upon demand.
E. Promptly after any termination or expiration, each party shall
pay to the other all sums owing to the other under the Franchise Agreement for
the period through the date of termination or expiration. In the event of
termination by TA arising out of default by Franchisee, Franchisee shall pay to
TA all damages, losses, costs and expenses, including reasonable attorneys'
fees, incurred by TA as a result of the default or the termination. Neither
termination nor any such payment shall deprive TA of any claim it may have for
any damages, costs, expenses or obligations under the Franchise Agreement or by
reason of its termination or the breach which gave rise to the termination.
F. Franchisee shall pay to TA all damages, costs and expenses,
including reasonable attorneys' fees, incurred by TA as a result of or in
connection with in obtaining injunctive or other relief for the enforcement of
any provisions of this Section XVIII or Section XVI.
G. Franchisee shall immediately turn over to TA all copies of all
manuals (including the Confidential Operations Manual) TA customer lists,
records, files, instructions, brochures, agreements, disclosure statements, and
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any and all other materials provided by TA to Franchisee relating to the
operation of the franchised business (all of which are acknowledged to be TA's
property).
H. Without intending to limit the other or more general provisions
of this Section XVIII, Franchisee shall promptly, but not later than seven days
after the termination, or expiration, disconnect and remove any discrete part of
any signs, sign faces, sign shapes or configurations which bear, incorporate,
convey or use any Marks ("TA Portion").
I. For a period of thirty (30) days after termination or expiration,
TA shall have the right at its option to purchase for cash any or all
proprietary equipment, supplies, and other inventory, advertising materials, and
TA Portion, at Franchisee's cost or fair market value, whichever is less. If the
parties cannot agree on fair market value within a reasonable time, an
independent appraiser shall be designated by TA, and the determination of such
appraiser shall be binding upon the parties. The cost of the independent
appraiser shall be borne by Franchisee. If TA exercises any option to purchase
hereunder, it shall have the right to set off all amounts due to TA from
Franchisee against any amounts due to Franchisee from TA as a result of the
exercise of such option or any payment therefor. Franchisee hereby acknowledges
TA's right to access the premises of the Franchised Facility should TA elect to
take possession of any items as to which it exercises this option.
J. All obligations of TA and Franchisee which expressly or by their
nature survive the expiration or termination of this Franchise Agreement shall
continue in full force and effect subsequent to and notwithstanding its
expiration or termination until they are satisfied or by their nature expire,
including, but not limited to, the covenants contained in Sections XVI and XXI
of this Franchise Agreement and the arbitration obligation contained in Section
XXVIII of this Franchise Agreement, and Franchisee and each Franchisee Party
agree to perform in accordance therewith.
XIX. TRANSFERABILITY OF INTEREST
A. This Franchise Agreement and all rights hereunder, including but
not limited to TA's right of first refusal set forth in Section XXI herein, may
be assigned and transferred by TA and, if so assigned, shall be binding upon and
inure to the benefit of TA's successors and assigns.
B. During the term of this Franchise Agreement, neither Franchisee
nor any Franchisee Party may, without the prior written consent of TA, by
operation of law or otherwise, sell, assign or transfer: (i) all or any part of
Franchisee's or any Franchisee Party's interest in or rights under this
Franchise Agreement or the TA Franchise granted hereby; (ii) all or any part of
any Franchisee Party's interest in Franchisee (or its interest in any
partnership, corporation or other entity that has an interest in Franchisee);
(iii) all or any part of Franchisee's or any Franchisee Party's interest in any
entity which leases property (real or personal) to Franchisee; or (iv) all or
substantially all of Franchisee's assets. Within thirty (30) days of TA's
receipt of a written request for consent to a sale, assignment or transfer
described above, TA shall advise Franchisee in writing that either: (a) it
consents to the proposed sale, assignment or transfer; (b) it does not consent
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to the proposed sale, assignment or transfer; or (c) it consents to the proposed
sale, assignment or transfer subject to and provided that Franchisee complies,
to TA's satisfaction, with certain terms or conditions. Among other things, TA
may require as a condition of its consent to such a sale, assignment or
transfer, that:
1. the transferee(s) shall be of good moral character and
reputation, shall have business expertise, shall have liquid assets, a
financial net worth and credit rating acceptable to TA and shall meet
TA's then-current standards for new franchisees;
2. Franchisee shall have fully paid and satisfied all of
Franchisee's obligations to TA as of the date of transfer;
3. the transferee or Franchisee shall pay to TA a
non-refundable transfer fee equal to TWENTY-FIVE percent (25%) of
the franchisee fee currently charged by TA for new franchises;
4. the transferee(s) (or such individual(s) who will be the
actual manager of the TA Franchise) shall have successfully completed
and passed the training course then in effect for franchisees, or
otherwise demonstrated to TA's satisfaction, sufficient ability to
operate the Franchised Facility being transferred;
5. the transferee(s), including certain key shareholders,
officers, directors or personnel of the transferee(s), shall jointly
and severally execute any or all of the following at TA's request:
a. a franchise agreement and other related agreements,
including but not limited to a Guaranty, for the unexpired term
of this Franchise Agreement, on the standard forms then being
used by TA; and
b. a written assignment from Franchisee in a form satisfactory
to TA wherein transferee shall assume all of Franchisee's
obligations hereunder.
6. each stock certificate of any transferee corporation shall
have conspicuously endorsed upon it a statement that it is held
subject to, and that further assignment or transfer thereof is subject
to, all restrictions imposed upon assignments by this Franchise
Agreement;
7. no new shares of voting stock in the transferee corporation
shall be issued to any person or entity without obtaining TA's prior
written consent; and
8. Franchisee, prior to the transfer, shall execute a general
release, in a form prescribed by TA, of any and all claims which
Franchisee may have as of such date against TA or its affiliates and
parents, and their respective officers, directors, agents and
employees.
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C. During the term of this Franchise Agreement, neither Franchisee
nor any Franchisee Party shall encumber all or any part of its interest in or
rights under this Franchise Agreement (or the TA Franchise granted hereby)
without the prior written consent of TA; provided, however, that TA shall
consent to a mortgage on the Franchised Facility if the mortgagee agrees, in
writing and upon terms acceptable to TA, to subordinate its lien to TA's rights
under the Franchise Agreement, including but not limited to any and all rights
of first refusal and consent rights provided in this Franchise Agreement.
D. Notwithstanding anything to the contrary herein, no sale,
assignment or transfer, described in paragraph (B) above shall relieve
Franchisee or any Franchisee Party of Franchisee's obligations pursuant to this
Franchise Agreement, including, but not limited to, any of the obligations or
covenants contained in Section XVI, unless TA shall expressly release the same
in writing.
XX. DEATH OR INCAPACITY OF FRANCHISEE
A. In the event of the death or incapacity of an individual
Franchisee, or any Franchisee Party, the Franchise Agreement shall be terminated
forthwith and all rights granted to Franchisee under this Franchise Agreement
shall, at the option of TA, terminate forthwith and automatically revert to TA.
B. Notwithstanding the foregoing, the heirs, beneficiaries,
devisees, or legal representatives of such person may, within one hundred
eighty (180) days of such death or incapacity:
1. apply to TA for the right to continue to operate the TA
Franchise for the duration of the term of this Franchise Agreement and
any renewals hereof, which right shall be granted upon the fulfillment
of all of the conditions set forth in Section XIX(C) of this Franchise
Agreement (except that no transfer fee shall be required); or
2. sell, assign, transfer, or convey Franchisee's interest in
compliance with the provisions of Section XIX(C) and Section XXI of
this Franchise Agreement; provided, however, in the event a proper and
timely application for the right to continue to operate has been made
and rejected, the one hundred eighty (180) days to sell, assign,
transfer or convey shall be computed from the date of the rejection.
XXI. RIGHT OF FIRST REFUSAL
During the term of this Franchise Agreement and for a period of two
(2) years from and after the termination of the Franchise Agreement, including
the expiration of this Franchise Agreement by its terms, (other than a
termination by Franchisee under Section XVII(A)), if: (1) Franchisee or any
Franchisee Party proposes to sell, assign or transfer all or any part of its
interest in the Franchisee or Franchise Site, or all or any part of its interest
in any partnership, corporation or other entity which has an interest in the
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Franchise Site; or (2) the party which owns the Franchise Site (if other than
Franchisee or a Franchisee Party) proposes to sell, assign or transfer all or
any part of its interest in the Franchise Site; then such party shall deliver to
TA a copy of a bona fide, executed written offer to purchase such interest, and
TA shall, for a period of sixty (60) days from the date of delivery of such
offer, have the right to purchase the same for the price and on the terms and
conditions contained in such offer; provided, however, that TA may substitute
cash for any form of payment proposed in such offer. If TA does not exercise
this right of first refusal in writing within such sixty (60) day period, the
offer may be accepted by Franchisee or such Franchisee Party; provided, however,
that if such offer is not accepted within six (6) months of the expiration of
this first refusal period, TA shall again have the right of first refusal herein
described.
XXII. OPERATION IN THE EVENT OF ABSENCE, DISABILITY OR DEATH
In order to prevent any interruption of the franchised business, if
Franchisee is unable to operate the Franchise (due to absence, illness or death
of one or more key personnel, or for any other reason), or if Franchisee shall
not have cured a default under this Franchise Agreement within the thirty (30)
days after receipt of a written notice from TA, TA may, at its option (and for
such period(s) of time as it determines in its sole discretion), enter upon the
premises of the Franchised Facility and exercise complete authority with respect
to the operation of the business until such time as TA determines that the
default of Franchisee has been cured or for such period of time as TA determines
is otherwise necessary or practical. Franchisee specifically agrees that TA may
take over, control, and operate the business under such circumstances, and that
Franchisee shall pay to TA a service fee of not less than FIVE HUNDRED FIFTY
Dollars ($550.00) per day plus all travel and living expenses, room and board
and other expenses reasonably incurred by TA in connection with such services.
All monies from the operation of the business during such period of operation by
TA shall be kept in a separate account and the expenses of the business
including TA's service fee shall be charged to that account. Franchisee and each
Franchisee Party further agree that if TA exercises its right of temporary
operation, Franchisee and each Franchisee Party will indemnify and hold harmless
TA and its agents, employees, and contractors who may act hereunder against all
claims or losses which may be asserted against TA in connection therewith,
except to the extent the claims or losses are attributable to the gross
negligence of TA. During any period of temporary management by TA all personnel
working at the truckstop, except those provided by TA, shall be deemed
employees, agents or contractors of Franchisee. TA's exercise of its rights
hereunder shall not constitute a waiver of any other rights or remedies TA may
have under this Franchise Agreement.
XXIII. INDEPENDENT CONTRACTOR AND INDEMNITY AND HOLD HARMLESS
A. This Franchise Agreement does not create between TA and
Franchisee any relationship of agent, legal representative, joint venturer,
partner, employee, or servant of TA for any purpose whatsoever. It is understood
between the parties hereto that Franchisee shall be an independent contractor
and is in no way authorized to make any contract, agreement, warranty or
representation on behalf of TA, or to create any obligation, express or implied,
on behalf of TA.
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B. Upon request, Franchisee shall prominently display a sign in a
form and at a location approved by TA clearly indicating that the business is
independently owned and operated by Franchisee as a TA Franchise and not as an
employee or agent of TA. Franchisee shall, as directed by TA, remove the sign
and replace it with a different sign approved by TA at either the old location
or a new location.
C. Franchisee and each Franchisee Party, jointly and severally,
agree to defend at their own cost and to indemnify and hold harmless TA, and its
parents, subsidiaries and affiliates and their shareholders, directors,
officers, employees and agents, from and against any and all losses, claims,
costs, expenses (including attorneys' fees and costs and expenses incurred by
them to enforce this provision), damages and liabilities, however caused,
whether or not known or including without limitation strict liability in tort,
resulting directly or indirectly from, arising out of, in connection with, or
pertaining to the following:
(1) the use, condition, or construction, equipping, decorating,
maintenance or operation of the Franchised Facility,
including without limitation the sale of any fuel or other
petroleum products, food products, merchandise or service
from the Franchised Facility,
(2) any breach of any representation, warranty or
covenant of Franchisee or any Franchisee Party under
this Franchise Agreement or any other agreement to
which Franchisee or any Franchisee Party is a party.
(3) any acts or failures to act by Franchisee's employees, and
(4) without limiting the foregoing, any injury or damages
that may arise as the result of leaking fuel tanks or
spill of petroleum products on the premises of the
Franchised Facility.
XXIV. NON-WAIVER
No failure of TA to exercise any power reserved to it hereunder, or to
insist upon strict compliance by Franchisee with any obligation or condition
hereunder, and no custom or practice of the parties in variance with the terms
hereof, shall constitute a waiver of TA's right to demand exact compliance with
the terms hereof. Waiver by TA of any particular default by Franchisee shall not
be binding unless in writing and shall not affect or impair TA's right with
respect to any subsequent default; nor shall any delay, forbearance, or omission
by TA to exercise any power or rights arising out of any breach or default by
Franchisee affect or impair TA's rights to declare any subsequent breach or
default. Subsequent acceptance by TA of any payment(s) due to it hereunder shall
not be deemed to be a waiver by TA of any preceding breach by Franchisee of any
terms, covenants or conditions of this Franchise Agreement. Neither the
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exercise, nor the non-exercise, by TA of any rights, nor the giving or
withholding of any approval or consent, shall result in a waiver or compromise
of any right or remedy of TA, nor shall such acts or omissions impose on TA any
obligation or liability whatsoever.
XXV. NOTICE
Any and all notices required or permitted under this Franchise
Agreement shall be in writing and shall be personally delivered or mailed by
certified mail, return receipt requested or by overnight delivery service to the
respective party at the following addresses unless and until a different address
has been designated to the other party through the use of this procedure:
Notices to TA: TA FRANCHISE SYSTEMS INC.
24601 Center Ridge Road, Suite 300
Westlake, Ohio 44145-5634
Attn: Manager Franchising
Notices to Franchisee: (the name and address shown for Franchisee
in the first paragraph of this Franchise
Agreement, to the Attn: General Manager)
Notice shall be deemed to have been given at the date and time of delivery to
said address, or three (3) days after mailing if sent by certified mail.
XXVI. SEVERABILITY AND CONSTRUCTION
A. Each Section, part, term or provision of this Franchise Agreement
shall be considered severable, and if, for any reason, is determined to be
invalid or unenforceable, it shall be deemed not part of this Franchise
Agreement and shall not impair the operation of or affect the remaining
portions, sections, parts, terms or provisions of this Franchise Agreement,
which will continue to be given full force and effect and bind the parties
hereto; provided, however, that if TA reasonably determines that the
unenforceability of any provision adversely affects the basic consideration of
this Franchise Agreement, TA may, at its option, terminate this Franchise
Agreement on thirty (30) days written notice.
B. Franchisee and each Franchisee Party acknowledge and agree that
in the event of breach by Franchisee of Sections VI, VII, XIV, XVI, XVIII, XIX,
XX or XXI, money damages alone may not be an adequate remedy to TA for such
breach. Accordingly, if there is such a breach or threatened breach, TA shall be
entitled to an injunction restraining the breaching party from any breach
without showing or proving actual damages sustained by TA. Notwithstanding the
foregoing, to the extent the Franchisee or any Franchisee Party obtains,
directly or indirectly, any profit or personal benefit resulting from any
violation of any such Section, such party shall be obligated to pay or deliver
forthwith such profit or personal benefit to TA as damages.
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C. Nothing in this Franchise Agreement is intended to confer upon
any person or legal entity other than TA and Franchisee and such of their
respective successors and assigns as may be contemplated hereby, any rights or
remedies under or by reason of this Franchise Agreement.
D. All captions are intended solely for the convenience of the
parties, and none shall be deemed to affect the meaning or construction of any
provision hereof.
E. The use of a particular pronoun herein shall not be restrictive
as to gender or number, but shall be interpreted in all cases as the context may
require.
XXVII. APPLICABLE LAW
A. This Franchise Agreement takes effect upon its acceptance and
execution by TA in Ohio and shall be interpreted and construed under the laws of
Ohio without regard to rules on conflicts of law.
B. Franchisee acknowledges and agrees that this Franchise Agreement
is entered into in Cuyahoga County, Ohio and that any action sought to be
brought by either party for the purpose of enforcing the terms and provisions
hereof shall be brought if federal jurisdiction exists in the United States
District Court for the Northern District of Ohio in Cleveland or, if such
jurisdiction does not exist, in the Court of Common Pleas of Cuyahoga County,
Ohio. The parties hereby submit to the personal jurisdiction and agree to the
venue of these forums.
C. Except as provided in Section XXVIII, no right or remedy
conferred upon or reserved to TA or Franchisee by this Franchise Agreement is
intended to be exclusive of any other right or remedy herein or by law or equity
provided or permitted, but each shall be cumulative of every other right or
remedy.
D. Nothing herein contained shall bar TA's right to seek injunctive
relief against threatened conduct that will cause it loss or damage, under the
usual equity rules, including the applicable rules for obtaining restraining
orders and preliminary injunctions.
XXVIII. ARBITRATION
A. Except as otherwise specifically provided in Sections X(C) and
XXVII(D) herein, the parties agree that any and all disputes between them, and
any claim by either party that cannot be amicably settled, shall be determined
solely and exclusively by arbitration in accordance with the Rules for
Non-Administered Arbitration of Business Disputes of the Center for Public
Resources. Arbitration shall take place at an appointed time and place in
Cuyahoga County, Ohio. Either TA or Franchisee may initiate arbitration by
giving notice to the other party in accordance with Section XXV.
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B. Each party shall select one (1) arbitrator who is an attorney
licensed to practice law in the State of Ohio (who shall not be counsel for the
party), and the two (2) so designated shall select a third arbitrator who shall
act as chairperson of the panel. If either party fails to designate an
arbitrator within fourteen (14) days after arbitration is requested, or if the
two arbitrators fail to select a third arbitrator within thirty (30) days after
arbitration is requested, then the third arbitrator (or second arbitrator) shall
be selected by the Cleveland ADR Panel of the Center for Public Resources
currently headquartered at 366 Madison Avenue, New York, New York 10017, or its
successor. Once impaneled, all three arbitrators shall act as neutrals and not
as party arbitrators and neither TA nor Franchisee shall have any ex parte
communication with any member of the panel regarding the substance of the
arbitration pending before that panel. The decision of the panel shall be by
majority vote and shall be in writing supported by written findings of fact and
conclusions of law. In reaching its decision the panel shall apply the laws of
the State of Ohio, without regard to rules on conflicts of law. The award of the
arbitrators may grant any relief which might be granted by a court of general
jurisdiction, including award of damages or injunctive relief and may, in the
discretion of the arbitrators, assess the costs of the arbitration, including
the reasonable fees of the arbitrators (but excluding attorneys' fees which
shall be borne individually by each party), against either or both parties in
such proportions as the arbitrators shall determine; provided, however, that the
arbitrators shall provision of this Franchise Agreement or make any award which
by its terms or effect, alters or modifies any such express provision.
C. The decision of the arbitrators, or in the case of a difference
of opinion between them, the decision of the majority shall be the sole and
exclusive remedy for the parties, and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof, except that
either party may appeal to the District Court for the Northern District of Ohio
in Cleveland or the Common Pleas Court of Cuyahoga County, Ohio, on the basis
that the arbitrators have made a mistake of law or that the arbitrators' finding
of fact is against the weight of the evidence, or that the award is beyond the
power or jurisdiction of the arbitrators. In such event, the District or Common
Pleas Court reviewing the decision shall review it without jury on the same
basis as any appellate court would review a decision of a lower court, provided
that the court shall finally determine the controversy unless it determines the
matter should be remanded to the arbitration panel for the taking of additional
evidence.
XXIX. DEFINITIONS
When used in this Franchise Agreement, the following terms in all
of their tenses and cases shall have the meanings set forth below or elsewhere
in this Franchise Agreement as indicated below:
"Adjacent Area" is defined in Section XVI(A).
"Confidential Operations Manual" is defined in Section VI(A).
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"Franchise Facility" is defined in Section I(A).
"Franchise Site" is defined in Section I(A).
"Franchisee" is defined in the first paragraph of this Franchise
Agreement.
"Franchisee Party" shall mean each person who executes a Guaranty
in the form of Exhibit E, attached hereto, and each of the following persons
[LIST ANY KEY PERSONNEL OR PRINCIPALS].
"Mandatory Standard" is defined in Section XII(H).
"Marks" is defined in the third "Whereas" paragraph, on page 1 of
this Franchise Agreement.
"System" is defined in the first "Whereas" paragraph, on page 1
of this Franchise Agreement.
"TA" shall mean TA Franchise Systems, Inc., a Delaware
corporation.
"TA Billing System" is defined in Section XII(S).
"TA Franchise" is defined in the next to last "Whereas" clause
located on pages 1 and 2 of this Franchise Agreement.
"TA Operating" shall mean TA Operating Corporation, a Delaware
corporation.
"TA Portion" is defined in Section XVIII(H).
"TA POS Computer System" means the Truckstops of America point of
sale system.
"Territory" is defined in Section I(B).
XXX. CAVEAT
The success of the business venture contemplated to be undertaken by
Franchisee by virtue of this Franchise Agreement is speculative and is very much
dependent upon the ability of Franchisee or its managers or owners as
independent businesspersons and its active participation in the daily affairs of
the business. TA DOES NOT MAKE ANY REPRESENTATION OR WARRANTY EXPRESS OR IMPLIED
AS TO THE POTENTIAL SUCCESS OR PROFITABILITY OF THE BUSINESS VENTURE
CONTEMPLATED HEREBY.
38
<PAGE>
XXXI. ENTIRE AGREEMENT
This Franchise Agreement, any Exhibits attached hereto, and the
documents referred to herein including particularly the Confidential Operations
Manual, shall be construed together and constitute the entire, full and complete
agreement between TA and Franchisee concerning the subject matter hereof. No
representation not set forth herein has induced Franchisee to execute this
Franchise Agreement, and there are no representations, inducements, promises, or
agreements, oral or otherwise, between the parties not contained herein which
are not explicitly superseded hereby. No amendment, change or variance from this
Franchise Agreement shall be binding on either party unless executed in writing
by both parties. Without limiting the generality of the foregoing, in the event
of any difference between the Uniform Franchise Offering Circular and this
Franchise Agreement, this Franchise Agreement shall govern.
XXXII. ACKNOWLEDGEMENTS
A. Franchisee and each Franchisee Party represent and acknowledge
that: (1) it has received, read and understood this Franchise Agreement and TA's
Uniform Franchise Offering Circular; (2) TA has fully and adequately explained
the provisions of each to its satisfaction; and (3) TA has accorded Franchisee
and each Franchisee Party ample time and opportunity to consult with advisors of
its own choosing about the potential benefits and risks of entering into this
Franchise Agreement.
B. Franchisee and each Franchisee Party acknowledge that Franchisee
has received a copy of this Franchise Agreement, and the attachments hereto, at
least five (5) business days prior to the date on which this Franchise Agreement
was executed. Franchisee and each Franchisee Party further acknowledge that
Franchisee has received the disclosure document required by the Trade Regulation
Rule of the Federal Trade Commission entitled Disclosure Requirements and
Prohibitions Concerning Franchising and Business Opportunity Ventures, at least
ten (10) business days prior to the date on which this Franchise Agreement was
executed.
C. Franchisee and each Franchisee Party represent and acknowledge
that they do not operate under a franchise agreement, licensing agreement, or a
prescribed marketing plan or system of another company or organization except as
may be disclosed on Exhibit B hereto, and that Franchisee and its officers,
directors and shareholders are not subject to any agreements limiting or
restricting Franchisee's ability to conduct said business as a TA Franchise.
D. TA expressly disclaims the making of, and Franchisee and each
Franchisee Party acknowledge that it has not received or relied upon, any
warranty or guaranty, express or implied, as to the revenues, profits or success
of the business venture contemplated by this Franchise Agreement, and that
neither Franchisee nor any Franchisee Party has any knowledge of any
representation by TA, or its officers, directors, shareholders, employees or
agents that is contrary to the terms herein.
39
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, sealed and delivered this Franchise Agreement on the
day and year first above written.
TA:
TA FRANCHISE SYSTEMS INC.
ATTEST: By:
(sign)
(print)
(title)
Witness
FRANCHISEE:
ATTEST: By:
(sign)
(print)
(title)
Witness
[AN ACKNOWLEDGEMENT WILL BE REQUIRED FROM ANY FRANCHISEE PARTY
THAT DOES NOT EXECUTE A GUARANTY]
40
EXHIBIT 10.32
NATIONAL AUTO/TRUCKSTOPS, INC.
FRANCHISE AGREEMENT
Franchise Agreement, made this day of ,
----- -------------------
19__, by and between NATIONAL AUTO/TRUCKSTOPS, INC., a Delaware corporation,
having its principal place of business at 1650 East Golf Road, Schaumburg,
Illinois 60196-1088 ("Franchisor") and ("Franchisee").
-------------------
WITNESSETH:
WHEREAS, Franchisor owns a unique auto/truckstop network which
includes, among other things, the establishment, development and operation of
businesses for full-service truckstop facilities that provide motor fuel pumping
facilities, along with one or more of the following services: truck care and
repair services, a full-service restaurant, a convenience store, showers,
laundry facilities, telephones, recreation rooms, truck weighing scales and
other compatible business services ("A/TS Network");
WHEREAS, Franchisor has expended time, effort and money to
develop the A/TS Network;
WHEREAS, Union Oil Company of California, a California corporation
("Unocal"), is the owner of certain registered or unregistered trademarks,
service marks and/or trade names when used in the field of manufacturing,
marketing and selling various petroleum and related products and services;
WHEREAS, Unocal has granted Franchisor a license to use and
sublicense such registered or unregistered trademarks, service marks and/or
trade names in connection with the operation of the A/TS Network, pursuant to a
trademark license agreement ("Trademark License Agreement") by and between
Unocal and Franchisor;
WHEREAS, in addition to the trademarks, service marks and/or trade
names granted under the Trademark License Agreement, Franchisor may, from time
to time, develop, use and control other trademarks, service marks and/or trade
names for the benefit and use of Franchisor and the Franchised Businesses in
order to identify for the public the source of products and services and to
represent the A/TS Network's high standards of operations, quality, appearance
and service;
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2
WHEREAS, Franchisor grants to certain qualified persons a Franchised
Business providing products and services authorized and approved by Franchisor
and utilizing the Marks, and Franchisee desires to own and/or operate a
Franchised Business under the A/TS Network and wishes to enter into a franchise
relationship with Franchisor for that purpose, as well as to receive assistance
provided by Franchisor in connection therewith (collectively, a "Franchise
Relationship");
WHEREAS, Franchisee understands and acknowledges the importance of
and agrees to comply with Franchisor's high and uniform standards of quality and
service and the necessity of operating the Franchised Business in conformity
with Franchisor's standards and specifications; and
WHEREAS, Franchisor expressly disclaims the making of and Franchisee
acknowledges that it has not received nor relied upon any warranty or guaranty,
express or implied, as to the revenues, profits or success of the business
venture contemplated by this Agreement. Franchisee acknowledges that it has read
this Agreement and Franchisor's Uniform Franchise Offering Circular and all
exhibits thereto ("Offering Circular") upon which it has exclusively relied, and
that it has no knowledge of any representations by Franchisor, or its officers,
directors, stockholders, employees or agents that are contrary to the statements
made in the Offering Circular or to the terms herein.
NOW THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements set forth herein, the parties hereby agree
as follows:
I. DEFINITIONS
1.1 Except where the context otherwise requires, the following terms
used herein shall have the meanings set forth below.
A. "ACCESS 76 System" shall mean the on-line credit card and
information retrieval system pursuant to a Software License Agreement between
Franchisor and Unocal.
B. "Advertising Fund" shall mean the advertising, marketing
and promotional fund to be used for the development, placement and
implementation of Advertising Materials to promote the A/TS Network.
C. "Advertising Material" shall mean any advertising or
promotional material, including, but not limited to, newspapers, other print
media, radio and television advertising, other electronic media advertising,
specialty and novelty items, signs, boxes, containers, point-of-sale materials,
napkins, bags and wrapping papers.
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3
D. "Affiliates" shall mean, with respect to any person, any
person directly or indirectly controlling, controlled by or under direct or
indirect common control with such other person.
E. "Approved Supplies List" shall mean a list of approved
inventory, products, fixtures, furniture, equipment, signs, stationery,
supplies, and other items or services used to operate the Franchised Business.
F. "Approved Suppliers List" shall mean a list of approved
manufacturers, suppliers and distributors of items or services on the Approved
Supplies List.
G. "Average Monthly Base" shall mean the total of all Non-
Fuel Revenue derived from the operation of Franchisee's Franchised Business
during the Base Year divided by twelve (12).
H. "Base Year" shall mean the twelve (12) month period
beginning July 1, 1991 and ending June 30, 1992.
I. "Branded Fuel" shall mean such brands of fuel meeting
Franchisor's specifications and bearing the Unocal Marks or such other Marks as
Franchisor may designate from time to time.
J. "Branded Products" shall mean certain petroleum products,
truck care products, and other merchandise bearing the Marks.
K. "Buying Program" shall mean a program to capitalize on
group buying power through the purchase by Franchisor on behalf of truckstops in
the A/TS Network of products or services used in the Franchised Business,
including, but not limited to, communications services and devices; store
merchandise; restaurant food supplies and services; garage parts and services;
insurance policies; and business services that serve the trucking industry and
other business customers.
L. "Claim" shall mean an action, suit, claim, demand, cause of
action, legal or administrative or arbitral proceeding, inquiry or
investigation.
M. "Confidential Information" shall mean any and all
information, whether obtained before or after Franchisor acquired the A/TS
Network, relating to the A/TS Network, including, but not limited to, trade
secrets, technology, processes, business plans, business systems, knowledge,
knowhow, drawings, materials, equipment, techniques, procedures for display of
products, product formula and other data. For purposes of this Agreement,
Confidential Information shall exclude information that (i) was in the public
domain at the time of its disclosure to Franchisee or (ii) becomes part of the
public domain through no violation of this
<PAGE>
4
Agreement or any other obligation by Franchisee or any third party to keep such
information confidential.
N. "Confidential Operations Manual" shall mean the
confidential operations and procedures manual or series of manuals as developed
and maintained by Franchisor for the Franchised Businesses and as the same may
be modified or supplemented from time to time by Franchisor.
O. "Five Star" shall mean the program for operation and
appearance of the Franchised Premises prescribed by Franchisor in the
Confidential Operations Manual and the Lease Agreement.
P. "Fleet Accounts" shall mean trucking companies or other
purchasers of large quantities of diesel fuel.
Q. "Fleet Marketing Throughput Agreement" shall mean, if
executed by Franchisee, the Fleet Marketing Throughput Agreement, between
Franchisor and Franchisee, in substantially the form of Exhibit A attached
hereto, pursuant to which Franchisee agrees to sell diesel fuel owned by
Franchisor to Fleet Accounts in return for a service fee.
R. "Franchised Business" shall mean a franchised business that
is part of the A/TS Network and provides full-service truckstop facilities that
provide motor fuel pumping facilities, along with one or more of the following
services: truck care and repair services, a full-service restaurant, a
convenience store, showers, laundry facilities, telephones, recreation rooms,
truck weighing scales and other compatible business services approved by
Franchisor.
S. "Guides" shall mean Unocal's National Truck Credit Card
Guide, ACCESS 76 Guide, Unocal's Restaurants and TruckStop Stores Credit Card
Guide, Unocal's Service Station Credit Card Guide and such other guides as
Franchisor may, from time to time, introduce into the A/TS Network and require
Franchisee to comply with.
T. "Incapacity" shall mean, if Franchisee is an individual,
the death or continuing severe physical or mental disability of Franchisee of at
least three (3) months' duration, which renders Franchisee unable to provide for
the continued proper operation of its Franchised Business.
U. "Indemnified Parties" shall mean Franchisor and its
Affiliates, officers, employees, agents, stockholders, designees, successors,
assigns and representatives.
<PAGE>
5
V. "Lease Agreement" shall mean any lease for the Franchised
Premises between Franchisor and Franchisee.
W. "Losses" shall mean all demands, claims, actions or causes
of action, assessments, losses, damages, costs, expenses, labilities, judgments,
awards, find, sanctions, penalties, charges and amounts paid or payable in
settlement, including, all reasonable costs, fees and expenses of attorneys,
experts, accountants, appraisers, consultants, witnesses, investigators and
other agents.
X. "Mark(s)" shall mean the Unocal Marks and such other trade
names, trademarks, service marks, logos and commercial symbols as Franchisor
determines in the future (and may hereinafter be designated by Franchisor) as an
integral part of the A/TS Network.
Y. "Motor Fuel" shall mean diesel fuel and gasoline and such
other fuel as Franchisor may sell, from time to time, for use in internal
combustion engines.
Z. "National Warranty Program" shall mean the national service
warranty program prescribed by Franchisor in the Confidential Operations Manual,
as amended by Franchisor from time to time.
AA. "Non-Fuel Revenue" shall mean the total gross monies and
other consideration received by Franchisee from all sales of parts, accessories,
merchandise, food, beverages, other products and services made in or on orders
placed at, or completed by delivery in, through or from any part of the
Franchised Premises, excluding sales of Motor Fuel. Non-Fuel Revenue shall
include sales and charges made for cash or upon credit whether or not collection
is made of the amounts for which credit is given, but shall exclude refunds for
merchandise returns, allowances, or adjustments permitted customers, sales
taxes, and Franchisor's "TLC" Truck Lube Center gross product receipts but shall
not exclude excise taxes, income taxes, or business taxes payable by Franchisee
which are measured by Franchisee's net operating income. Non-Fuel Revenue shall
also include any other monies or other consideration received from broker's
office rental, income or commissions from broker boards, telephones, permit
sales and motel rentals.
BB. "Person" shall mean an individual, corporation,
partnership, association, trust, estate or other entity or organization.
CC. "Promotional Programs" shall mean programs developed,
established and marketed by Franchisor from time to time and designed to induce
users of Franchisee's products or services to patronize its Franchised Business.
<PAGE>
6
DD. "Unocal Marks" shall mean trademarks, trade names, service
marks and associated logos and commercial symbols licensed to Franchisor
pursuant to a trademark license agreement.
1.2 Each of the following terms is defined in the paragraphs set
forth opposite such term:
"A/TS Network" Recitals
"Advertising Committee" 10.3
"Asserted Liability" 23.4
"Assign" 21.2.A
"Claims Notice" 23.4
"Continuing Services and Royalty Fee" 3.1
"Customer Complaint Form" 19.1.B.2
"Delivery Termination Date" 16.4.A
"Designated Terminal" 16.4.A
"Force Majeure" XXXV
"Franchised Premises" 2.1
"Franchise" Recitals
"Franchisor" Recitals
"Geographic Area" 16.4.A
"Gross Negligence" 23.4
"Initial Delivery Period" 16.4
"Initial Franchise Fee" 2.4
"Initial Term" 5.1
"Monthly Non-Fuel Revenue Amount" 3.2
"Offering Circular" Recitals
"Outside Elements" 12.13.E
"PMPA" 19.1.A.3
<PAGE>
7
"PMPA Summary" 19.1.E
"Principal Manager" 21.2.B
"Purchase Price" 16.6
"Qualified Immediate Family Member" 21.2.B
"Quarterly Maximum Gallons" 16.2
"Renewal Term" 5.2
"Tax" 16.7
"Trademark License Agreement" Recitals
"Transfer Fee" 21.2.D
"Unocal" Recitals
"Wilful Misconduct" 23.4
II. APPOINTMENT AND FRANCHISE FEE
2.1 Franchisor hereby grants to Franchisee, upon the terms and
conditions herein contained, the right, franchise and privilege to operate a
Franchised Business at, and only at, the following location:
("Franchised Premises"), and
- ------------------------------------------
Franchisee undertakes to operate the Franchised Business at, and only at, the
Franchised Premises.
2.2 In connection with Franchisor's grant of the Franchised Business
to Franchisee, Franchisor will license Franchisee to use the Unocal Marks during
term of this Agreement solely in connection with the Franchised Business.
2.3 Franchisor does not grant Franchisee any territorial exclusivity
outside the Franchised Premises.
2.4 Upon execution of this Agreement, Franchisee shall pay to
Franchisor a non-refundable initial franchise fee of SEVENTY-FIVE THOUSAND
Dollars ($75,000.00) ("Initial Franchise Fee"). Franchisee acknowledges that the
Initial Franchise Fee is fully earned and non-refundable upon execution of this
Agreement as consideration for expenses incurred by Franchisor in furnishing
assistance and services to Franchisee and for Franchisor's lost or deferred
opportunity
<PAGE>
8
to franchise others. (STRIKE THIS PARAGRAPH IF NOT PAYING AN INITIAL FRANCHISE
FEE.)
III. CONTINUING SERVICES AND ROYALTY FEE
3.1 Commencing on January 1, 1994, Franchisee shall pay to
Franchisor, without offset, credit or deduction of any nature, so long as this
Agreement shall be in effect, an annual continuing services and royalty fee in
an amount equal to three percent (3%) of the excess of all Non-Fuel Revenue
derived from the Franchised Business during the calendar year over the Non-Fuel
Revenue derived from the Franchised Business during the Base Year ("Continuing
Services and Royalty Fee"). Such fee shall be paid monthly in arrears in the
manner set forth in the Confidential Operations Manual.
3.2 On or before the tenth (10th) day of each month commencing
February 1, 1994, Franchisee shall calculate the Non-Fuel Revenue derived from
the Franchised Business during the prior month just ended ("Monthly Non-Fuel
Revenue Amount"). If the Monthly Non-Fuel Revenue Amount exceeds the Average
Monthly Base, Franchisee shall pay to Franchisor on or before the tenth (10th)
day of each month, three percent (3%) of the excess of the Monthly Non-Fuel
Revenue Amount over the Average Monthly Base. If the Monthly Non-Fuel Revenue
Amount is less than the Average Monthly Base, Franchisor shall credit
Franchisee's account in the amount of three percent (3%) of the difference
between the Monthly Non-Fuel Revenue Amount and Average Monthly Base and shall
deduct such amount from the Continuing Services and Royalty Fee payments due in
subsequent months for the remainder of such calendar year. In January of each
year, Franchisor shall reconcile Franchisee's monthly payments of Continuing
Services and Royalty Fees for the preceding year just ended. In the event that
Franchisee has overpaid the amount due for Continuing Services and Royalty Fees
in any calendar year, Franchisor shall refund to Franchisee any Continuing
Services and Royalty Fees paid by Franchisee during such preceding calendar
year.
3.3 On or before the tenth (10th) day of each month Franchisee will
submit to Franchisor on a form approved by Franchisor, a correct statement,
signed by Franchisee, of Franchisee's Monthly Non-Fuel Revenue Amount for the
preceding month just ended. Each monthly statement shall be accompanied by
Franchisee's calculation of the Continuing Services and Royalty Fee payment
based on the Monthly Non-Fuel Revenue Amount reported in the statement so
submitted for the preceding month just ended. Franchisee shall make available to
Franchisor for reasonable inspections at reasonable times all original books and
records that Franchisor may deem necessary to ascertain Franchisee's Monthly
Non-Fuel Revenue Amount.
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9
IV. PAYMENT
4.1 All Continuing Services and Royalty Fees, advertising
contributions, amounts due for purchases by Franchisee from Franchisor, and
other amounts which Franchisee owes to Franchisor shall bear interest after due
date at eighteen percent (18%) per annum or the maximum rate permitted by law,
whichever is lower. Franchisee acknowledges that this Paragraph shall not
constitute agreement by Franchisor to accept such payments after same are due or
a commitment by Franchisor to extend credit to, or otherwise finance
Franchisee's operation of, the Franchised Business. Further, Franchisee
acknowledges that its failure to pay all amounts when due shall constitute
grounds for termination of this Agreement, as provided in Paragraph XIX hereof.
4.2 Notwithstanding any designation by Franchisee, Franchisor shall
have the sole discretion to apply any payments by Franchisee to any past due
indebtedness of Franchisee for Continuing Services and Royalty Fees, advertising
contributions, purchases from Franchisor, interest or any other indebtedness, in
such amounts and in such order as Franchisor shall determine.
V. TERM AND RENEWAL
5.1 This Agreement shall be effective and binding from the date of
its execution for an initial term commencing on the closing date of the
transaction and ending on ("Initial Term").
---------------
5.2 Franchisee shall have the right to renew the Franchise Agreement
at the expiration of the Initial Term for five (5) additional successive terms
of three (3) years each ("Renewal Term"), provided that all of the following
conditions have been fulfilled:
A. Franchisee has during the Initial Term complied with all
the provisions of this Agreement and during any Renewal Term complied with the
provisions of the then-current franchise agreement;
B. Franchisee is not in default of the provisions of Paragraph
XIX of this Agreement;
C. Franchisee has given notice of renewal to Franchisor as
provided in Paragraph XIX herein;
D. Franchisee has satisfied all monetary obligations owed by
Franchisee to Franchisor and Franchisor's Affiliates and has timely met these
obligations throughout the term of this Agreement;
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10
E. Franchisee has executed upon renewal Franchisor's
then-current form of franchise agreement, Lease Agreement and/or any other
agreements required to be executed by the parties (with appropriate
modifications to reflect the fact that the agreement relates to the grant of a
renewal franchise), which agreements shall supersede in all respects this
Agreement, the Lease Agreement and other agreements between the parties, and the
terms of which may differ from the terms of this Agreement and other agreements
between the parties, including, without limitation, a different percentage
Continuing Services and Royalty Fee or advertising contribution, or adoption and
utilization of any new or different computer hardware and software prescribed by
Franchisor for current franchisees; provided, however, Franchisee shall not be
required to pay the then-current initial franchise fee;
F. Franchisee has complied with Franchisor's then-current
qualification and training requirements; and
G. Franchisee has executed a general release, in the
then-current form prescribed by Franchisor, of any and all claims against
Franchisor and its Affiliates, and their respective officers, directors, agents,
stockholders and employees.
5.3 Franchisor may terminate or not renew this Agreement by written
notice to Franchisee, as provided in Paragraph XIX herein.
VI. PROPRIETARY MARKS
6.1 Franchisee acknowledges that Franchisee's right to use the Marks
is derived solely from this Agreement and is limited to the conduct of the
Franchised Business by Franchisee pursuant to and in compliance with this
Agreement and all applicable standards, specifications, and operating procedures
prescribed by Franchisor from time to time during the term of this Agreement.
Any unauthorized use of the Marks by Franchisee is a breach of this Agreement
and an infringement of the rights of Franchisor in and to the Marks. Franchisee
acknowledges that all usage of the Marks by Franchisee and any goodwill
established by Franchisee's use of the Marks shall inure to the exclusive
benefit of Franchisor and that this Agreement does not confer any goodwill or
other interests in the Marks upon Franchisee. Franchisee shall not, at any time
during the term of this Agreement or after its termination or expiration,
contest the validity or ownership of any of the Marks or assist any other person
in contesting the validity or ownership of any of the Marks. All provisions of
this Agreement applicable to the Marks apply to any additional trademarks,
service marks, and commercial symbols authorized for use by and licensed to
Franchisee by Franchisor after the date of this Agreement.
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11
6.2 Franchisee shall not use any Mark or portion of any Mark as part
of any corporate or trade name, or with any prefix, suffix, or other modifying
words, terms, designs, or symbols, or in any modified form, nor may Franchisee
use any Mark in connection with the sale of any unauthorized product or service
or in any other manner not expressly authorized in writing by Franchisor.
Franchisee shall give such notices of trademark and service mark registrations
as Franchisor specifies and obtain such fictitious or assumed name registrations
as may be required under applicable law, and at Franchisee's expense. Franchisee
shall not use any of the Marks in any manner which has not been specified or
approved by Franchisor.
6.3 Franchisee shall promptly notify Franchisor of any Claim based
upon or arising from any attempt by any other Person to use the Marks or any
colorable imitation thereof. Franchisee shall also notify Franchisor of any
Claim against Franchisee relating to the Marks, within ten (10) days after
Franchisee received notice of such Claim. Upon receipt of timely notice of a
Claim against Franchisee relating to the Marks, Franchisor shall have the sole
right to defend any such action. Franchisor shall have the exclusive right to
contest or bring action against any third party regarding the third party's use
of any of the Marks and shall exercise such right in its sole discretion. In any
defense or prosecution of any litigation relating to the Marks undertaken by
Franchisor, Franchisee shall cooperate with Franchisor and execute any and all
documents and take all actions as may be desirable or necessary in the opinion
of Franchisor and/or its counsel, to carry out such defense or prosecution. Both
parties will make every effort consistent with the foregoing to protect,
maintain, and promote the Marks and their distinguishing characteristics.
6.4 If it becomes advisable at any time, and from time to time, in
Franchisor's sole discretion, for Franchisor and/or Franchisee to modify or
discontinue use of any Mark, including, but not limited to, the Unocal Marks,
and/or use one (1) or more additional or substitute trade names, trademarks,
service marks, or other commercial symbols, Franchisee shall comply with
Franchisor's directions within a reasonable time after notice to Franchisee by
Franchisor. Franchisee shall immediately, upon the request of Franchisor, and in
any event upon termination of this Agreement, at no expense to Franchisor,
discontinue and take such legal or other action as may be necessary to
discontinue the use of the Marks.
6.5 In order to preserve the validity and integrity of the Marks and
copyrighted material licensed herein and to ensure that Franchisee is properly
employing the same in the operation of its Franchised Business, Franchisor or
its agents shall have the right of entry and inspection of the Franchised
Premises at all reasonable times and, additionally, shall have the right to
observe the manner in which Franchisee is rendering its services and conducting
its operations, to confer with Franchisee's employees and customers, and at
Franchisee's expense to select fuel, products, inventory, equipment and other
items, materials and supplies for test
<PAGE>
12
of content and evaluation purposes to make certain that the services, fuel,
products, inventory, materials, supplies, equipment and operations are
satisfactory and meet the quality control provisions and performance standards
established by Franchisor.
6.6 Under no circumstances shall Franchisee use Franchisor's name or
Marks (i) on any forms, publication, material or item disapproved by Franchisor,
or (ii) in connection with any product or service not authorized by Franchisor,
or (iii) in connection with any service performed by Franchisee in any manner
not authorized by Franchisor.
6.7 Franchisee shall not use in any advertising or any other form of
promotion, the Marks (i) in any manner disapproved by Franchisor, and (ii)
without the appropriate (C) or (R) registration marks or the designations (TM)
or (sm) where applicable as specified by Franchisor in the Confidential
Operations Manual.
VII. CONFIDENTIAL OPERATIONS MANUAL
7.1 Franchisor will loan to Franchisee during the term of this
Agreement one (1) or more copies of a Confidential Operations Manual containing
mandatory and suggested specifications, standards, operating procedures and
rules prescribed from time to time by Franchisor for the A/TS Network and
information relative to other obligations of Franchisee hereunder and the
operation of its Franchised Business. Franchisor shall have the right to add to
and otherwise modify the Confidential Operations Manual from time to time to
reflect changes in the specifications, standards, operating procedures and rules
prescribed by Franchisor for the A/TS Network, provided that no such addition or
modification shall alter Franchisee's fundamental status and material rights
under this Agreement. Franchisee shall immediately upon notice adopt any and all
such changes.
7.2 The Confidential Operations Manual (and any copies thereof)
shall at all times remain the sole property of Franchisor and shall be returned
promptly by Franchisee to Franchisor, at Franchisee's expense, immediately upon
the expiration or other termination of this Agreement.
7.3 Franchisee acknowledges that the Confidential Operations Manual
contains proprietary information of Franchisor and agrees to keep such
information confidential both during the term of this Agreement and subsequent
to the expiration or termination of this Agreement. Franchisee shall at all
times insure that at least one (1) up-to-date and current copy of the
Confidential Operations Manual is available at the Franchised Premises. At all
times that the Confidential Operations Manual is not in use by authorized
personnel, Franchisee shall maintain the Confidential Operations Manual in a
locked receptacle at the Franchised Premises and
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13
shall grant only authorized personnel, as defined in the Confidential Operations
Manual, access to the key or lock combination of such receptacle.
7.4 In the event of any dispute as to the contents of the
Confidential Operations Manual, the terms of the master copy of the Confidential
Operations Manual maintained by Franchisor at Franchisor's principal place of
business shall control.
VIII. CONFIDENTIAL INFORMATION
8.1 Franchisee acknowledges that knowledge of the operation of the
Franchised Business is and will be derived from Confidential Information
disclosed to Franchisee by Franchisor and that such Confidential Information is
proprietary, confidential and a trade secret of Franchisor. Franchisee shall
maintain the absolute confidentiality of all such Confidential Information
during and after the term of this Agreement and shall not use any such
Confidential Information in any other business or in any manner not specifically
authorized or approved in writing by Franchisor.
8.2 Franchisee shall divulge Confidential Information only to its
employees that must have access to such information and only to the extent
necessary to operate the Franchised Business.
IX. MODIFICATION OF THE A/TS NETWORK
Franchisee acknowledges that at any time and from time to time
Franchisor may change or modify the A/TS Network, including, without limitation,
the adoption and use of new or modified trade names, trademarks, service marks
or copyrighted materials; new business centers; new computer systems; new
inventory items; new products or services; new merchandising techniques; new
equipment; or new techniques and that Franchisee will be required to accept, use
and display for the purpose of this Agreement any such changes in the A/TS
Network, as if they were part of this Agreement at the time of execution hereof.
Franchisee will make such expenditures as are reasonably required by such
modifications in the A/TS Network. Franchisee shall not change, modify or after
in any way the A/TS Network, except as directed by Franchisor.
X. ADVERTISING
10.1 Franchisor reserves the right to require Franchisee to
discontinue using any Advertising Material promoting the Franchised Business
that Franchisor deems unacceptable or detrimental to the A/TS Network.
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14
10.2 Beginning on January 1, 1994, or at such later time as
Franchisor's board of directors elects, and continuing throughout the term of
this Agreement, Franchisee shall contribute to the Advertising Fund an amount
equal to one percent (1%) of Non-Fuel Revenue. Franchisee's required payments to
the Advertising Fund shall be made monthly in arrears at the same time and in
the same manner as, and in addition to, the Continuing Services and Royalty Fee
provided in Paragraph III herein. The Advertising Fund shall be maintained and
administered by Franchisor or its designee, as follows:
A. Franchisor shall direct all advertising programs with sole
discretion over the creative concepts, materials and media used in such programs
and the placement and allocation thereof. Franchisor reserves the right in its
sole and exclusive discretion to use such media, create such programs and
allocate any money from the Advertising Fund to such regions or localities as
Franchisor shall deem appropriate. All Advertising Material shall be and remain
the sole property of Franchisor and may not be altered by Franchisee. Franchisee
acknowledges that the Advertising Fund need not be spent pro rata and is
intended to further the general recognition and acceptance of the Marks for the
benefit of the A/TS Network.
B. Franchisor shall, for each of its Franchisor-owned
Franchised Businesses, contribute to the Advertising Fund an amount equal to one
percent (1%) of the Non-Fuel Revenue of such Franchised Businesses.
C. The Advertising Fund may be used to meet any and all costs
of maintaining, administering, directing and preparing advertising material
(including, without limitation, the cost of (i) preparing and conducting
television, radio, magazine and newspaper advertising campaigns and other public
relations activities; (ii) employing advertising agencies to assist therein;
(iii) producing signage and point-of-sale materials; (iv) conducting marketing
activities; (v) compensating personnel employed by Franchisor to engage in
advertising, marketing and/or public relations activities on behalf of the
Advertising Fund if Franchisor in its sole and exclusive discretion, decides to
employ such personnel, but only to the extent such personnel actually devote
time to such activities; and (vi) providing promotional brochures and other
marketing materials to franchisees in the A/TS Network). All sums paid by
Franchisee to the Advertising Fund shall be maintained in a separate account
from the other funds of Franchisor and shall not be used to defray any of
Franchisor's general operating expenses, except for such reasonable
administrative costs and overhead, if any, as Franchisor may incur in activities
reasonably related to the administration or direction of the Advertising Fund
and advertising programs including, without limitation, conducting market
research, preparing marketing and advertising materials, and collecting and
accounting for assessments for the Advertising Fund; provided, however, that up
to ten percent (10%) of the Advertising Fund may be expended by Franchisor for
such reasonable administrative costs and overhead, if any, as Franchisor may
incur in activities reasonably related to the
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15
administration or direction of the Advertising Fund and advertising programs for
Franchised Businesses including, without limitation, collecting and accounting
for assessments for the Advertising Fund.
D. Franchisor maintains the right to terminate the Advertising
Fund at any time. However, the Advertising Fund shall not be terminated until
all monies in the Advertising Fund have been expended for advertising and
promotional purposes, or returned to franchisees, as Franchisor deems fair and
reasonable in its sole discretion.
E. An accounting of the operation of the Advertising Fund
shall be prepared annually and shall be made available to Franchisee upon
request.
F. Once contributions to the Advertising Fund are made by
Franchisee, all such contributions shall be used as herein required and shall
not be returned to Franchisee, except pursuant to Subparagraph 10.2.D. hereof.
10.3 Franchisor shall form an Advertising and Promotion Committee
("Advertising Committee") comprised of no fewer than five (5) franchisee
representatives (each, a "Franchisee Representative"), the number of such
Franchisee representative being determined in Franchisor's sole discretion. Each
Franchisee Representative shall represent a geographic region specified by
Franchisor. Each Franchised Business shall have one (1) vote to elect annually
the Franchisee representative from its respective geographic area. Franchisor
may from time to time consult with the Advertising Committee to develop
Advertising Materials and Promotional Programs. The Advertising Committee may
recommend to Franchisor certain Advertising Materials and Promotional Programs
deemed beneficial for promotion of the A/TS Network. However, Franchisor
reserves the right, in its sole discretion, to make the final determination of
Advertising Materials and Promotional Programs to be implemented into the A/TS
Network and shall not be bound by the Advertising Committee's recommendations.
10.4 Franchisee shall participate in all Promotional Programs
conducted by Franchisor. Franchisor shall notify Franchisee of the creation of
all such Promotional Programs and shall advise Franchisee with respect to all of
the elements thereof. Franchisee shall adhere to all elements of such
Promotional Programs, provided that no such Promotional Program shall dictate or
control the price charged by Franchisee for any item. Franchisor may, however,
suggest prices to be charged in any Promotional Program. Franchisor may
establish no Promotional Programs, in its sole, subjective discretion, and need
not consult or confer with Franchisee or any other franchisee of Franchisor,
except to the extent provided in Subparagraph 10.3 above, with respect to the
nature, content or amount of any Promotional Programs.
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16
XI. FRANCHISOR'S OPERATIONS ASSISTANCE
11.1 Franchisor may, from time to time, advise or offer guidance to
Franchisee relative to prices for the products and services offered for sale by
its Franchised Business that in Franchisor's judgment constitute good business
practice. Such guidance will be based on the experience of Franchisor and its
franchisees in operating Franchised Businesses and an analysis of the costs of
such products and prices charged for competitive products. Franchisee shall not
be obligated to accept any such advice or guidance and shall have the sole right
to determine the prices to be charged from time to time by its Franchised
Business, and no such advice or guidance shall be deemed or construed to impose
upon Franchisee any obligation to charge any fixed, minimum or maximum prices
for any product offered for sale by the Franchised Business.
11.2 During the term of this Agreement Franchisor shall:
A. Provide to Franchisee the Approved Supplies List and
Approved Suppliers List;
B. Provide site engineering assistance;
C. Maintain and administer a Fleet Marketing Throughput
Program, as provided in Exhibit A to this Agreement;
D. Provide centralized purchasing assistance for products and
services outside of the Buying Program;
E. Administer the Buying Program, as further described in
Paragraph XIII herein;
F. Provide ongoing training programs for Franchisee;
G. Coordinate system-wide advertising and administer the
Advertising Fund;
H. Regulate quality standards and products throughout the A/TS
Network; and
I. Provide Franchisee with key performance guidelines based on
information gathered from franchisees in the A/TS Network.
11.3 Franchisor may, from time to time, provide operations
assistance which may consist of advice and guidance with respect to the
following:
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17
A. Proper procedures to be used by the Franchised Business,
with respect to the sale of the Branded Fuel, Branded Products and other
products and services as approved by Franchisor;
B. Additional products and services authorized for sale from
Franchised Businesses;
C. Ongoing research and development of products, services,
systems, procedures and techniques which may enhance the A/TS Network;
D. Central product purchasing services;
E. The institution of proper administrative, bookkeeping,
accounting, inventory control, supervisory and general operating procedures for
the effective operation of a Franchised Business;
F. Seminars and programs designed to increase knowledge of the
industry and/or foster and promote franchisee relations;
G. Advertising and promotional programs; and
H. Recommended software packages for conducting inventory
control, point-of-sale and/or other functions.
11.4 Franchisor, or its representative, shall make periodic visits
to the Franchised Business for the purposes of consultation, assistance, and
guidance to Franchisee in all aspects of the operation and management of the
Franchised Business.
XII. FRANCHISEE'S OBLIGATIONS
12.1 Franchisee shall comply with all requirements set forth in this
Agreement, the Confidential Operations Manual and other written policies
supplied to Franchisee by Franchisor. All references herein to this Agreement
shall include all such mandatory specifications, standards and operating
procedures and rules. Franchisee shall comply with the entire set of
specifications and standards for the A/TS Network including, but not limited to,
the provisions of this Paragraph XII.
12.2 Franchisee agrees to execute and deliver the Lease Agreement
simultaneously with the execution of this Agreement.
12.3 Franchisee shall follow such procedures or take such action as
Franchisor may from time to time require to maintain the appearance and
efficient operation of the Franchised Business and to meet or exceed
Franchisor's annually
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18
published minimal acceptable Five Star score. If at any time in Franchisor's
judgment the general state of repair or appearance of the Franchised Premises or
its equipment, fixtures, signs or decor does not meet Franchisor's standards,
Franchisor shall so notify Franchisee, specifying the action to be taken by
Franchisee to correct such deficiency. If Franchisee fails to cure such
deficiency within the period of time specified in said notice and thereafter
fails to implement a bona fide program to complete any required maintenance,
Franchisor shall have the right, in addition to all other remedies, to enter
upon the Franchised Premises and effect such maintenance or repairs on behalf of
Franchisee, and Franchisee shall pay to Franchisor the entire cost thereof upon
demand. If Franchisee disputes the amounts owed Franchisor for such maintenance
or repairs, Franchisor shall be entitled to reimbursement of its costs
including, but not limited to, reasonable legal fees plus accrued interest.
Failure to correct such deficiency is a material default of this Agreement and
grounds for termination of this Agreement subject to the provisions of Paragraph
XIX herein.
12.4 Franchisee shall not make or permit anyone to make any
modifications in or to the Franchised Premises of a permanent nature, including
but not limited to, permanent improvements, alterations, decorations, or
additions, structural or otherwise, in or to the Franchised Premises without
first obtaining the written consent of Franchisor. All improvements,
alterations, decorations, or additions made by Franchisee shall be completed in
a good and workmanlike manner in accordance with all applicable laws and
requirements, and Franchisee shall defend, indemnify, and hold Franchisor
harmless from and against any and all costs, expenses, claims, liens, and
damages to person or property resulting from the making of any such
improvements, alterations, decorations, or additions in or to the Franchised
Premises.
Franchisee shall not do or suffer anything to be done whereby the
Franchised Premises may be encumbered by a mechanic's lien or liens. If,
however, any mechanic's lien is filed against the Franchised Premises,
Franchisee shall discharge the same of record within ten (10) days after the
date of filing. If Lessee fails to discharge any such lien as provided herein,
such failure shall be a default of this Agreement.
Franchisor shall not be liable for any labor or materials to be
furnished to Franchisee upon credit, and no mechanic's or other lien for any
such labor or materials shall attach to or affect the reversionary or other
estate or interest of Franchisor in and to the Franchised Premises.
12.5 Franchisee understands and acknowledges that uniformity of
standards, products and services is essential to the A/TS Network. To that end,
Franchisor reserves the right to reject any category of product or services
offered for sale at the Franchised Business. Should Franchisee elect to offer
and sell additional product or service categories to customers of the Franchised
Business, Franchisor
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19
shall not unreasonably withhold its approval of any such category of product or
service.
A. Franchisee shall immediately cease offering for sale or
selling any product or service if Franchisor, in its sole discretion, deems such
product or service to be detrimental to the Marks or the image of the A/TS
Network.
B. Franchisee is prohibited from displaying, offering and
selling any alcoholic beverages, or otherwise, any condom vending machines
(unless required by law) and any sexual or pornographic materials (as determined
by Franchisor in its sole discretion), including, without limitation, books,
magazines, videotapes, cassettes, calendars, novelty and related items.
Franchisor reserves the right, in its sole discretion, to expand the categories
of products and services which Franchisee is prohibited from offering or selling
from the Franchised Business.
12.6 All inventory, products and materials, and other items and
supplies used in the operation of the Franchised Business which are not
purchased in accordance with Franchisor's Approved Supplies List and Approved
Suppliers List shall conform to the specifications and quality standards
established by Franchisor from time to time.
12.7 Franchisor has an ACCESS 76 System and credit card services
available for use by its Franchised Businesses. Franchisee shall use the ACCESS
76 System and credit card services from Franchisor or a source designated by
Franchisor at a cost established by Franchisor, and Franchisee agrees not to
obtain credit card services from any other source. Franchisee shall make sales
of Motor Fuel and other products and services at the Franchised Business to
persons presenting a valid credit card in accordance with the Guides.
Franchisee shall comply with the instructions, policies, equipment
requirements, and restrictions set forth in the Guides and agrees that
Franchisor may refuse to accept credit card invoices, or may charge back to
Franchisee any credit card invoices, where Franchisee has failed to comply with
any instruction, policy, or restriction set forth in the Guides. Franchisor
shall have the right, from time to time, to amend, add, or delete any
instruction, policy, or restriction in the Guides including the right to charge
a fee for Franchisor's acceptance of credit card invoices evidencing purchases
from Franchisee. If Franchisee is past due on any payment to Franchisor,
Franchisor may, without limiting any other lawful remedy, first apply credit
card invoices to the payment of the past due indebtedness.
12.8 Franchisee shall carry an adequate supply and maintain a
representative inventory of Branded Products and other items and merchandise
packaged under the Marks as required by the Confidential Operations Manual in
such quantities sufficient to meet public demand. Franchisor may, in the future,
develop
<PAGE>
20
additional products bearing the Marks, and Franchisor may introduce such
products into the A/TS Network at Franchisor's discretion.
12.9 In order to maintain the common identity of the A/TS Network,
Branded Products shall be prominently displayed among the goods displayed for
resale at the Franchised Premises and Franchisee shall maintain at such premises
a stock of Branded Products sufficient to satisfy fully the demand of
Franchisee's customers for such products.
12.10 Franchisee, at its expense, shall secure and maintain in force
all required licenses, permits and certificates relating to the operation of the
Franchised Business and the property on which the Franchised Premises are
located and shall operate the Franchised Business and maintain the property on
which the Franchised Premises are located, in full compliance with all
applicable federal, state and local laws, ordinances and regulations, including,
without limitation, all such laws, ordinances and regulations relating to the
dispensing of food products, occupational hazards and health, general liability
and pollution liability insurance requirements, consumer protection,
environmental protection, underground storage facilities and dispensing of fuel,
trade regulation, workers' compensation, unemployment insurance and withholding
and payment of federal and state income taxes and social security taxes, and
sales, use and property taxes, as further described in Paragraph 23.6 herein and
in the Lease Agreement. Further, throughout the term of this Agreement,
Franchisee shall cause the Franchised Business to be in full and strict
compliance with the Americans with Disabilities Act, as amended, except as
otherwise provided in the Lease Agreement. Franchisee is responsible for daily
monitoring of the underground storage facilities and dispensing of fuel and for
reporting to and notifying Franchisor of any spills, leakage, losses and/or
other difficulties relating to such underground storage facilities.
12.11 Franchisee shall refrain from any merchandising, advertising
or promotional practice which is unethical or may be injurious to the business
of Franchisor, the A/TS Network and/or other Franchised Businesses or to the
goodwill associated with the Marks, as determined by Franchisor in its sole
discretion.
12.12 Franchisor may, from time to time, develop and market special
promotional items which will be made available to Franchisee at Franchisor's
cost plus a reasonable markup, and Franchisee shall maintain a representative
inventory of such promotional items to meet public demand. Franchisee shall have
the right to purchase alternative promotional items provided that such
alternative goods conform to the specifications and quality standards
established by Franchisor from time to time.
12.13 Franchisee shall operate the Franchised Business in a clean,
safe and healthful manner that will assure that customers receive quality
merchandise and
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21
courteous and efficient service, which shall include the following minimum
obligations:
A. Sell merchandise and provide service with care, courtesy,
and regard for customer satisfaction.
B. Take prompt action to respond to or correct all complaints
received by Franchisor concerning Franchisee's operation of, or condition of,
the Franchised Business or conduct of any employee of Franchisee. A written
reply must be made to Franchisor within fourteen (14) days outlining
Franchisee's actions or plans to resolve.
C. Operate or cause a qualified manager to at all times
operate the Franchised Business in compliance with the standards prescribed in
this Agreement.
D. Operate the Franchised Business so as not to pose a threat
or danger to public health or safety or the environment.
E. Provide reasonable security at the parking lot of the
Franchised Business for vehicles and drivers, and exert reasonable effort to
maintain an absence of outside elements that negatively affect the image of the
Franchised Business as well as the Branded Fuel and Branded Products.
Specifically, "outside elements" refers to prostitutes, gamblers, drug dealers,
and stolen goods dealers, but is not limited to same ("Outside Elements").
F. Provide, or have made outside arrangements for providing
emergency service for passenger cars including tire service, road towing, belt
replacement, and light replacement, but not to be limited to same.
G. Keep the Franchised Business open for business twenty-four
(24) hours each day including, but not limited to, the diesel and gasoline
islands, garage, store and restaurant. Franchisee's closing the Franchised
Business or any part thereof shall constitute abandonment by Franchisee and
shall be a material breach of this Agreement.
H. Not engage in dishonest, fraudulent or scare selling
practices.
I. Perform all services in a good workmanlike manner.
J. Provide a sufficient number of trained, courteous, and neat
personnel who can communicate with customers by understanding and speaking
English to operate the Franchised Business in an efficient and organized manner.
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22
K. Store and dispense Motor Fuel only from tanks, pumps, or
containers identified with only Franchisor-designated suppliers' trademarks or
trade names.
L. Comply with the requirements of any conditional use permit
or other approval covering the construction, maintenance, and/or operation of
the Franchised Business. If the Franchised Business is subject to a permit, a
copy shall be delivered to Franchisee and Franchisee shall acknowledge receipt
of the copy on a form provided by Franchisor.
12.14 Franchisee shall have on staff at all times during regular
business hours a qualified mechanic experienced in truck service to provide
prompt, courteous and workmanlike service, and to otherwise fulfill Franchisee's
responsibilities under this Agreement. Such mechanic shall meet the requirements
set forth in the Confidential Operations Manual.
12.15 Franchisee shall participate in the National Warranty Program
and shall abide by all provisions of the National Warranty Program as set forth
in the Confidential Operations Manual.
12.16 Franchisee shall notify Franchisor in writing within five (5)
days of the commencement of any action, suit, or proceeding, and of the issuance
of any order, writ, injunction, award, or decree of any court, agency, or other
governmental instrumentality, which may adversely affect the operation or
financial condition of the Franchised Business.
12.17 If Franchisee desires to utilize a software and hardware
system in the operation of the Franchised Business, Franchisee shall utilize
only such systems approved by Franchisor.
12.18 At any full service truckstop facility, Franchisee shall
maintain a minimum of fifty (50) paved truck parking spaces.
XIII. BUYING PROGRAM
13.1 Simultaneously with the execution of this Agreement, Franchisee
may, in its sole option, elect to participate in the Buying Program, and does so
elect unless this Paragraph is deleted from the Agreement. If Franchisee elects
to participate in the Buying Program, Franchisee shall, until the third
anniversary of this Agreement, purchase all products and services included in
and offered through the Buying Program only from participating suppliers, and
not from any other source. Franchisees who participate in the Buying Program
agree to maintain a representative inventory of all products covered in such
program. Franchisee's participation in the
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23
Buying Program will automatically renew for the remainder of the term of the
Franchise Agreement, unless Franchisee gives Franchisor notice at least six (6)
months prior to the third anniversary of this Agreement. If at any time,
Franchisee fails to comply with the requirements of the Buying Program or drops
out of the Buying Program, Franchisee's participation in the Buying Program
shall be terminated upon written notice from Franchisor, and Franchisee cannot
later elect to participate in the Buying Program for the remainder of the
then-current term of this Agreement. Nothing herein shall obligate Franchisor to
initiate or continue the Buying Program, or to include any one (1) or more
products or services within the Buying Program. (STRIKE THIS PARAGRAPH IF NOT
PARTICIPATING IN THE BUYING PROGRAM).
13.2 On or before December 1 of any calendar year, any franchisee
who previously did not participate in the Buying Program may notify Franchisor
of its intent to participate in the Buying Program for the three (3) year period
starting January 1 of the subsequent calendar year. Franchisee shall pay a
one-time fee of TWELVE THOUSAND FIVE HUNDRED Dollars ($12,500.00) for the right
to join the Buying Program.
13.3 If Franchisee elects not to participate or to renew its
participation in the Buying Program, Franchisee agrees to maintain a
representative inventory of all products covered in the Buying Program. Such
products need not be purchased from suppliers participating in the Buying
Program, but Franchisee shall comply with Subparagraph 13.4 hereof with respect
to such products.
13.4 All products and services not included in the Buying Program or
listed on the Approved Supplies List, or purchased from suppliers not on the
Approved Suppliers List, shall meet specifications and quality standards
prescribed by Franchisor.
XIV. ACCOUNTING AND RECORDS
14.1 Franchisee shall maintain and preserve any and all records in
the manner and for such time as required by the Internal Revenue Service of the
United States.
14.2 Franchisee shall maintain a daily Motor Fuel meter reading and
shall provide such daily meter reading to Franchisor on a monthly report as
prescribed in the Confidential Operations Manual.
14.3 Franchisee shall, at its expense, submit to Franchisor, within
ninety (90) days of the end of each fiscal year during the term of this
Agreement,
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24
annual financial statements, prepared by an independent certified public
accountant in accordance with generally accepted accounting principles.
14.4 Franchisee shall provide Franchisor on or before the tenth
(10th) day of each month a sales report specifying all Non-Fuel Revenue derived
from and actual fuel gallonage purchased through the Franchised Business in a
form approved by Franchisor. In order to assist Franchisor in monitoring the
A/TS Network, Franchisee shall submit to Franchisor such other information
requested by Franchisor from time to time in the format prescribed by Franchisor
in the Confidential Operations Manual or as Franchisor shall otherwise
reasonably require in writing, including, but not limited to, state and federal
fuel tax records by location and daily Motor Fuel meter readings by location.
14.5 Franchisor or its designated agents shall have the right at all
reasonable times to examine and copy, at its expense, the books, records, and
tax returns of Franchisee. Franchisor shall also have the right, at any time, to
have an independent audit made of the books and records of Franchisee at
Franchisor's expense. If an inspection or audit should reveal that any payments
due to Franchisor have been understated in any report to Franchisor, then
Franchisee shall immediately pay to Franchisor the amount understated upon
demand, in addition to interest from the date such amount was due until paid, at
the rate of eighteen percent (18%) per annum or the maximum rate permitted by
law, whichever is lower. If an inspection or audit discloses an understatement
in any report of two percent (2%) or more, Franchisee shall, in addition,
reimburse Franchisor for any and all costs and expenses connected with the
inspection or audit (including, without limitation, reasonable accounting and
attorneys' fees). The foregoing remedies shall be in addition to any other
remedies Franchisor may have, including, but not limited to, termination or
non-renewal pursuant to Paragraph XIX.
14.6 Franchisee acknowledges that nothing contained herein
constitutes Franchisor's agreement to accept any payments after same are due or
a commitment by Franchisor to extend credit to or otherwise finance Franchisee's
operation of the Franchised Business. Further, Franchisee acknowledges that its
failure to pay all amounts when due shall constitute a materially significant
default and grounds for termination of this Agreement.
XV. ACCESS
Franchisor has the right to enter and inspect the Franchised
Premises at any reasonable time with such employees, consultants, and equipment
as it considers necessary to determine if Franchisee's obligations under this
Agreement are being fulfilled.
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XVI. FUEL SUPPLY
16.1 Subject to Subparagraph 16.2 below, Franchisor agrees to sell
to Franchisee one hundred percent (100%) of Franchisee's requirements of Motor
Fuel for resale to the motoring public, and Franchisee agrees to buy from
Franchisor one hundred percent (100%) of Franchisee's requirements of such Motor
Fuel.
16.2 Franchisee's purchase of Motor Fuel shall be in fairly even
monthly amounts, within the quarterly maximum gallons listed below ("Quarterly
Maximum Gallons"). Franchisor shall not be obligated to sell to Franchisee
during any stated period more than one hundred twenty percent (120%) of the
Quarterly Maximum Gallons. Franchisee agrees to buy from Franchisor at least
eighty percent (80%) of the Quarterly Maximum Gallons. Franchisee acknowledges
and agrees that Franchisee's agreement to buy at least eighty percent (80%) of
the Quarterly Maximum Gallons is reasonable and of material significance to the
Franchise Relationship between Franchisor and Franchisee and that Franchisee's
failure to purchase at least such percentage is grounds for Franchisor's
termination or non renewal of this Agreement pursuant to Paragraph XIX.
Franchisor reserves the right to amend this amount in writing in the event
Franchisee experiences a reduction in Motor Fuel sales due to road closures,
Force Majeure, or any other reason approved by Franchisor in writing. The amount
of Quarterly Maximum Gallons will be adjusted annually as agreed upon by
Franchisee and Franchisor.
Quarterly Maximum Gallons
Jan-Feb-Mar Apr-May-June Jul-Aug-Sept Oct-Nov-Dec
----------- ------------ ------------ -----------
(in gallons)
Gasoline
------- ------- ------- -------
Diesel Fuel
------- ------- ------- -------
16.3 Franchisee shall not commingle Motor Fuel sold to Franchisee by
Franchisor pursuant to Paragraph XVI of this Agreement or consigned to
Franchisee pursuant to the Fleet Marketing Throughput Agreement with Motor Fuel
from any other suppliers or any other source.
16.4 For purposes of this Agreement, the term Initial Delivery
Period ("Initial Delivery Period") shall mean the period beginning on the date
first above written and ending on the last date on which Franchisor is required
to deliver Motor Fuel to Franchisee at the Franchised Premises pursuant to
Subparagraph 16.4.A. During the Initial Delivery Period, Franchisor shall be
responsible for arranging the delivery to the Franchised Premises of Motor Fuel
purchased by Franchisee. Such
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26
deliveries shall be made on Franchisee's order in single deliveries of not less
than seven thousand five hundred (7,500) gallons. Franchisor shall not be
required to make such deliveries (i) within forty-eight (48) hours following
receipt of Franchisee's order, (ii) other than during Franchisor's normal
business hours, or (iii) on Sundays or holidays.
A. At any time during the period beginning on the date first
above written and ending no later than eighteen (18) months after such date,
Franchisor may notify Franchisee that Franchisor no longer intends to deliver
Motor Fuel to Franchisee at the Franchised Premises. Such notice shall specify
the last date on which Franchisor will deliver such Motor Fuel ("Delivery
Termination Date") and the first date on which Franchisor shall begin to provide
Franchisee with such Motor Fuel at a terminal designated by Franchisor within
the Geographic Area ("Designated Terminal"). The Geographic Area shall encompass
an area of not more than three hundred (300) miles from the Franchised Premises
("Geographic Area"). After the Delivery Termination Date (or after the eighteen
(18) month anniversary of this Agreement if Franchisor does not specify the
Delivery Termination Date), Franchisee shall arrange for the delivery of such
Motor Fuel from the Designated Terminal to the Franchised Premises.
B. After the Initial Delivery Period, Franchisee shall notify
Franchisor of its quantity requirements of Motor Fuel no less than forty-eight
(48) hours prior to Franchisee's pick-up of Motor Fuel. Franchisor shall not be
required to have Motor Fuel available to Franchisee (i) within forty-eight (48)
hours following receipt of Franchisee's order, (ii) other than during the
Designated Terminal's business hours, or (iii) on Sundays or holidays.
Immediately upon notice by Franchisor to Franchisee, Franchisor may change the
location of the Designated Terminal within the Geographic Area. Transportation
equipment shall be loaded on a first-come, first-served basis. All demurrage
shall be for the account of Franchisee.
16.5 At Franchisor's request, Franchisee will furnish to Franchisor,
on or before the tenth (10th) day subsequent to the end of each month, a written
statement (i) specifying the date of each delivery by Franchisor or pick-up by
Franchisee, as the case may be, during the preceding month, and (ii) showing the
quantity of Motor Fuel purchased by or consigned to Franchisee on each such
date.
16.6 The purchase price to be paid by Franchisee for Motor Fuel
("Purchase Price") shall be the price in effect for the Franchised Premises at
the time the transport truck receiving such Motor Fuel is completely loaded at
the Designated Terminal. Such price shall be posted by Franchisor at its
principal place of business and be available to Franchisee upon request. During
the Initial Delivery Period, any and all freight charges with respect to the
delivery of Motor Fuel by Franchisor to the Franchised Premises shall be
included in the Purchase Price. After the Initial Delivery Period and during the
remaining term of this Agreement, the Purchase Price
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shall exclude any and all such freight charges and such charges shall be the
sole responsibility of and paid by Franchisee. Franchisor shall not be obligated
to compute the Purchase Price pursuant to any particular formula or to maintain
any particular differential between such price and other prices posted by
Franchisor. Franchisor's records of the Purchase Price with respect to a
particular transaction shall be conclusive and binding for all purposes of this
Agreement.
16.7 If any governmental authority now has, or later places, a tax,
excise, inspection fee or charge (collectively, a "Tax") on Franchisor because
of the manufacture, storage, withdrawal from storage, transportation,
distribution, sale or handling of any Motor Fuel sold by Franchisor to
Franchisee, such Tax shall be added to the Purchase Price and be the sole
responsibility of and paid by Franchisee. Franchisor shall remain liable for any
Tax applicable to Motor Fuel consigned by Franchisor to Franchisee pursuant to
the Fleet Marketing Throughput Agreement.
16.8 Franchisee shall pay for Motor Fuel purchased from Franchisor
according to the terms established from time to time by Franchisor's Credit
Department.
16.9 A. During the Initial Delivery Period, title to, and risk of
loss of, Motor Fuel purchased by Franchisee and delivered by Franchisor shall
pass to Franchisee at the time the Motor Fuel enters the Motor Fuel storage
tanks at the Franchised Premises. During the Initial Delivery Period, title to,
and risk of loss of, Motor Fuel consigned pursuant to the Fleet Marketing
Throughput Agreement to Franchisee by Franchisor and delivered by Franchisor
shall remain with Franchisor until the time such Motor Fuel is delivered by
Franchisee into the vehicles of the respective Fleet Accounts. Franchisee waives
any claim against Franchisor as to quantity and quality of Motor Fuel delivered
to the Franchised Premises unless Franchisee notifies Franchisor in writing
within ten (10) days after receipt of such Motor Fuel.
B. After the Initial Delivery Period, title to, and risk of
loss of, Motor Fuel purchased by Franchisee from Franchisor and delivered to the
Franchised Premises shall pass to Franchisee at the time such Motor Fuel enters
into the transportation equipment provided by Franchisee or for Franchisee's
account. After the Initial Delivery Period, title to, and risk of loss of, Motor
Fuel consigned pursuant to the Fleet Marketing Throughput Agreement to
Franchisee by Franchisor and delivered to the Franchised Premises shall remain
with Franchisor until the time such Motor Fuel is delivered by Franchisee into
the vehicles of the respective Fleet Accounts. Franchisee waives any claim
against Franchisor as to quantity or quality of Motor Fuel available to
Franchisee pursuant to Paragraph 16.4.B unless Franchisee notifies Franchisor in
writing within ten (10) days after receipt of such Motor Fuel.
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16.10 If at any time the volume of Motor Fuel that Franchisor has
available for sale to its Franchised Businesses is, for any reason, less than
the volume needed to supply its Franchised Businesses' demands, Franchisor shall
allocate the volume of available Motor Fuel to its Franchised Businesses under a
plan and formula that Franchisor determines is fair and reasonable.
XVII. CREDIT
In connection with evaluating Franchisee's financial status for
credit purposes, Franchisor's Credit Department may at any time, and from time
to time, request that Franchisee provide it with certain financial statements.
Franchisee's failure to respond to any such request may result in Franchisor's
denial of credit to Franchisee. If Franchisee fails to fulfill the terms of
payment or if Franchisee's financial responsibility shall deteriorate in
Franchisor's sole judgment, Franchisor may, without prejudice to any other
lawful remedy, withhold Motor Fuel until payment is made, demand cash payment,
demand advance payment or terminate or not renew this Agreement pursuant to
Paragraph XIX. Franchisor may apply any payment made by or on behalf of
Franchisee to any indebtedness owed Franchisor by Franchisee, notwithstanding
any direction to the contrary. No payment made to Franchisor by check or other
instrument shall contain a restrictive endorsement of any kind. A restrictive
endorsement shall have no legal effect, even if the instrument restrictively
endorsed is processed for payment and Franchisor retains the proceeds.
XVIII. INSURANCE
18.1 Franchisee shall procure at its expense, and maintain in full
force and effect during the term of this Agreement, an insurance policy or
policies protecting Franchisee and Franchisor and Franchisor's officers,
directors, partners and employees, against any loss, liability, personal injury,
death, or property damage or expense whatsoever arising or occurring upon or in
connection with the Franchised Business, as Franchisor may reasonably require
for its own and Franchisee's protection. Franchisor shall be named an additional
insured in such policy or policies.
18.2 Such policy or policies shall be written by a licensed
insurance company satisfactory to Franchisor in accordance with standards and
specifications set forth in the Confidential Operations Manual or otherwise in
writing, as either may be modified from time to time by Franchisor, following
written notice to Franchisee.
18.3 Franchisor reserves the right to review and amend the amounts
and types of the required insurance coverage annually.
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18.4 The insurance afforded by the policy or policies respecting
liability shall not be limited in any way by reason of any insurance which may
be maintained by Franchisor. Within thirty (30) days after execution of this
Agreement, a Certificate of Insurance showing compliance with the foregoing
requirements shall be furnished by Franchisee to Franchisor for approval. Such
certificate shall state that said policy or policies will not be canceled or
altered without at least ninety (90) days prior written notice to Franchisor and
shall reflect proof of payment of premiums. Maintenance of such insurance and
the performance by Franchisee of the obligations under this Paragraph shall not
relieve Franchisee of liability under the indemnity provision set forth in this
Agreement.
18.5 Should Franchisee, for any reason, not procure and maintain
insurance coverage as required by this Agreement, Franchisor shall have the
right and authority (without, however, any obligation to do so) immediately to
procure such insurance coverage and to charge same to Franchisee, which charges,
together with a reasonable fee for expenses incurred by Franchisor in connection
with such procurement, shall be payable by Franchisee immediately upon notice.
XIX. DEFAULT AND TERMINATION
19.1 Termination and Non-renewal by Franchisor.
A. Franchisor may terminate or not renew this Agreement
by written notice to Franchisee, upon the occurrence of any of the following:
1. Franchisee's failure to comply with any provision
of this Agreement, the Fleet Marketing Throughput Agreement, the Lease
Agreement, and any other agreement between the parties, which provision is
reasonable and of material significance to the Franchise Relationship between
Franchisor and Franchisee. Franchisor is not required to give Franchisee an
opportunity to remedy any such failure prior to terminating or not renewing this
Agreement; or
2. Franchisee's failure to exert good faith efforts to
carry out the terms and conditions of this Agreement, the Fleet Marketing
Throughput Agreement, or the Lease Agreement. Prior to terminating or not
renewing this Agreement under the provisions of this Subparagraph 2, Franchisor
shall advise Franchisee in writing of such failure and give Franchisee a
reasonable opportunity to remedy it; or
3. The happening of any one (1) or more of the
events, defined in the Petroleum Marketing Practices Act, as amended (including
any similar successor legislation, the "PMPA"), as an event relevant to the
Franchise Relationship or the happening of any other event which is relevant to
the Franchise
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Relationship including, but not limited to, the following: Franchisor is not
required to give Franchisee an opportunity to remedy any such happening prior to
terminating or not renewing this Agreement.
a. Franchisee's fraud or criminal misconduct
in the operation of the Franchised Business.
b. Declaration of bankruptcy or judicial
determination of insolvency of Franchisee.
c. The death or continuing severe physical or
mental disability of Franchisee of at least three (3) months' duration which
renders Franchisee unable to provide for the continued proper operation of the
Franchised Business.
d. If Franchisee is occupying the Franchised
Premises under a lease from Franchisor, the loss of Franchisor's right to grant
possession under such lease through expiration of any underlying lease, if
Franchisee was notified in writing, prior to the commencement of the term of
this Agreement, of the duration of the underlying lease and of the fact that
such underlying lease might expire and not be renewed during the term of this
Agreement or at the end of this Agreement.
e. The condemnation or other taking, in
whole or in part, of the Franchised Premises under the power of eminent domain.
The condemnation award paid to Franchisor, or the payment received by Franchisor
in exchange for its voluntary conveyance in lieu of condemnation, shall belong
solely to Franchisor, and Franchisee shall not, by virtue of this Agreement, be
entitled to any part thereof; provided, however, that nothing in this Agreement
shall preclude Franchisee from prosecuting any claim directly against the
condemning authority for loss of business, or depreciation to, damage to, or
cost of, removal of, or for the value of stock, inventory and other personal
property of Franchisee; and further provided, however, that no such claim shall
diminish or otherwise adversely affect Franchisor's award or proceeds.
f. Franchisor's loss of the right to grant
Franchisee the use of any Mark, unless the loss is due to Franchisor's trademark
abuse, violation of federal or state law, or other fault or negligence of
Franchisor related to bad faith action by Franchisor.
g. The destruction, other than by Franchisor,
of all or substantially all of the Franchised Premises. If Franchisee is
occupying the Franchised Premises under a lease from Franchisor and Franchisor
rebuilds or replaces the Franchised Premises and elects to offer the operation
of the rebuilt or
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replaced Franchised Premises in accordance with the terms of the Lease
Agreement, Franchisee shall have the preferential right to again be the operator
of the Franchised Premises.
h. Franchisee's failure to pay Franchisor in a
timely manner when due, all sums to which Franchisor is legally entitled.
i. Franchisee's failure to operate the
Franchised Business for seven (7) consecutive days, or shorter period of time
which, under the facts and circumstances, is an unreasonable period of time.
j. Franchisee's wilful adulteration,
mislabeling or misbranding of Motor Fuel sold at the Franchised Premises, or
other trademark, trade name, service mark, or other identifying symbol or name
violations.
k. Franchisee's knowing failure to comply
with federal, state or local laws or regulations that are relevant to the
operation of the Franchised Business.
l. Franchisee's conviction of any felony
involving moral turpitude; or
4. Franchisor's good faith determination, made in
the normal course of business, to withdraw from the marketing of Motor Fuel
through retail outlets in the state or geographic area in which the Franchised
Business is located if:
a. The term of this Agreement is three
(3) years or longer or Franchisee was offered a term of three (3) years or
longer and elected to accept a lesser term; and
b. Franchisor's determination to withdraw
was made after the effective date of this Agreement; and
c. Franchisor's determination to withdraw
was made as a result of a change of relevant facts and circumstances.
B. In addition to the rights of termination or non-renewal
by Franchisor, set forth above, Franchisor may decline to renew this Agreement:
1. If Franchisor and Franchisee fail to agree to
changes or additions to this Agreement made by Franchisor in good faith and in
the normal course of business, and Franchisor does not insist on such changes or
additions being made for the purpose of preventing the renewal of this
Agreement.
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2. If Franchisor receives numerous bona fide
complaints concerning Franchisee's operation of the Franchised Business and
Franchisor promptly notifies Franchisee of each complaint and the reason it was
communicated to Franchisor, and as to those complaints relating to the condition
of the Franchised Business or the conduct of any employee of Franchisee,
Franchisee does not take prompt action to cure or correct the basis for such
complaints. Franchisor will communicate these complaints to Franchisee in
writing using Franchisor's Customer Complaint Form ("Customer Complaint Form").
A written statement from Franchisee as to the outcome is required by Franchisor.
3. If Franchisee fails on at least three (3) occasions
during the term of this Agreement, to operate the Franchised Business in a
clean, safe and healthful condition and Franchisor notified Franchisee of each
such failure.
4. Franchisor makes a good faith determination in
the normal course of business not to renew this Agreement because such renewal
would be uneconomical to Franchisor, despite any changes or additions to the
provisions of this Agreement that may be acceptable to Franchisee; provided,
however, that such non-renewal is not made for the purpose of converting the
Franchised Business to operation by employees or agents of Franchisor for
Franchisor's own account.
C. If the Franchised Premises are leased by Franchisee from
Franchisor, Franchisor may also decline to renew this Agreement if Franchisor
makes a good faith determination, in the normal course of business, to:
1. Convert the Franchised Premises to a use other
than for the operation of an auto/truckstop; or
2. Materially alter, add to or replace the Franchised
Premises if such alteration, addition or replacement is not made for the purpose
of converting the Franchised Premises to operation by employees or agents of
Franchisor for Franchisor's own account; or
3. Sell the Franchised Premises.
D. Non-renewal under Subparagraph B.4 or Subparagraph C above
shall not be effective unless (i) the term of this Agreement is for three (3)
years or longer, or Franchisee was offered a term of three (3) years or longer
and elected to accept a shorter term, and (ii) within the ninety (90) day period
following notice of non-renewal, Franchisor makes a bona fide offer to sell,
transfer or assign its interest in the Franchised Business to Franchisee, or if
applicable, grants Franchisee a forty-five (45) day preferential right to meet
the bona fide offer of another Person to purchase Franchisor's interest in the
Franchised Business.
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E. Franchisor's written notice of termination or non-renewal
shall include a statement that this Agreement is being terminated or not renewed
and shall set forth the reason or reasons for termination or non-renewal. The
effective date of the termination or non-renewal shall be at least ninety (90)
days after the date of notice of termination or non-renewal, except as provided
by Subparagraph F below. Franchisor shall include with the notice a copy of the
Summary of Title I of the PMPA, prepared by the office of the Secretary of
Energy and published August 30, 1978, in Volume 43, No. 169 of the Federal
Register, as amended from time to time ("PMPA Summary").
F. Although at least ninety (90) days written notice of
termination or non-renewal is provided for in most circumstances, there may be
times when the giving of a ninety (90) day notice is not reasonable. If such a
circumstance occurs with regard to an event set forth in Subparagraph A, B, or C
above, Franchisor may terminate or not renew this Agreement by giving Franchisee
written notice of termination or non-renewal on the earliest date that is
reasonably practical. If the period between the date of notice of termination or
non-renewal and the effective date is thirty (30) days or less, Franchisor shall
not lease the Franchised Premises to another Person for at least thirty (30)
days from the date the notice of termination or non-renewal was posted by
certified mail or personally delivered to Franchisee. If, however, the period of
time between the date of notice of termination or non-renewal, and the effective
date is more than thirty (30) days, but less than ninety (90) days, Franchisor
shall not lease the Franchised Premises to another Person until the effective
date of such notice of termination or non-renewal.
G. Nothing in this Agreement shall prohibit or restrict
Franchisor from terminating or not renewing this Agreement in any lawful manner
or for any lawful reason under applicable federal, state and local laws or
regulations, including, but not limited to, the PMPA, as such laws or
regulations may be amended from time to time.
19.2 Mutual Termination. Franchisee and Franchisor may agree in
writing to terminate or not renew this Agreement. The effective date of such
termination or non-renewal shall be the date agreed to by Franchisee and
Franchisor but may not be a date that is more than one hundred eighty (180) days
after the date of such agreement. Franchisor shall send by certified mail, or
personally deliver to Franchisee, a copy of (i) the agreement promptly after it
is executed by Franchisor and Franchisee, and (ii) the PMPA Summary. Franchisee
may repudiate such agreement by written notice to Franchisor, sent by certified
mail, postmarked not more than seven (7) days following the date Franchisee
receives a copy of such agreement.
19.3 Termination by Franchisee. (a) If Franchisee is in
substantial compliance with this Agreement and Franchisor materially breaches
this Agreement
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34
and fails to cure such breach within a reasonable time after written notice
thereof is delivered to Franchisor, Franchisee may terminate this Agreement.
Such termination shall be effective thirty (30) days after delivery to
Franchisor of written notice that such breach has not been cured and Franchisee
elects to terminate this Agreement. A termination of this Agreement by
Franchisee for any reason other than breach of this Agreement by Franchisor and
Franchisor's failure to cure such breach within a reasonable time after receipt
of written notice thereof shall be deemed a termination by Franchisee without
cause.
(b) Franchisee may terminate this Agreement at any
time by one hundred eighty (180) days advance written notice to Franchisor,
posted by certified mail. Upon receipt of such notice by Franchisor, it may not
be withdrawn without Franchisor's written approval.
19.4 Termination of Lease Agreement. This Agreement shall
automatically terminate upon the occurrence of any default or termination of the
Lease Agreement.
XX. RIGHTS AND DUTIES OF PARTIES
UPON EXPIRATION OR TERMINATION
20.1 Upon termination or expiration, this Agreement and all rights
granted hereunder to Franchisee shall forthwith terminate, and:
A. Franchisee shall immediately cease to operate the
Franchised Business under this Agreement, and shall not thereafter, directly or
indirectly, represent to the public or hold itself out as a present or former
franchisee of Franchisor.
B. Franchisee shall immediately and permanently cease to use,
by advertising or in any manner whatsoever, any Confidential Information or any
other methods, procedures, and techniques associated with the A/TS Network or
any Marks and distinctive forms, slogans, signs, symbols, logos, or devices
associated with the A/TS Network. In particular, Franchisee shall cease to use,
without limitation, all signs, advertising materials, stationery, forms, and any
other articles which display the Marks associated with the A/TS Network.
C. Franchisee shall take such action as may be necessary to
cancel or assign to Franchisor, at Franchisor's option, any assumed name rights
or equivalent registration filed with state, city, or county authorities which
contains Marks associated with the A/TS Network, and Franchisee shall furnish
Franchisor with evidence of compliance with this obligation satisfactory to
Franchisor within thirty (30) days after termination or expiration of this
Agreement.
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D. In the event Franchisee continues to operate or
subsequently begins to operate any other business, Franchisee shall not use any
reproduction, counterfeit, copy or colorable imitation of the Marks either in
connection with such other business or the promotion thereof, which is likely to
cause confusion, mistake or deception, or which is likely to dilute Franchisor's
rights in and to the Marks and further, Franchisee shall not utilize any
designation of origin or description or representation which falsely suggests or
represents an association or connection with Franchisor so as to constitute
unfair competition or a deceptive trade practice.
E. Franchisee shall promptly pay all sums owing to Franchisor.
In the event of termination for any default of Franchisee, such sums shall
include all damages, costs, and expenses, including reasonable attorneys' fees,
incurred by Franchisor as a result of the default.
F. Franchisee shall pay to Franchisor all damages, costs and
expenses, including reasonable attorneys' fees, incurred by Franchisor
subsequent to the termination or expiration of the franchise herein granted in
obtaining injunctive or other relief for the enforcement of any provisions of
this Agreement.
G. Franchisee shall immediately turn over to Franchisor all
manuals and copies thereof, including the Confidential Operations Manual,
records, files, instructions, brochures, agreements, disclosure statements, and
any and all other materials provided by Franchisor to Franchisee relating to the
operation of the Franchised Business (all of which are acknowledged to be
Franchisor's property).
H. Franchisor shall acquire all right, title and interest to
any sign or sign faces bearing the Marks. Franchisee hereby acknowledges
Franchisor's right to access the Franchised Premises should Franchisor elect to
take possession of any signs or sign faces bearing the Marks. If this Agreement
has been terminated for cause as provided in Paragraph XIX herein, such sign
removal shall be at Franchisee's cost. In the event of non-renewal of this
Agreement, Franchisor shall not charge Franchisee for the cost of sign removal.
I. Franchisor shall have the right (but not the duty), to be
exercised by notice of intent to do so within thirty (30) days after termination
or expiration, to purchase for cash any or all signs (except those signs owned
by Franchisor), Advertising Materials, and all items bearing Franchisor's Marks,
at Franchisee's cost or fair market value, whichever is less. If the parties
cannot agree on fair market value within a reasonable time, the determination
shall be made by arbitration in accordance with Paragraph XXXIX of this
Agreement. If Franchisor elects to exercise any option to purchase herein
provided, it shall have the right to set off all amounts due from Franchisee
under this Agreement, and the cost of the arbitration, if any, against any
payment therefor.
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20.2 All obligations of Franchisor and Franchisee which expressly or
by their nature survive the expiration or termination of this Agreement shall
continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied or by their nature
expire.
XXI. TRANSFERABILITY OF INTEREST
21.1 This Agreement and all rights hereunder can be assigned and
transferred by Franchisor and, if so, shall be binding upon and inure to the
benefit of Franchisor's successors and assigns.
21.2 This Agreement and all rights hereunder may be assigned and
transferred by Franchisee and, if so, shall be binding upon and inure to the
benefit of Franchisee's successors and assigns, subject to the following
conditions and requirements, and Franchisor's right of first refusal as set
forth herein:
A. Franchisee may not sell, assign (including, but not limited
to, assignments by operation of law) or transfer (collectively, "Assign") this
Agreement without Franchisor's prior written consent. Franchisor has an absolute
and unqualified right to withhold consent to such proposed Assignments. Any
attempt by Franchisee to Assign this Agreement without Franchisor's prior
written consent shall be void and of no force and effect. The sale, transfer,
transfer by operation of law, or other disposition of Franchisee's interest, or
any part thereof, in the Franchised Business, or any Person's ownership or other
interest in Franchisee, if Franchisee is a corporation, partnership or other
business entity, shall be an assignment requiring Franchisors prior written
consent. Franchisee's written request for Franchisor's approval of any
assignment must be received by Franchisor not less than ninety (90) days prior
to the effective date of such requested assignment.
B. Notwithstanding Subparagraph A above, Franchisee may Assign
this Agreement without Franchisor's consent to an immediate family member of (i)
Franchisee, if Franchisee is a natural person, or (ii) Franchisee's principal
manager (insert name) ("Principal Manager"); provided
-------------------------
that, in Franchisor's reasonable judgment, such family member is sufficiently
qualified and trained ("Qualified Immediate Family Member").
C. Franchisor shall have the preferential right to meet the
bona fide offer of any proposed assignee; such right to be exercised by
Franchisor within sixty (60) days following the date Franchisor receives a copy
of Franchisee's written request for Franchisor's approval of any assignment.
Franchisee shall include in such written request the name and address of the
proposed assignee and the price, terms, and conditions contained in the bona
fide offer. Franchisor's failure to
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37
exercise this preferential right shall not terminate this Agreement or the
preferential right or release Franchisee from any of its obligations under this
Agreement.
D. In the event of sale, transfer, or assignment of this
Agreement by Franchisee during the term of this Agreement, or at the expiration
date of this Agreement, Franchisor will charge Franchisee a Transfer Fee of TEN
THOUSAND Dollars ($10,000.00) ("Transfer Fee"). If the transfer is an assignment
to a corporation in which Franchisee is the principal stockholder or the officer
responsible for the full-time personal operation and supervision of the
Franchised Business, or an assignment to a qualified immediate family member,
the fee will not be charged.
XXII. DEATH OR INCAPACITY OF FRANCHISEE
22.1 In the event of the death or incapacity of an individual
Franchisee, or any partner of a Franchisee which is a partnership or any
stockholder owning fifty percent (50%) or more of the capital stock of a
Franchisee which is a corporation, the heirs, beneficiaries, devisees, or legal
representatives of said individual, partner or stockholders shall notify
Franchisor within fifteen (15) days of death or incapacity, and, within one
hundred eighty (180) days of such event:
A. Apply to Franchisor for the right to continue to operate
the Franchised Business for the duration of the term of this Agreement, which
right shall be granted upon the fulfillment of all of the conditions set forth
in Subparagraph 21.2. of this Agreement (except that no transfer fee shall be
required); or
B. Sell, assign, transfer, or convey Franchisee's interest in
compliance with the provisions of Subparagraph 21.2 of this Agreement; provided,
however, in the event a proper and timely application for the right to continue
to operate has been made and rejected, the one hundred eighty (180) days to
sell, assign, transfer or convey shall be computed from the date of said
rejection. For purposes of this Paragraph, Franchisor's silence on an
application made pursuant to Subparagraph 21.2 through the one hundred and
eighty (180) days following the event of death or incapacity shall be deemed a
rejection made on the last day of such period.
22.2 In the event of the death or incapacity of an individual
Franchisee, or any partner or stockholder of a Franchisee which is a partnership
or corporation, where the aforesaid provisions of Paragraph XXI are applicable
and have not been fulfilled within the time provided, all rights licensed to
Franchisee under this Agreement shall, at the option of Franchisor, terminate
forthwith and Franchisor shall
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have the option to purchase the Franchised Business in accordance with this
Agreement.
XXIII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
23.1 This Agreement does not create a fiduciary relationship between
the parties nor does it constitute Franchisee as an agent, legal representative,
joint venturer, partner, employee, or servant of Franchisor for any purpose
whatsoever; and it is understood between the parties hereto that Franchisee
shall be an independent contractor and is not authorized to make any contract,
agreement, warranty or representation on behalf of Franchisor, or to create any
obligation, express or implied, on behalf of Franchisor. Franchisee shall not,
without the prior written approval of Franchisor, have any power to obligate
Franchisor for any expenses, liabilities or other obligations, other than as is
specifically provided for in this Agreement. Franchisor shall not have the power
to hire or fire Franchisee's employees and, except as herein expressly provided,
Franchisor may not control or have access to Franchisee's funds or the
expenditure thereof, or in any other way exercise dominion or control over
Franchisee's Franchised Business. It is expressly understood and agreed that
neither Franchisee nor any employee of Franchisee whose compensation for
services is paid by Franchisee may, in any way, directly or indirectly,
expressly or by implication, be construed to be an employee of Franchisor for
any purpose, most particularly with respect to any mandated or other insurance
coverage, tax or contributions, or requirements pertaining to withholdings
levied or fixed by any city, state or federal governmental agency.
23.2 FRANCHISEE SHALL CONSPICUOUSLY IDENTIFY ITSELF AND ITS
FRANCHISED BUSINESS IN ALL DEALINGS WITH ITS CLIENTS, CONTRACTORS, SUPPLIERS,
PUBLIC OFFICIALS AND OTHERS, AS AN INDEPENDENT FRANCHISEE OF FRANCHISOR, AND
SHALL PLACE SUCH NOTICE OF INDEPENDENT OWNERSHIP IN SUCH FASHION AS FRANCHISOR
MAY, IN ITS SOLE AND EXCLUSIVE DISCRETION, SPECIFY AND REQUIRE FROM TIME TO
TIME, IN ITS CONFIDENTIAL OPERATIONS MANUAL OR OTHERWISE.
23.3 EXCEPT AS OTHERWISE EXPRESSLY AUTHORIZED BY THIS AGREEMENT,
NEITHER PARTY HERETO SHALL MAKE ANY EXPRESS OR IMPLIED AGREEMENTS, WARRANTIES,
GUARANTEES OR REPRESENTATIONS OR INCUR ANY DEBT IN THE NAME OF OR ON BEHALF OF
THE OTHER PARTY, OR REPRESENT THAT THE RELATIONSHIP BETWEEN FRANCHISOR AND
FRANCHISEE IS OTHER THAN THAT OF FRANCHISOR AND FRANCHISEE. FRANCHISOR DOES NOT
ASSUME ANY LIABILITY, AND WILL NOT BE DEEMED LIABLE, FOR ANY AGREEMENTS,
REPRESENTATIONS, OR WARRANTIES MADE BY
<PAGE>
39
FRANCHISEE WHICH ARE NOT EXPRESSLY AUTHORIZED UNDER THIS AGREEMENT, NOR WILL
FRANCHISOR BE OBLIGATED FOR ANY DAMAGES TO ANY PERSON OR PROPERTY WHICH DIRECTLY
OR INDIRECTLY ARISE FROM OR RELATE TO THE OPERATION OF THE FRANCHISED BUSINESS.
23.4 Franchisee agrees to indemnify, defend, protect and hold
harmless Franchisor (and its directors, officers, employees, agents, Affiliates,
designees, representatives, stockholders, successors and assigns (collectively,
"Indemnified Parties")) from and against all losses, liens, liabilities,
damages, deficiencies, demands, claims, actions, judgments or causes of action,
assessments, costs or expenses (including, without limitation, interest,
penalties and reasonable attorneys', consultants', and other experts' fees and
disbursements) ("Losses") based upon, arising out of or otherwise in respect of
Franchisee's Franchised Business; provided, however, Franchisee shall not be
required to indemnify, defend and hold harmless the Indemnified Parties from and
against any Losses, arising out of the gross negligence ("Gross Negligence") or
wilful misconduct ("Wilful Misconduct") of Franchisor and/or any other
Indemnified Party. For the purpose of this Paragraph 23.4, the term "Gross
Negligence" shall mean a conscious and voluntary act or omission which is in
reckless disregard of the rights or property of another and the term "Wilful
Misconduct" shall mean intentional, purposeful conduct of an Indemnified Party
but does not include instances where an Indemnified Party is strictly liable for
breach of any warranty. It is agreed that neither Franchisee nor its insurance
carrier shall have the power or authority under this Agreement to make a
determination as to whether an Indemnified Party caused liabilities, losses,
claims, liens or demands as the result of Gross Negligence or Wilful Misconduct.
If there is a disagreement between Franchisee, its insurance carrier and the
Indemnified Parties as to whether or not the actions of an Indemnified
Party(ies) meet the test of Gross Negligence or Wilful Misconduct, such a
dispute shall be submitted for resolution to a court having jurisdiction over
such disputes.
Promptly after receipt by any Indemnified Party of notice of any
demand, claim or circumstance which, with the lapse of time, would or might give
rise to a claim or the commencement (or threatened commencement) of any action,
proceeding or investigation ("Asserted Liability") that may result in a Loss,
the Indemnified Party shall give notice thereof ("Claims Notice") to Franchisee.
The Claims Notice shall describe the Asserted Liability in reasonable detail and
shall indicate the amount (estimated, if necessary and to the extent feasible)
of the Loss that has been or may be suffered by an Indemnified Party.
Franchisee may elect within thirty (30) days of receipt of the
Claims Notice to compromise or defend, at its own expense and by its own
counsel, any Asserted Liability if Franchisee acknowledges to such Indemnified
Party Franchisee's obligation to fully indemnify such party with respect to such
Asserted Liability;
<PAGE>
40
provided, however, that a condition to any settlement by Franchisee shall be a
complete and unconditional release of the Indemnified Party with respect to such
claim. If Franchisee elects to compromise or defend such Asserted Liability as
provided in this Paragraph 23.4, the Indemnified Party shall cooperate, at the
expense of Franchisee, in the compromise or defense of such Asserted Liability.
The Indemnified Party may select its own legal counsel to participate in such
compromise or defense, at Franchisee's expense, to the extent such Indemnified
Party, or its counsel, reasonably believes that a conflict of interest exists
between Franchisee and such Indemnified Party.
Franchisor will reimburse reasonable attorneys' fees incurred by
Franchisee in a court-sought resolution if Franchisor or any other Indemnified
Party is found to be Grossly Negligent or guilty of Wilful Misconduct. If
Franchisee elects not to compromise or defend the Asserted Liability, fails to
notify the Indemnified Party of its election as herein provided or contests its
obligation to indemnify under this Agreement, the Indemnified Party may pay,
compromise or defend such Asserted Liability; provided, however, that such
payment, compromise or defense shall in no way relieve Franchisee of its
indemnification responsibilities pursuant to this Agreement.
23.5 Without limiting or detracting from the indemnity provision
above or elsewhere in this Agreement, Franchisee shall comply with the
applicable federal, state and local laws, rules, regulations, orders and
ordinances concerning pollution and protection of the environment, with special
attention to the regulations governing the storage, dispensing, and sale of
unleaded gasoline; shall procure and maintain all permits and licenses required
thereunder; and shall defend, indemnify, and hold harmless the Indemnified
Parties from and against any and all penalties, interest, costs, expenses,
claims, judgments, and orders with respect to such laws, ordinances, rules,
orders, and regulations, except those determined to have been caused by the
Gross Negligence or Willful Misconduct of an Indemnified Party.
23.6 Because Franchisee has the day-to-day occupation and control of
the business at the Franchised Premises, Franchisee shall:
A. Immediately clean up and properly dispose of all
contaminants, pollutants, toxic substances, and hazardous substances which are
dumped, spilled, or otherwise deposited, or which appear anywhere on, or which
originate from, the Franchised Premises from whatever cause or source. All such
cleanup and disposal actions shall be in compliance with all applicable laws,
regulations and ordinances, and the requirements of governmental agencies,
relating to pollution or protection of the environment. If the matter cleaned up
and disposed of is determined after non-appealable final judgment to have been
deposited through the Gross Negligence or Wilful Misconduct of an Indemnified
Party, Franchisor shall reimburse Franchisee the reasonable clean-up and
disposal costs.
<PAGE>
41
B. Comply with the Occupational Safety and Health Act and
rules, orders, and regulations issued and promulgated thereunder applicable to
Franchisee's operation of the Franchised Business. Franchisee shall also defend,
indemnify, and hold harmless the Indemnified Parties from and against any and
all penalties, interest, cost, expenses, claims, judgments, and orders arising
out of or incident to Franchisee's non-compliance with said Act and the rules,
orders, and regulations issued and promulgated thereunder applicable to
Franchisee's operation of the Franchised Business.
C. Comply with the Americans with Disabilities Act and rules,
orders, and regulations issued and promulgated thereunder applicable to
Franchisee's operation of the Franchised Business. Franchisee shall also defend,
indemnify, and hold harmless the Indemnified Parties from and against any and
all penalties, interest, cost, expenses, claims, judgments and orders arising
out of or incident to Franchisee's non-compliance with said Act and the rules,
orders, and regulations issued and promulgated thereunder applicable to
Franchisee's operation of the Franchised Business.
D. Immediately advise Franchisor in writing of defects in or
deterioration of storage tanks, submerged pumps, and/or piping as listed in the
Lease Agreement, for which Franchisor has replacement responsibility. In this
regard, storage tanks, submerged pumps, and/or piping at the Franchised Premises
may result in major environmental and property damage. One of the recommended
methods used to warn of a potential leak is the implementation and adherence to
a motor fuel inventory program that includes a daily stick measurement of the
volume of motor fuel in storage and recording of the volume of motor fuel
received and sold. Franchisee agrees to implement and adhere to a daily
inventory plan incorporating the above described elements. Franchisee shall
immediately notify Franchisor when a loss of motor fuel is equal to or greater
than one thousand (1,000) gallons reflected in its daily inventory system, but
not later than the next day, by the fastest means available. This loss may be
considered a paper shortage of motor fuel even though the motor fuel may be
reflecting an overage. Franchisee should use his best judgment and past
historical data in determining losses during periods of fuel expansion or
shrinkage during storage. If Franchisee's first notification to Franchisor of a
loss is verbal, Franchisee shall confirm such notice in writing immediately
after giving the verbal notice. Franchisor shall have the sole right to
determine what tests are required to confirm any leaks and what corrective
measures are to be taken. If Franchisee keeps a daily inventory system and
notifies Franchisor immediately upon detecting a motor fuel loss, Franchisee
shall be released from its obligation to defend, indemnify, and hold the
Indemnified Parties harmless from any claims, costs, fines, penalties, and
damages related to a leak in the underground tanks, submerged pumps, or piping,
except for any leak arising from the negligent or willful acts or omissions of
Franchisee, its contractors, agents, or employees. If Franchisee, its employees
or agents is negligent, or if Franchisee does not maintain a daily inventory
system and/or
<PAGE>
42
fails to immediately advise Franchisor of an indicated loss, Franchisee shall be
responsible for and shall indemnify, defend, and hold the Indemnified Parties
harmless from, any and all claims, costs, fines, penalties, or damages of every
nature related to any leak not detected and/or reported. Such failure to
maintain an inventory system or immediately notify Franchisor of an indicated
loss or water contamination shall be grounds for termination or non-renewal of
this Agreement.
23.7 Indemnified Parties do not assume any liability whatsoever for
acts, errors, or omissions of those with whom Franchisee may contract,
regardless of the purpose. Franchisee shall hold harmless and indemnify
Indemnified Parties for all losses and expenses which may arise out of any acts,
errors or omissions of these third parties.
23.8 Franchisor shall not, by virtue of any approvals, advice or
services provided to Franchisee, assume responsibility or liability to
Franchisee or any third parties to which Franchisor would not otherwise be
subject.
XXIV. APPROVALS
24.1 Whenever this Agreement requires the prior approval or consent
of Franchisor, Franchisee shall make a timely written request to Franchisor
therefor, and, except as otherwise provided herein, any approval or consent
granted must be in writing to be binding upon Franchisor.
24.2 Franchisor makes no warranties or guarantees upon which
Franchisee may rely and assumes no liability or obligation to Franchisee or any
third party to which it would not otherwise be subject, by providing any waiver,
approval, advice, consent or services to Franchisee in connection with this
Agreement, or by reason of any neglect, delay or denial of any request therefor.
XXV. AMENDMENTS; WAIVERS; REMEDIES
25.1 Any provision of this Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by Franchisee and Franchisor, or in the case of a waiver, by the
party against whom the waiver is to be effective.
25.2 No waiver by either party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent occurrence. No single or partial exercise by
either party in
<PAGE>
43
exercising any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any right or remedies provided by law.
XXVI. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
XXVII. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by
the laws of the State of Illinois.
XXVIII. COUNTERPARTS; EFFECTIVENESS
This Agreement may be signed in any number of counterparts, each of
which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received a counterpart hereof signed
by the other party hereto.
XXIX. ENTIRE AGREEMENT
This Agreement, together with the Lease Agreement, constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, understandings and negotiations, both
written and oral, between the parties with respect to the subject matter of this
Agreement. Neither this Agreement nor any provision hereof is intended to confer
upon any person or entity other than the parties hereto any rights or remedies
hereunder (except the rights given to the Indemnified Parties in Paragraph
XXIII).
XXX. JURISDICTION
Each of the parties hereto irrevocably submits to the jurisdiction
of any state or federal court sitting in the county and state in which the
Franchised Business is located, in any action or proceeding arising out of or
relating to this Agreement, agrees that all claims in respect of the action or
proceeding may be heard and
<PAGE>
44
determined in any such court, and agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court or to contest
the jurisdiction (in rem or in personam) or power or decision of such court over
or pertaining to the party or with respect to the subject matter in any other
court within or outside of the United States other than appropriate appellate
courts. Each of the parties hereto irrevocably waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety or other security that might be required of the other
party hereto with respect thereto.
XXXI. CAPTIONS
The captions herein are included for convenience of reference only
and shall be ignored in the construction or interpretation hereof.
XXXII. SEVERABILITY
If any provisions of this Agreement, or the application thereof to
any Person, place or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable or void, the remainder of this
Agreement and such provisions as applied to other Persons, places and
circumstances shall remain in full force and effect only if, after excluding the
portion deemed to be unenforceable, the remaining terms shall provide for the
consummation of the transactions contemplated hereby in substantially the same
manner as originally set forth at the later of the date this Agreement was
executed or last amended.
XXXIII. CONSTRUCTION
Whenever required by the context, any gender shall include any other
gender, the singular shall include the plural and the plural shall include the
singular.
XXXIV. INCONSISTENCY
In the event of any conflict between the terms and provisions of
this Agreement and the terms and provisions of the Lease Agreement and other
agreements between the parties, the terms and provisions of the Franchise
Agreement shall govern and control.
<PAGE>
45
XXXV. FORCE MAJEURE
The period of time during which either party hereto is prevented or
delayed in the performance or fulfilling any obligation, or any other fees or
sums and charges due hereunder, due to unavoidable delays caused by force
majeure, earthquake, fire, flood, or the elements, malicious mischief, riots,
strikes, lockouts, boycotts, picketing, labor disputes or disturbance, war,
compliance with any directive, order or regulation of any governmental authority
or representative thereof acting under claim or color of authority, or for any
reason beyond such party's reasonable control, whether or not similar to the
foregoing, shall be added to such party's time for performance thereof, and such
party shall have no liability by reason thereof.
XXXVI. NOTICE
All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) if personally delivered,
when so delivered, (ii) if mailed, two (2) business days after having been sent
by registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below, (iii) if given by telex
or telecopier, once such notice or other communication is transmitted to the
telex or telecopier number specified below and the appropriate answer back or
telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (ii) above or (iv) if sent through a reputable overnight delivery service
in circumstances to which such service guarantees next day delivery, the day
following being so sent:
Notices to Franchisor: NATIONAL AUTO/TRUCKSTOPS, INC.
1650 East Golf Road
Schaumburg, Illinois 60196-1088
Attention: C. William Osborne
Telex:
Telecopy: (708) 330-5835
Notices to Franchisee:
-------------------------
-------------------------
-------------------------
Attention:
Telex:
Telecopy:
Either party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
<PAGE>
46
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it is
actually received by the individual for whom it is intended. Either party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
XXXVII. COST OF ENFORCEMENT OR DEFENSE
If a claim for amounts owed by Franchisee to Franchisor is asserted
in any legal proceeding before a court of competent jurisdiction, or if
Franchisor or Franchisee is required to enforce this Agreement in a judicial
proceeding, the prevailing party shall be entitled to reimbursement of its
costs, including reasonable accounting and legal fees, in connection with such
proceeding.
XXXVIII. INJUNCTIVE RELIEF
Franchisor shall have the right to obtain injunctive relief against
threatened or actual conduct by Franchisee that will cause Franchisor loss or
damages, for Franchisee's material misuse or unauthorized use of the Marks, for
Franchisee's threatened or actual violation of the provisions of this Agreement
governing Confidential Information. Such injunctive relief shall be governed
under the usual equity rules, including the applicable rules for obtaining
restraining orders and preliminary injunctions.
XXXIX. ARBITRATION
39.1 Any monetary claim of less than ONE HUNDRED THOUSAND Dollars
($100,000.00) in dispute arising out of or relating to this Agreement, or any
breach thereof, shall be submitted to arbitration before a single arbitrator in
the county and state where Franchisor's principal place of business is located
at the time such action is brought forth in accordance with the rules of the
American Arbitration Association and judgment upon the award may be entered in
any court having jurisdiction thereof. The arbitrator is explicitly authorized
to award attorneys' fees as part of his or her award. Nothing contained herein
shall, however, be construed to limit or to preclude Franchisor from bringing
any action in any court of competent jurisdiction for injunctive or other
provisional relief as Franchisor deems to be necessary or appropriate to compel
Franchisee to comply with its obligations hereunder or to protect Franchisor's
Marks or other property rights of Franchisor. In addition, nothing contained
herein shall be construed to limit or to preclude Franchisor from joining with
any action for injunctive or provisional relief all monetary claims that
Franchisor may have against Franchisee which arise out of the
<PAGE>
47
acts or omissions to act giving rise to the action for injunctive or provisional
relief. This arbitration provision shall be deemed to be self-executing and in
the event that Franchisee fails to appear at any properly noticed arbitration
proceeding, award may be entered against Franchisee notwithstanding its failure
to appear.
39.2 Nothing herein contained shall bar the right of either party to
seek and obtain temporary injunctive relief from a court of competent
jurisdiction in accordance with applicable law against threatened conduct that
will cause loss or damage, pending completion of the arbitration.
39.3 It is the intent of the parties that any arbitration between
Franchisor and Franchisee shall be of Franchisee's individual claim and that the
claim subject to arbitration shall not be arbitrated on a class-wide basis.
XL. LINE OF CREDIT
In order to guaranty Franchisee's performance of its monetary
obligations to Franchisor pursuant to this Agreement, Franchisee shall establish
a line of credit with Franchisor's Credit Department in an amount determined by
Franchisor's Credit Department. In the event that Franchisee fails to pay any
amounts due pursuant to this Agreement, Franchisor may refuse to extend credit
to Franchisee.
XLI. CAVEAT
The success of the business venture contemplated to be undertaken by
Franchisee by virtue of this Agreement is speculative and depends, to a large
extent, upon the ability of Franchisee as an independent business entity, and
its active participation in the daily affairs of the business as well as other
factors. Franchisor does not make any representation or warranty express or
implied as to the potential success of the business venture in this Agreement.
XLII. ACKNOWLEDGMENTS
42.1 Franchisee represents and acknowledges that it has received,
read and understood this Agreement and Franchisor's Uniform Franchise Offering
Circular; and that Franchisor has fully and adequately explained the provisions
of each to Franchisee's satisfaction; and that Franchisor has accorded
Franchisee ample time and opportunity to consult with advisors of its own
choosing about the potential benefits and risks of entering into this Agreement.
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48
42.2 Franchisee acknowledges that it has received a copy of this
Agreement and the attachments thereto, at least five (5) business days prior to
the date on which this Agreement was executed. Franchisee further acknowledges
that Franchisee has received the disclosure document required by the Trade
Regulation Rule of the Federal Trade Commission entitled Disclosure Requirements
and Prohibitions Concerning Franchising and Business Opportunity Ventures, at
least ten (10) business days prior to the date on which this Agreement was
executed.
42.3 Franchisee has been advised to consult with its own advisors
with respect to the legal, financial and other aspects of this Agreement, the
business franchised hereby, and the prospects for that business. Franchisee has
either consulted with such advisors or has deliberately declined to do so.
42.4 Franchisee affirms that all information set forth in any and
all applications, financial statements and submissions to Franchisor is true,
complete and accurate in all respects, with Franchisee expressly acknowledging
that Franchisor is relying upon the truthfulness, completeness and accuracy of
such information.
42.5 Franchisee has conducted an independent investigation of the
business contemplated by this Agreement and recognizes that, like any other
business, an investment in a Franchised Business involves business risks and
that the success of the venture is primarily dependent upon the business
abilities and efforts of Franchisee.
42.6 FRANCHISEE UNDERSTANDS AND ACKNOWLEDGES THAT ALL
REPRESENTATIONS OF FACT MADE BY FRANCHISOR HEREIN ARE MADE SOLELY BY FRANCHISOR.
ALL DOCUMENTS, INCLUDING FRANCHISOR'S FRANCHISE AGREEMENT AND UNIFORM FRANCHISE
OFFERING CIRCULAR AND ALL EXHIBITS THERETO, HAVE BEEN PREPARED SOLELY IN
RELIANCE UPON REPRESENTATIONS MADE AND INFORMATION PROVIDED BY FRANCHISOR, ITS
OFFICERS AND ITS DIRECTORS. FRANCHISEE FURTHER AGREES THAT IT HAS NO CLAIM
AGAINST, AND WILL INDEMNIFY AND HOLD HARMLESS, THE PREPARER OF ANY AND ALL SUCH
FRANCHISE AGREEMENTS, OFFERING CIRCULARS AND EXHIBITS THERETO, WITH RESPECT TO
ANY AND ALL LOSS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), DAMAGES AND
LIABILITIES RESULTING FROM ANY REPRESENTATIONS AND/OR CLAIMS MADE BY FRANCHISOR
IN SUCH DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have duly executed, sealed and delivered this Agreement in
multiple copies the day and year first above written.
NATIONAL AUTO/TRUCKSTOPS, INC.
ATTEST:
By:
- ----------------------- ---------------------------------
Witness
ATTEST:
Witness Franchisee
- ----------------------- ------------------------
Witness Franchisee
- ----------------------- ------------------------
Exhibit 10.33
NATIONAL AUTO/TRUCKSTOPS INC.
*****
AUTO/TRUCKSTOP LEASE
Location # Date: , 19
-------------- ---------------- -----
LESSOR: NATIONAL AUTO/TRUCKSTOPS, INC.
A DELAWARE CORPORATION
Street Address 1650 EAST GOLF ROAD
City and State SCHAUMBURG, ILLINOIS Zip Code 60196-1088
LESSEE:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
PROPERTY:
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
See Exhibits A-I and A-II for leased property description.
A subject matter index will be found at the end of the Lease.
LESSOR LESSEE
National Auto/Truckstops, Inc.
-------------------------
By By
---------------------------- ------------------------
Name: Name:
Title: Title:
1
<PAGE>
LEASE AGREEMENT
Lease Agreement (the "Agreement" or the "Lease"), dated as of
, 199 , by and between National Auto/Truckstops, Inc., a Delaware
- ------------ -
corporation (the "Company"), and , a corporation
-------------------- -----------
("Lessee").
W I T N E S S E T H:
WHEREAS, the Company and Lessee have entered into a Franchise
Agreement of even date herewith (as the same may hereafter be amended, the
"Franchise Agreement"; all terms used and not defined herein shall have the
meanings set forth in the Franchise Agreement) which, among other things,
defines the franchise relationship between the Company and Lessee in connection
with the Company's A/TS Network; and
WHEREAS, Lessee is obligated under the Franchise Agreement to enter
into this Lease, pursuant to which, among other things, (i) the Company agrees
to lease and demise the Leased Premises (as defined herein) to Lessee and (ii)
Lessee agrees to take and hire from the Company the Leased Premises, each on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements set forth herein, the parties hereby agree
as follows:
1. PROPERTY. The Company leases to Lessee and Lessee leases from the
Company the land located in the County of , State of ,
------------ ---------
described in Exhibit A-I attached hereto and made a part hereof, together with
the buildings, improvements, fixtures, and equipment listed in Exhibit A-II
attached hereto and made a part hereof, said land and buildings, improvements,
fixtures, and equipment being collectively referred to herein as the "Leased
Premises."
2. TERM. (a) The term of the Lease commences , 19 ,
--------- --
and expires , 19 , (the "Initial Term) subject to the renewal terms
--------- --
set forth in this Paragraph 2. The Lease ends automatically and without notice
on the expiration date.
(b) Should the Lessee receive the Company's permission pursuant to
Paragraph 8 to improve the facility or any portion thereof, or make any
additions requiring large capital expendi tures, where the term of this Lease is
a factor determining
2
<PAGE>
Lessee's ability to raise funds or justify the expenditure to itself, the
Company will, at its option, enter into negotiations with Lessee to extend the
term of this Lease.
(c) Lessee shall have the right to renew the Lease at the expiration
of the Initial Term for five (5) additional suc cessive terms of three (3) years
each ("Renewal Term"), provided that all of the following conditions have been
fulfilled:
(i) Lessee has during the Initial Term complied with all the
provisions of this Lease and during any Renewal Term complied with the
provisions of this Lease;
(ii) Lessee is not in default of the provisions
of Paragraph 14 of this Lease;
(iii) Lessee has given notice of renewal to the
Company as provided in Paragraph 14 herein;
(iv) Lessee has satisfied all monetary obliga tions owed by
Lessee to the Company and the Company's Affiliates and has timely met these
obligations throughout the term of this Lease;
(v) Lessee has complied with the Company's then-
current qualification and training requirements;
(vi) Lessee has executed a general release, in the
then-current form prescribed by the Company, of any and all Claims against the
Company and its Affiliates, and their respec tive officers, directors, agents,
stockholders and employees; and
(vii) Lessee simultaneously renews the Franchise Relationship
in accordance with the terms and provisions of the Franchise Agreement.
(d) The Company may terminate or not renew this Agreement by written
notice to Lessee, as provided in Paragraph 14 herein.
(e) Notwithstanding the foregoing or any other provision hereof, the
Lease shall end automatically and without notice on the date of expiration or
termination of the Franchise Agreement.
3. RENT. Lessee shall pay the Company rentals for
the Leased Premises without offset or deduction, and the Company
shall make certain payments to Lessee, as stated in the attached
Exhibit B attached hereto and made a part hereof. Lessee shall
pay all rentals and all other sums Lessee legally owes the
Company in accordance with the Company's credit policies. No
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<PAGE>
payment made to the Company by check or other instrument shall contain a
restrictive endorsement of any kind. A restrictive endorsement shall have no
legal effect even if the document restrictively endorsed is processed for
payment and the Company retains the proceeds.
4. RECORDS AND AUDIT. [INTENTIONALLY OMITTED.]
5. SERVICES AND USES. Lessee agrees to use the Leased Premises to
operate an auto/truckstop as part of the A/TS Network (an "Auto/Truckstop").
Lessee agrees to operate the Auto/Truckstop in a manner that will assure (i)
that customers receive quality merchandise and courteous and efficient service
in a clean and orderly business establishment; (ii) a profit to Lessee; and
(iii) the reasonable return to the Company on its investment in the Leased
Premises. Lessee shall comply with all requirements set forth in this Lease, the
Confidential Operations Manual and other written policies supplied to Lessee by
the Company. All references herein to this Lease shall include all such
mandatory specifications, standards and operating procedures and rules. Lessee
shall comply with the entire set of specifications and standards for the A/TS
Network including, but not limited to, the provisions of this Paragraph 5.
Lessee's operation shall include the following minimum obligations:
(a) Sell merchandise and service with care, courtesy, and
regard for customer satis faction. This will be
determined by comment cards and on-site surveys received
by the Company.
The Company has the right to enter the Leased Premises
to conduct, but is not obligated to conduct, on-site
surveys and leave comment cards. Should the Company
receive negative comments dealing with the same issue in
any 30 day period, the Lessee will be expected to take
action to correct the situation which generated the
comments.
(b) Take prompt action to respond to or correct
all complaints received by the Company
concerning Lessee's operation of, or
condition of, the Leased Premises or conduct
of any employee of the Lessee. A written
reply must be made to the Company within 14
days outlining Lessee's actions or plans to
resolve.
(c) Follow such procedures or take such action as
the Company may from time to time require to
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maintain the appearance and efficient opera tion of the
Leased Premises and to meet or exceed the Company's
annually published minimum acceptable Five Star score.
If at any time in the Company's judgment the general
state of repair or appearance of the Leased Premises or
its equipment, fixtures, signs of decor does not meet
the Company's standards, the Company shall so notify
Lessee, specifying the action to be taken by the Company
to correct such deficiency. Failure to correct such
deficiency is a material default of this Agreement and
grounds for termination of this Agreement subject to the
provisions of Paragraph 14 herein.
Lessee acknowledges that it has received a copy of the
Five Star program, has reviewed it and understands the
program. The terms of said program are incorporated
herein by reference.
(d) Devote full-time and business expertise to
the operation of the Leased Premises. The
Manager (as defined in Paragraph 12 herein),
must be at the Leased Premises more than
thirty (30) hours each seven (7) day week,
devote more than four (4) hours of time
between the hours of 8:00 a.m. and 8:00 p.m.
each day, Monday through Friday, and not be
absent more than thirty (30) days in any
calendar year.
(e) Operate the Leased Premises and any
restaurant contained thereon so as not to
pose a threat or danger to public health or
safety or the environment. Mail a copy of
each and every Health Inspection Report
prepared for the Leased Premises and any
restaurant contained thereon by the local,
county, or state governments to:
National Auto/Truckstops, Inc.
1650 East Golf Road
Schaumburg, IL 60196-1088
Attention: C. William Osborne
(f) Provide reasonable security at the parking
lot of the Leased Premises for vehicles and
drivers, and exert a reasonable effort to
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maintain an absence of outside elements that negatively
affect the image of the Auto/ Truckstop, the Leased
Premises, the Fran chised Business, the Branded Fuel or
the Branded Products. Specifically, "outside elements"
refers to prostitutes, gamblers, drug dealers, and
stolen goods dealers, but is not limited to same
("Outside Elements").
(g) Provide, or have made outside arrangements for
providing, emergency service for passenger cars
including tire service, road towing, belt replacement,
and light replace ment, but not to be limited to same.
(h) Keep the Leased Premises open for business
24 hours each day, including the diesel &
gasoline islands, garage, store, and restau
rant, but not limited to same. Lessee's
closing the Leased Premises or any part
thereof, shall constitute abandonment by
Lessee and shall be a material breach of this
Lease.
(i) Not engage in dishonest, fraudulent, or scare
selling practices.
(j) Perform all services in a good workmanlike
manner.
(k) Maintain a complete inventory of merchandise
to satisfy the reasonable demands of
customers.
(l) Operate the Leased Premises in a clean, safe and
healthful manner that will assure that customers receive
quality merchandise and courteous and efficient service,
which shall include the following minimum obligations:
(i) Operate or cause the Manager to at all times
operate the Leased Premises in compliance with the
standards prescribed in this Lease.
(ii) Provide a sufficient number of trained, courteous,
and neat personnel who can personally communicate
with customers by understanding, writing and
speaking English to operate the Leased Premises in
an efficient and organized manner.
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<PAGE>
(m) [INTENTIONALLY OMITTED.]
(n) Comply with the requirements of any condi
tional use permit or other approval ("per
mit") covering the construction, maintenance,
and/or operation of the Leased Premises. If
the Leased Premises are subject to a permit,
a copy shall be delivered to Lessee and
Lessee shall acknowledge receipt of the copy
on a form provided by the Company.
(o) Secure and maintain in force, at its expense,
all required licenses, permits and certifi-
cates relating to the operation of the Leased
Premises, and operate the Leased Premises in
full compliance with all applicable federal,
state and local laws, ordinances and
regulations, including, without limitation,
all such laws, ordinances, and regulations
relating to the dispensing of food products,
occupational hazards and health, general
liability regulations relating to the
dispensing of food products, occupational
hazards and health, general liability and
pollution liability insurance requirements,
consumer protection, environmental protec
tion, underground storage facilities and
dispensing of fuel, trade regulation,
workers' compensation, unemployment insurance
and withholding and payment of federal and
state income taxes and social security taxes,
and sales, use and property taxes. Further,
throughout the term of this Lease, Lessee
shall cause the Leased Premises to be in full
and strict compliance with the Americans with
Disabilities Act, as amended.
(p) Designate a qualified full-time shift manager
for each shift established by Lessee.
(q) Lessee shall have on staff at all times
during regular business hours a qualified
mechanic experienced in truck service to
provide prompt, courteous and workmanlike
service, and to otherwise fulfill Lessee's
responsibilities under this Lease and the
Franchise Agreement. Such mechanic shall
meet the requirements set forth in the
Confidential Operations Manual.
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<PAGE>
(r) Lessee shall notify the Company in writing
within five (5) days of the commencement of
any action, suit, or proceeding, and of the
issuance of any order, writ, injunction,
award, or decree of any court, agency, or
other governmental instrumentality, which may
adversely affect the operation or financial
condition of the Franchised Business or the
Leased Premises.
(s) At any full service truckstop facility, Lessee shall
maintain a minimum of fifty (50) paved truck spaces.
6. PROHIBITED USES. The Leased Premises shall be
utilized as an Auto/Truckstop and for no other purpose. In
addition, Lessee shall not:
(a) Obstruct any entrance, exit, or pump island, or
otherwise restrict access to the Leased Premises, or any
part thereof, or block delivery carrier's access to
storage tank fill pipes.
(b) Subject to laws, ordinances, and regulations,
display signs except those usual and custo
mary to advertise products and services
offered for sale by Lessee from or at the
Leased Premises; and not install, affix, or
paint signs on any building or part of Leased
Premises leased by the Company to Lessee,
without the Company's prior written approval.
(c) [INTENTIONALLY OMITTED.]
(d) Store or sell illegal drugs or substances, and any
related paraphernalia, or permit the same to be used or
consumed at the Leased Premises.
(e) Discharge or permit the discharge of petroleum products
or other products or materials onto the Leased Premises
or adjacent properties.
(f) Place or install amusement, music, or vending machines,
or telephones at locations that interfere with, or
restrict, the safe and free flow of vehicles and
pedestrian traffic on the Leased Premises.
8
<PAGE>
(g) Create or permit waste at the Leased Premises, or any
part thereof, or allow or condone any activity on the
Leased Premises, or any part thereof, that shall
constitute a nuisance.
Lessee understands and acknowledges that uniformity of standards, products and
services is essential to the A/TS Network. To that end, the Company reserves the
right to reject any category of product or services offered for sale at the
Leased Premises. Should Lessee elect to offer and sell additional product or
service categories to customers at the Leased Premises, the Company shall not
unreasonably withhold its approval of any such category of product or service.
In addition:
(i) Lessee shall immediately cease offering for sale
or selling any product or service if the Company,
in its sole discretion, deems such product or
service to be detrimental to the Marks or the
image of the A/TS Network.
(ii) Lessee is prohibited from displaying,
offering and selling any alcoholic
beverages, packaged or otherwise, any
condom vending machines (unless required
by law) and any sexual or pornographic
materials (as determined by the Company
in its sole discretion), including,
without limitation, books, magazines,
videotapes, cassettes, calendars,
novelty and related items. The Company
reserves the right, in its sole
discretion, to expand the categories of
products and services which Lessee is
prohibited from offering or selling from
the Leased Premises.
7. OPERATING EXPENSES. Lessee shall pay all charges and expenses
connected with the operation of the Leased Premises, including license, permit,
and inspection fees; expenses incurred for testing for motor fuel shortages if
due to Lessee negligence, unless required by law, ordinance, or regulation; the
calibration of dispensing equipment; the registration of storage tanks except
those required by governmental regulations; occupation and license taxes, water,
sewer, gas, telephone, electricity, and power charges assessed or charged on or
against the Leased Premises, Lessee's use or occupancy thereof, or the business
conducted thereon. Lessee shall have all meters and accounts for water, sewer,
gas, telephone, electricity, power, and other utilities transferred to Lessee's
name. If Lessee fails or
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<PAGE>
refuses to make timely payment of any charge, expense, and/or tax, the Company
may, but is not obligated to, make payment for the account of Lessee, and the
amount paid by the Company shall be additional rental and shall be due and
payable by Lessee on demand of the Company.
8. ALTERATIONS. Subject to the provisions of Paragraph 9, Lessee
shall not make or permit anyone to make any modifications in or to the Leased
Premises of a permanent nature, including but not limited to permanent
improvements, alterations, decorations, or additions, structural or otherwise,
in or to the Leased Premises without first obtaining the written consent of the
Company. All improvements, alterations, decorations, or additions made by Lessee
shall be completed in a good and workmanlike manner in accordance with all
applicable laws and requirements, and Lessee shall defend, indemnify, and hold
the Company harmless from and against any and all costs, expenses, claims,
liens, and damages to person or property resulting from the making of any such
improvements, alterations, decorations, or additions in or to the Leased
Premises.
Lessee shall not do or suffer anything to be done whereby the Leased
Premises may be encumbered by a mechanic's lien or liens. If, however, any
mechanic's lien is filed against the Leased Premises, Lessee shall discharge the
same of record within ten days after the date of filing. If Lessee fails to
discharge any such lien as provided herein, such failure shall be a default of
this Lease.
The Company shall not be liable for any labor or materials to be
furnished to Lessee upon credit, and no mechanic's or other lien for any such
labor or materials shall attach to or affect the reversionary or other estate or
interest of the Company in and to the Leased Premises.
9. MAINTENANCE AND REPAIRS. Lessee shall, at his expense, clean,
maintain, repair, and make replacements to the Leased Premises as set forth in
Exhibit C attached hereto and made a part hereof. If Lessee fails, or refuses,
to perform any obligations set forth in Exhibit C, the Company may do so, and
Lessee shall reimburse the cost to the Company on demand.
Lessee shall employ, on a full-time basis, an individual qualified
to accomplish Lessee's obligations set forth in Exhibit C. This individual's
primary duties shall be limited to maintenance responsibilities as defined.
The Company is responsible for the replacements not required of
Lessee and imposed upon the Company by Exhibit C, except for damage to or
destruction of the Leased Premises as set forth below. Notwithstanding the
Company's obligations set forth
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<PAGE>
in Exhibit C, Lessee has the primary obligation to keep the Leased Premises safe
for all persons in or to the Leased Premises. Therefore, Lessee shall undertake
interim repairs or maintenance to keep the Leased Premises safe for all persons,
until such time as Lessee notifies the Company of the unsafe condition and the
Company performs its required obligations within a reasonable time after notice.
If the Leased Premises, or any part thereof, is damaged or
destroyed, Lessee shall advise the Company immediately of such damage or
destruction by the fastest means possible, but in no event later than 24 hours
after the damage or destruction occurs, and shall confirm the damage or
destruction within 7 days of its occurrence by completing and sending the
Company its Property/Environmental Loss Report. Lessee is responsible for damage
to or destruction of the Leased Premises, or any part thereof, not caused by the
Company, its employees, agents, or contractors, or Acts of God. "Acts of God"
for the purposes of this Paragraph 9 shall include only damage or destruction
caused by wind, rain, hail, floods, ice, snow, earthquakes, volcanoes, thunder,
or lightning; fire is not an Act of God, other than caused by lightning.
The Company waives right of recovery against Lessee for damage
covered by All Risk Policy required under subparagraph (f)(4) of Paragraph 13
(indemnity and insurance) of this Lease to Leased Premises in excess of $400,000
in any one occurrence.
10. TRANSFERABILITY OF INTEREST.
(a) This Lease and all rights hereunder can be assigned and
transferred by the Company and, if so, shall be binding
upon and inure to the benefit of the Company's
successors and assigns.
(b) This Lease and all rights hereunder may be assigned and
transferred by Lessee and, if so, shall be binding upon
and inure to the benefit of Lessee's successors and
assigns, subject to the following conditions and
requirements, and the Company's right of first refusal
as set forth herein:
(i) Lessee may not sell, assign (including, but not
limited to, assignments by operation of law) or
transfer (collectively, "Assign") this Lease
without the Company's prior written consent. The
Company has an absolute and unqualified right to
withhold
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<PAGE>
consent to such proposed Assignments. Any attempt
by Lessee to Assign this Lease without the
Company's prior written consent shall be void and
of no force and effect. The sale, transfer,
transfer by operation of law, or other disposition
of Lessee's interest, or any part thereof, in the
Lease, or any Person's ownership or other interest
in Lessee, if Lessee is a corporation, partnership
or other business entity, shall be an assignment
requiring the Company's prior written consent.
Lessee's written request for the Company's
approval of any assignment must be received by the
Company not less than ninety (90) days prior the
effective date of such requested assignment.
(ii) Notwithstanding the foregoing, Lessee
may Assign this Lease without the
Company's consent to an immediate family
member of (i) Lessee, if Lessee is a
natural person, or (ii) the Manager;
PROVIDED that, in the Company's
reasonable judgment, such family member
is sufficiently qualified and trained
("Qualified Immediate Family Member").
(iii) The Company shall have the preferential right to
meet the bona fide offer of any proposed assignee;
such right to be exercised by the Company within
sixty (60) days following the date the Company
receives a copy of Lessee's written request for
the Company's approval of any assignment. Lessee
shall include in such written request for the
Company's approval of any assignment. Lessee shall
include in such written request the name and
address of the proposed assignee and the price,
terms, and conditions contained in the bona fide
offer. The Company's failure to exercise this
preferential right shall not terminate this
Agreement or the preferential right or release
Lessee from any of its obligations under this
Lease.
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<PAGE>
(c) If the Lessee proposes to sell, transfer,
assign or sublet this Lease, the Company will
perform a Five Star Appearance inspection of
the Leased Premises to determine necessary
corrections to be made to bring the Leased
Premises up to a Five Star Appearance
inspection score equal to or greater than the
Company's annually published minimum accept
able score. The Company will also perform an
engineering and maintenance inspection and,
if deemed necessary by the Company, an
environmental inspection, of the Leased
Premises to determine what actions are
necessary to bring the Lessee into compliance
with all of the provisions of Paragraph 9 and
Exhibit C hereof. The results of the fore
going inspections will be made in writing to
Lessee and corrections made before sale,
assignment, transfer or subletting is
approved.
(d) Notwithstanding any provision of the fore
going subparagraphs (a) through (c), any
attempted assignment of this Lease (including
an assignment by operation of law) shall be
void and of no force and effect unless the
Franchise Relationship is also transferred to
the assignee in accordance with the pro
visions of the Franchise Agreement.
11. UNDERLYING LEASE. (If the Company leases the Leased Premises or
part of the Leased Premises from others, this paragraph will be completed.) The
Company leases the Leased Premises by virtue of an underlying lease dated
_______ for a term that expires on _______. The Company is under no obligation
to extend or renew such underlying lease. Lessee acknowledges and confirms that
it was notified in writing by the Company of the facts set forth in this
Paragraph prior to the execution of this Lease.
12. OPERATION BY LESSEE. The Company's normal business practice and
procedure is to enter into Auto/TruckStop leases with individuals only, to
assure that the Company will receive the benefit of the business expertise and
management of the named individual. If Lessee is an individual, any attempt by
him to operate the Leased Premises through a corporation shall not relieve him
of, and the Company shall require him to perform, his obligations under this
Lease, unless and until the Company approves the assignment of this Lease to the
corporation.
13
<PAGE>
The Company may enter into Auto/TruckStop leases with corporations
or other entities, but only upon the assurance of the entity that an individual
acceptable to the Company shall direct the management and operation of the
Auto/TruckStop. If the Lessee is a corporation or any other entity, it agrees
that the day-to-day management and operation of the Leased Premises shall be
directed by ________________________ ("Manager"). If the Lessee is an
individual, then Lessee shall be the Manager.
If the Manager as named is not the Lessee, and if, in the Company's
opinion, the operation of the Leased Premises under the Manager is not
equivalent to, or better than the operation under Lessee's operation, the
Company shall so advise Lessee and the Lessee shall name a new Manager.
If, during the term of this Lease, Manager dies or becomes
physically handicapped and cannot continue the direct day-to-day management and
operation of the Leased Premises, this Lease shall not terminate, but Lessee
shall name a new Manager, in writing, delivered to the Company not more than 30
days following the death or incapacity of Manager.
13. INDEMNITY AND INSURANCE.
(a) Lessee agrees to indemnify, defend, protect
and hold harmless the Company (and its
directors, officers, employees, agents,
Affiliates, designees, representatives,
stockholders, successors and assigns
(collectively, "Indemnified Parties")) from
and against all losses, liens, liabilities,
damages, deficiencies, demands, claims,
actions, judgments or causes of action,
assessments, costs or expenses (including,
without limitation, interest, penalties and
reasonable attorneys', consultants, and other
experts' fees and disbursements) ("Losses")
based upon, arising out of or otherwise in
respect of the Franchised Business and
Lessee's use of the Leased Premises; PRO-
VIDED, HOWEVER, Lessee shall not be required
to indemnify, defend and hold harmless the
Indemnified Parties from and against any
Losses, arising out of the Gross Negligence
("Gross Negligence") or Wilful Misconduct
("Wilful Misconduct") of the Company and/or
any other Indemnified Party. For the purpose
of this Paragraph 13, the term "Gross Negli
gence" shall mean a conscious and voluntary
act or omission which is in reckless dis
regard of the rights or property of another
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<PAGE>
and the term "Wilful Misconduct" shall mean intentional,
purposeful conduct of an indem nified Party but does not
include instances where an Indemnified Party is strictly
liable for breach of any warranty. IT IS AGREED THAT
NEITHER LESSEE NOR ITS INSURANCE CARRIER SHALL HAVE THE
POWER OR AUTHORITY UNDER THIS LEASE TO MAKE A
DETERMINATION AS TO WHETHER AN INDEMNIFIED PARTY CAUSED
LIABILITIES, LOSSES, CLAIMS, LIENS OR DEMANDS AS THE
RESULT OF GROSS NEGLIGENCE OR WILFUL MISCONDUCT. IF
THERE IS A DISAGREEMENT BETWEEN LESSEE, ITS INSURANCE
CARRIER AND THE INDEMNIFIED PARTIES AS TO WHETHER OR NOT
THE ACTIONS OF AN INDEMNIFIED PARTY(IES) MEET THE TEST
OF GROSS NEGLIGENCE OR WILFUL MISCON DUCT, SUCH A
DISPUTE SHALL BE SUBMITTED FOR RESOLUTION TO A COURT
HAVING JURISDICTION OVER SUCH DISPUTES.
Promptly after receipt by any Indemnified Party of
notice of any demand, claim or circumstance which, with
the lapse of time, would or might give rise to a claim
or the commencement (or threatened commencement) of any
action, proceeding or investigation ("Asserted
Liability") that may result in a Loss, the Indemnified
Party shall give notice thereof ("Claims Notice") to
Lessee. The Claims Notice shall describe the Asserted
Liability in reasonable detail and shall indicate the
amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or may be suffered
by an Indemnified Party.
Lessee may elect within thirty (30) days of receipt of
the Claims Notice to compromise or defend, at its own
expense and by its own counsel, any Asserted Liability
if Lessee acknowledges to such Indemnified Party
Lessee's obligation to fully indemnify such party with
respect to such Asserted Liabi lity, PROVIDED, HOWEVER,
that a condition to any settlement by Lessee shall be a
complete and unconditional release of the Indemnified
Party with respect to such claim. If Lessee elects to
compromise or defend such Asserted Liability as provided
in this Para graph 23.04., the Indemnified Party shall
cooperate, at the expense of Lessee, in the
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<PAGE>
compromise or defense of such Asserted Liability. The
Indemnified Party may select its own legal counsel to
participate in such compromise or defense, at Lessee's
expense, to the extent such Indemnified Party, or its
counsel, reasonably believes that a conflict of interest
exists between Lessee and such Indemnified Party.
Lessee will be reimbursed reasonable attorneys' fees
incurred by Lessee in a court-sought resolution if the
Company or any other Indemnified Party is found to be
Grossly Negligent or guilty of Wilful Misconduct. If
Lessee elects not to compromise or defend the Asserted
Liability, fails to notify the Indemnified Party of its
election as herein provided or contests its obligation
to indem nify under this Agreement, the Indemnified
Party may pay, compromise or defend such Asserted
Liability; PROVIDED, HOWEVER, that such payment,
compromise or defense shall in no way relieve Lessee of
its indemnification responsibilities pursuant to this
Lease.
(b) Without limiting or detracting from the
indemnity provision above or any other
provision of this Lease, Lessee shall comply
with the applicable federal, state and local
laws, rules, regulations, orders and ordi
nances concerning pollution and protection of
the environment, with special attention to
the regulations governing the storage,
dispensing, and sale of unleaded gasoline;
shall procure and maintain all permits and
licenses required thereunder; and shall
defend, indemnify, and hold harmless the
Indemnified Parties from and against any and
all penalties, interest, costs, expenses,
claims, judgments, and orders with respect to
such laws, ordinances, rules, orders, and
regulations, except those determined to have
been caused by the Gross Negligence or Wilful
Misconduct of an Indemnified Party.
(c) Because Lessee has the day-to-day occupation
and control of the business at the Leased
Premises, Lessee shall:
(i) Immediately clean up and properly
dispose of all contaminants, pollutants,
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<PAGE>
toxic substances, and hazardous sub stances which
are dumped, spilled, or otherwise deposited, or
which appear anywhere on, or which originates
from, the Leased Premises from whatever cause or
source. All such cleanup and dis posal actions
shall be in compliance with all applicable laws,
regulations and ordinances, and the requirements
of governmental agencies, relating to pollution or
protection of the environ ment. If the matter
cleaned up and disposed of is determined after
non-appealable final judgment to have been
deposited through the Gross Negligence or Wilful
Misconduct of an Indemnified Party, the Company
shall reimburse Lessee the reasonable clean-up and
disposal costs.
(ii) Comply with the Occupational Safety and
Health Act and rules, orders, and regu
lations issued and promulgated there
under applicable to Lessee's operation
of the Leased Premises. Lessee shall
also defend, indemnify, and hold harm
less the Indemnified Parties from and
against any and all penalties, interest,
cost, expenses, claims, judgments, and
orders arising out of or incident to
Lessee's noncompliance with said Act and
the rules, orders, and regulations
issued and promulgated thereunder
applicable to Lessee's operation of the
Leased Premises.
(iii) Comply with the Americans with Dis abilities Act
and rules, orders, and regulations issued and
promulgated thereunder applicable to Lessee's
operation of the Leased Premises. Lessee shall
also defend, indemnify, and hold harmless the
Indemnified Parties from and against any and all
penalties, interest, cost, expenses, claims, judg
ments, and orders arising out of or incident to
Lessee's noncompliance with said Act and the
rules, orders, and regulations issued and
promulgated thereunder applicable to Lessee's
operation of the Leased Premises.
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<PAGE>
(iv) Immediately advise the Company in
writing of defects in or deterioration
of storage tanks, submerged pumps,
and/or piping listed on Exhibit C, for
which the Company has replacement
responsibility. In this regard, storage
tanks, submerged pumps, and/or piping at
the Leased Premises may result in major
environmental and property damage. One
of the recommended methods used to warn
of a potential leak is the implementa
tion and adherence to a Motor Fuel
inventory program that includes a daily
stick measurement of the volume of Motor
Fuel in storage and recording of the
volume of Motor Fuel received and sold.
Lessee agrees to implement and adhere to
a daily inventory plan incorporating the
above described elements. Lessee shall
immediately notify the Company when a
loss of Motor Fuel is equal to or
greater than 1000 gallons reflected in
its daily inventory system, but not
later than the next day, by the fastest
means available. This loss may be
considered a paper shortage of Motor
Fuel even though the Motor Fuel may be
reflecting an overage. Lessee should
use his or its best judgment and past
historical data in determining losses
during periods of fuel expansion or
shrinkage during storage. If Lessee's
first notification to the Company of a
loss is verbal, Lessee shall confirm
such notice in writing immediately after
giving the verbal notice. The Company
shall have the sole right to determine
what tests are required to confirm any
leaks and what corrective measures are
to be taken. If Lessee keeps a daily
inventory system and notifies the
Company immediately upon detecting a
Motor Fuel loss, Lessee shall be
released from its obligation to defend,
indemnify, and hold the Indemnified
Parties harmless from any claims, costs,
fines, penalties, and damages related to
a leak in the underground tanks, sub
merged pumps, or piping, except for any
leak arising from the negligent or
willful acts or omissions of Lessee, its
18
<PAGE>
contractors, agents, or employees. If Lessee, its
employees or agents is negligent, or if Lessee
does not maintain a daily inventory system and/or
fails to immediately advise the Company of an
indicated loss, Lessee shall be responsible for
and shall indemnify, defend, and hold the
Indemnified Parties harmless from, any and all
claims, costs, fines, penalties, or damages of
every nature related to any leak not detected
and/or reported. Such failure to maintain an
inventory system or immediately notify the Company
of an indicated loss or water contamination shall
be grounds for termination or nonrenewal of this
Lease.
(d) Indemnified Parties do not assume any
liability whatsoever for acts, errors or
omissions of those with whom Lessee may
contract, regardless of the purpose. Lessee
shall hold harmless and indemnify Indemnified
Parties for all losses and expenses which may
arise out of any acts, errors or omissions of
these third parties.
(e) The Company shall not, by virtue of any approvals,
advice or services provided to Lessee, assume
responsibility or liability to Lessee or any third
parties to which the Company would not otherwise be
subject.
(f) With respect to operations performed under or
incident to this Lease, Lessee shall obtain
and maintain insurance acceptable to the
Company which is primary as to any other
existing, valid, and collectible insurance
and, except for Workers' Compensation and
Employers' Liability Insurance, names the
Company as Additional Insured with a Cross
Liability Clause. Such insurance shall
include (except as different coverages and
policy limits may reasonably be specified for
all Franchised Businesses from time to time
by the Company in the Confidential Operations
Manual or otherwise in writing):
(1) Comprehensive General Liability Insur
ance, or Garage Liability Insurance,
covering Premises Operations, Completed
19
<PAGE>
Operations, Products Liability, and Contractual
Liability, all with a minimum combined single
limit of $1,000,000 each occurrence, $2,000,000
aggregated all occurrences, for Bodily Injury and
Property Damage, including Personal Injury.
(2) Comprehensive Automobile Liability Insurance
covering all owned, hired, or otherwise operated
non-owned vehicles with a minimum combined single
limit of $500,000 each occurrence for Bodily
Injury and Property Damage, including Personal
Injury.
(3) Garagekeepers' Legal Liability Insurance covering
customers' vehicles in Lessee's care, custody, and
control, including coverage for loss by fire,
explosion, theft, vandalism, and/or malicious
mischief, and collision or upset with a minimum
limit of $300,000 each occurrence.
(4) All Risk Property Insurance, including Agreed
Amount Endorsement, but excluding coverage for
Acts of God as defined in Paragraph 9 of this
Lease, which con tains a waiver of co-insurance
covering Leased Premises for loss or damage with a
minimum insurance requirement of $250,000.
Lessee's maximum liability for Property loss
covered by such All Risk Property Insurance is
$400,000, for each occurrence. The Lessee may
elect to self-insure the difference between the
minimum requirement ($250,000) and the maximum
liability ($400,000) or insure to the maximum
liability ($400,000). The Company is to be the
loss payee.
(5) (i) Workers' Compensation Insurance
covering Lessee and, as required by
law, Lessee's Employees, and
(ii) Employers' Liability Insurance with
a minimum limit of (i) $500,000
each occurrence, (ii) $500,000
20
<PAGE>
disease-policy limits and (iii)
$500,000 disease-each employee.
Such policy or policies shall be written by a licensed
insurance company satisfactory to the Company in accordance
with standards and specifications set forth in the
Confidential Operations Manual or otherwise in writing. The
Company reserves the right to review and amend the amounts and
types of the required insurance coverage annually, and the
minimum amounts as required above may be modified from time to
time, as conditions require, by written notice to Lessee. The
insurance afforded by the policy or policies respecting
liability shall not be limited in any way by reason of any
insurance which may be maintained by the Company.
Within thirty (30) days after execution of this Lease, Lessee
shall furnish the Company with policies or Certificates of
Insurance showing compliance with the foregoing requirements,
which policies or Certificates shall provide that coverage
will not be cancelled or altered prior to ninety (90) days'
advance written notice to the Company and which shall reflect
proof of payment of premiums. However, the Company's failure
to demand or receive said Certificates shall in no event be or
be construed as a waiver by the Company to require delivery of
said Certificates or the underlying insurance policies of
Lessee. Subrogation against the Company shall be waived with
respect to all of the insurance policies set forth above.
The insurance required hereunder in no way limits or restricts
Lessee's obligations under this Lease as to indemnification of
the Company and the Indemnified Parties, and further, the
insurance to be carried shall in no way be limited by any
limitation placed on the indemnity herein given as a matter of
law. Any deductible amounts are the responsibility of Lessee.
Lessee shall immediately notify its insurance carrier in
writing, with a copy to the Company, of all third party
lawsuits, or claims, that involve the Leased Premises and/or
operations thereon.
Should Lessee, for any reason, not procure and
maintain insurance coverage as required by this
21
<PAGE>
Lease, the Company shall have the right and authority
(without, however, any obligation to do so) immediately to
procure such insurance coverage and to charge same to Lessee,
which charges, together with a reasonable fee for expenses
incurred by the Company in connection with such procurement,
shall be payable by Lessee immediately upon notice.
14. TERMINATION.
(a) The Company may terminate or not renew this Lease by
written notice to Lessee, upon the occurrence of any of
the following:
(i) Lessee's failure to comply with any
provision of this Lease, the Fleet
Marketing Throughput Agreement, if
applicable, the Franchise Agreement or
any other agreement between the parties,
which provision is reasonable and of
material significance to the Franchise
Relationship between the Company and
Lessee. The Company is not required to
give Lessee an opportunity to remedy any
such failure prior to termination or not
renewing this Lease; or
(ii) Lessee's failure to exert good faith efforts to
carry out the terms and conditions of this Lease,
the Franchise Agreement, the Fleet Marketing
Throughput Agreement, if applicable, or any other
agreement between the parties. Prior to
terminating or not renewing this Lease under the
provisions of this subsection (ii), the Company
shall advise the Lessee in writing of such failure
and give Lessee a reasonable opportunity to remedy
it; or
(iii) The happening of any one or more of the following
listed events, defined in the Petroleum Marketing
Practices Act, as amended (including any similar
successor legislation, the "PMPA"), as an event
relevant to the Franchise Relationship or the
happening of any other event which is relevant to
the Franchise Relationship, including, but not
limited to, the following: (The Company is not
22
<PAGE>
required to give Lessee an opportunity to remedy any
such happening prior to terminating or not renewing this
Lease.)
(A) Lessee's fraud or criminal mis conduct in
the operation of the Leased Premises.
(B) Declaration of bankruptcy or judicial
determination of insolvency of Lessee.
(C) If Lessee is an individual, the
death of or the continuing severe
physical or mental disability of
Lessee of at least three (3)
months' duration, which renders
Lessee unable to provide for the
continued proper operation of the
Leased Premises.
(D) The loss of the Company's right to
grant possession under this Lease
through expiration of any under
lying lease, if Lessee was notified
in writing, prior to the commence
ment of the term of this Lease, of
the duration of the underlying
lease and of the fact that such
underlying lease might expire and
not be renewed during the term of
this Lease or at the end of this
Lease.
(E) The condemnation or other taking,
in whole or in part, of the Leased
Premises under the power of eminent
domain. The condemnation award
paid to the Company, or the payment
received by the Company in exchange
for its voluntary conveyance in
lieu of condemnation, shall belong
solely to the Company, and Lessee
shall not, by virtue of this Lease,
be entitled to any part thereof;
PROVIDED, HOWEVER, that nothing in
this Lease shall preclude Lessee
from prosecuting any claim directly
against the condemning authority
for loss of business, or deprecia
tion to, damage to, or cost of,
23
<PAGE>
removal of, or for the value of stock,
inventory and other personal property of
Lessee; and FURTHER PROVIDED, HOWEVER, that
no such claim shall diminish or otherwise
adversely affect the Company's award or
proceeds.
(F) The Company's loss of the right to
grant Lessee the use of any Mark,
unless the loss is due to the
Company's trademark abuse, viola
tion of federal or state law, or
other fault or negligence of the
Company related to bad faith action
by the Company.
(G) The destruction, other than by the Company,
of all or substantially all of the Leased
Premises.
(H) Lessee's failure to pay the Company in a
timely manner, when due, all sums to which
the Company is legally entitled.
(I) Lessee's failure to operate the Leased
Premises for seven (7) consecutive days, or
shorter period of time which, under the
facts and circumstances, is an unreasonable
period of time.
(J) Lessee's willful adulteration, mislabeling
or misbranding of Motor Fuel sold at the
Leased Premises, or other trademark, trade
name, service mark, or other identifying
symbol or name violations.
(K) Lessee's knowing failure to comply with
federal, state or local laws or regulations
that are relevant to the operation of the
Leased Premises.
(L) Lessee's conviction of any felony
involving moral turpitude; or
(iv) The Company's good faith determination, made in
the normal course of business,
24
<PAGE>
to withdraw from the marketing of Motor Fuel through
retail outlets in the state or geographic area in which
the Leased Premises is located if:
(A) The term of this Lease is three (3) years or
longer or Lessee was offered a term of three
(3) years or longer and elected to accept a
lesser term; and
(B) The Company's determination to
withdraw was made after the
effective date of this Lease; and
(C) The Company's determination to withdraw was
made as a result of a change of relevant
facts and circumstances.
(b) In addition to the rights of termination or nonrenewal
by the Company set forth in subsections (i), (ii), (iii)
and (iv) above, the Company may decline to renew this
Lease:
(i) If the Company and Lessee fail to agree to changes
or additions to this Lease made by the Company in
good faith and in the normal course of business,
and the Company does not insist on such changes or
additions being made for the purpose of preventing
the renewal of this Lease.
(ii) If the Company receives numerous bona fide
complaints concerning Lessee's operation of the
Leased Premises and the Company promptly notifies
Lessee of each complaint and the reason it was com
municated to the Company, and as to those
complaints relating to the con dition of the
Leased Premises or the conduct of any employee of
Lessee, Lessee does not take prompt action to cure
or correct the basis for such complaints. The
Company will com municate these complaints to
Lessee in writing using the Company's Customer
Complaint Form ("Customer Complaint Form"). A
written statement from Lessee as to the outcome is
required by the Company.
25
<PAGE>
(iii) If Lessee fails on at least three (3) occasions
during the term of this Lease, to operate the
Leased Premises in a clean, safe and healthful
condition and the Company notified Lessee of each
such failure.
(iv) The Company makes a good faith determination in
the normal course of business not to renew this
Lease because such renewal would be uneconomical
to the Company, despite any changes or additions
to the provisions of this Lease that may be
acceptable to Lessee; PROVIDED, HOWEVER, that such
nonrenewal is not made for the purpose of
converting the Leased Premises to operation by
employees or agents of the Company for the
Company's own account.
(c) The Company may also decline to renew this Lease if the
Company makes a good faith determination, in the normal
course of business, to:
(i) Convert the Leased Premises to a use other than
for the operation of an Auto/ Truckstop; or
(ii) Materially alter, add to or replace the Leased
Premises if such alteration, addition or
replacement is not made for the purpose of
converting the Leased Premises to operation by
employees or agents of the Company for the
Company's own account; or
(iii) Sell the Leased Premises.
(d) Nonrenewal under subsection (b)(iv) above or
nonrenewal under subsection (c) shall not be
effective unless (i) the term of this Lease
is for three (3) years or longer, or Lessee
was offered a term of three years or longer
and elected to accept a shorter term, and
(ii) within the 90 day period following
notice of nonrenewal, the Company makes a
bona fide offer to sell, transfer or assign
its interest in the Leased Premises to
Lessee, or if applicable, grants Lessee a 45
day preferential right to meet the bona fide
26
<PAGE>
offer of another Person to purchase the
Company's interest in the Leased Premises.
(e) The Company's written notice of termination
or nonrenewal shall include a statement that
this Lease is being terminated or not renewed
and shall set forth the reason or reasons for
termination or nonrenewal. The effective
date of the termination or nonrenewal shall
be at least 90 days after the date of notice
of termination or nonrenewal, unless a 90 day
notice would not be reasonable as set forth
in subparagraph 14(f) below. The Company
shall include with the notice a copy of the
Summary of Title I of the PMPA, prepared by
the Office of the Secretary of Energy and
published August 30, 1978, in Volume 43, No.
169 of the Federal Register (the "PMPA
Summary").
(f) Although at least 90 days written notice of
termination or nonrenewal is provided for in
most circumstances, there may be times when
the giving of a 90 day notice is not
reasonable. If such a circumstance occurs
with regard to an event set forth in
subsection (a), (b) or (c) above, the Company
may terminate or not renew this Lease by
giving Lessee written notice of termination
or nonrenewal on the earliest date that is
reasonably practical.
(g) Nothing in this Lease shall prohibit or restrict the
Company from terminating or not renewing this Lease in
any lawful manner under applicable federal, state and
local laws or regulations, including, but not limited to
the PMPA, as such laws or regulations may be amended
from time to time.
15. MUTUAL TERMINATION. Lessee and the Company may agree in writing
to terminate or not renew this Lease. The effective date of such termination or
nonrenewal shall be the date agreed to by Lessee and the Company but may not be
a date that is more than 180 days after the date of such agreement. The Company
shall send by certified mail, or personally deliver to Lessee, a copy of (i) the
agreement promptly after it is signed by the Company and Lessee and (ii) the
PMPA Summary. Lessee may repudiate such agreement by written notice to the
Company, sent by certified mail, postmarked not more than seven (7) days
following the date Lessee receives a copy of such agreement.
27
<PAGE>
16. TERMINATION BY LESSEE. Lessee may terminate this Lease at any
time by 180 days' advance written notice to the Company, posted by certified
mail, but only if Lessee simul taneously terminates the Franchise Agreement in
accordance with the terms of the Francise Agreement. Upon receipt of such notice
by the Company, it may not be withdrawn by Lessee without the Company's written
approval.
17. CONDEMNATION. [INTENTIONALLY OMITTED.]
18. DEATH OR INCAPACITY OF LESSEE.
(a) In the event of the death or incapacity of an
individual Lessee, or any partner of a Lessee
which is a partnership or any stockholder
owning fifty percent (50%) or more of the
capital stock of a Lessee which is a corpora
tion, the heirs, beneficiaries, devisees, or
legal representatives of said individual,
partner or stockholders shall notify the
Company within fifteen (15) days of death or
incapacity, and, within one hundred eighty
(180) days of such event:
(i) Apply to the Company for the right to continue to
operate the Franchised Business for the duration
of the term of this Lease, which right shall be
granted upon the fulfillment of all of the
conditions set forth in subpara graph 10(b) of
this Lease; or
(ii) Sell, assign, transfer, or convey
Lessee's interest in compliance with the
provisions of subparagraph 10(b) of this
Lease; PROVIDED, HOWEVER, in the event a
proper and timely application for the
right to continue to operate has been
made and rejected, the one hundred eight
(180) days to sell, assign, transfer or
convey shall be computed from the date
of said rejection. For purposes of this
Paragraph, the Company's silence on an
application made pursuant to subpara
graph 10(b) through the one hundred and
eighty (180) days following the event of
death or incapacity shall be deemed a
rejection made on the last day of such
period.
28
<PAGE>
(b) In the event of the death or incapacity of an
individual Lessee, or any partner or stock
holder of a Lessee which is a partnership or
corporation, where the aforesaid provisions
of Paragraph 10 have not been fulfilled
within the time provided, all rights licensed
to Lessee under this Lease and Lessee's
leasehold interest in the Leased Premises
under this Lease shall, at the option of the
Company, terminate forthwith.
19. BANKRUPTCY. If Lessee files a petition in bank ruptcy or for
reorganization, is adjudicated a bankrupt, makes an assignment for the benefit
of creditors, or a receiver or trustee of the property of Lessee is appointed in
any proceeding brought by or against Lessee, and if such receiver or trustee is
not discharged within 60 days after such appointment, or if this Lease is
attached or executed upon and within or for 60 days thereafter such attachment
has not been released or such execu tion has not been satisfied or such person
or persons remain in possession, the Company may terminate this Lease.
20. TAXES AND ASSESSMENTS. The Company shall pay all taxes and
assessments levied against the Leased Premises. Lessee shall pay all taxes on
the products, property, and improvements of the Lessee on the Leased Premises.
Lessee shall be exclusively liable for the payment of any and all premiums,
contributions, and taxes for Workers' Compensation Insurance, Unemployment
Insurance, old Age Benefits, annuities, and retirement benefits now or hereafter
imposed by or pursuant to any governmental law or regulation which are measured
by the wages, salaries, or remuneration paid by Lessee to his employees and
representatives.
21. INDEPENDENT CONTRACTOR. Lessee is an independent contractor
hereunder. It is agreed that none of the provisions of this Lease reserves or
shall be construed as reserving to the Company any right to exercise control
over the business operations of Lessee upon the Leased Premises or to direct in
any respect the manner in which such business and operations shall be conducted
(including the price at which products and merchandise are to be sold), it being
understood and agreed that except as set forth to the contrary in the Franchise
Agreement, the entire control and direction of such activities shall be and
remain with Lessee. Lessee shall have no authority to employ any persons as
employees or agents for or on behalf of the Company for any purpose, and neither
Lessee nor any other persons performing any duties or engaging in any work at
the request of Lessee shall be deemed to be the employees or agents of the
Company. Lessee will not erect nor permit any sign, insignia, or other
advertising device upon or near the Leased Premises which would in any way
29
<PAGE>
indicate or imply that the Company is the owner or operator of the business
being conducted thereon by Lessee.
22. CREDIT CARD SALES. [INTENTIONALLY OMITTED.]
23. SURRENDER OF PREMISES. At the expiration or termination of this
Lease, Lessee shall yield immediate and peaceable possession of the Leased
Premises to the Company and shall, at such time, return the keys to all locks;
said Leased Premises to be surrendered to the Company in as good condition as
when received, except for reasonable wear and tear and damage or destruction not
caused by Lessee or Lessee's employees', agents', or contractors' negligent or
willful acts or omissions.
Upon the termination or nonrenewal of this Lease, (unless state law
provides to the contrary) neither the Company nor any incoming Lessee shall be
obligated to purchase any of Lessee's inventory, tools, equipment, or supplies;
provided, however, that the Company, at its option, may purchase any of such
inventory, tools, equipment, or supplies which are not obsolete and are in a
current and saleable condition which Lessee purchased from the Company, for the
reasonable value thereof, but not to exceed the cost to Lessee, and credit the
amount thereof against any sums due the Company by Lessee. With respect to
property items owned by Lessee and not purchased by the Company, and
improvements, alterations, decorations, or additions', structural or otherwise,
made by Lessee, Lessee agrees to remove same immediately from the Leased
Premises prior to the end of the Lease and repair any and all damage to the
Leased Premises caused or occasioned by such removal. Any property not removed
by Lessee may be removed and the Leased Premises restored by the Company at
Lessee's expense. Any property not removed by either party shall become the
property of the Company and no compensation will be due Lessee therefore.
24. INSPECTION OF LEASED PREMISES. The Company has the right to
enter and inspect the Leased Premises at any reasonable time with such employees
and equipment as it considers necessary to (a) determine if the obligations of
Lessee under this Lease are being fulfilled, (b) perform replacements required
of the Company under this Lease pursuant to Exhibit C and/or (c) conduct a Five
Star Appearance inspection. Lessee agrees to cooperate with the Company in
connection with the Company's activities pursuant to clauses (a), (b) and (c) of
the immedi ately preceding sentence, such cooperation to include making
employees and the Manager available at reasonable times for discussion with the
Company's employees and representatives.
30
<PAGE>
25. AMENDMENTS; WAIVERS; REMEDIES.
(a) Any provision of this Lease may be amended or waived if,
and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Lessee and the
Company, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by either party of any default,
misrepresentation or breach of warranty or
covenant hereunder, whether intentional or
not, shall be deemed to extend to any prior
or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or
affect in any way any rights arising by
virtue of any prior or subsequent occurrence.
No single or partial exercise by either party
in exercising any right, power or privilege
hereunder shall preclude any other or further
exercise thereof or the exercise of any other
right, power or privilege. The rights and
remedies herein provided shall be cumulative
and not exclusive of any right or remedies
provided by law.
26. SUCCESSORS AND ASSIGNS. This Lease shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
27. ARBITRATION.
(a) Any monetary claim of less than ONE HUNDRED THOUSAND
Dollars ($100,000.00) in dispute arising out of or relating to this Lease, or
any breach thereof, shall be submitted to arbitration before a single arbitrator
in the county and state where the Company's principal place of business is
located at the time such action is brought forth in accordance with the rules of
the American Arbitration Association and judgment upon the award may be entered
in any court having jurisdiction thereof. The arbitrator is explicitly
authorized to award attorney's fees as part of his or her award. Nothing
contained herein shall, however, be construed to limit or to preclude the
Company from bringing any action in any court of competent jurisdiction for
injunctive or other provisional relief as the Company deems to be necessary or
appropriate to compel Lessee to comply with its obligations hereunder to or
protect the Company's Marks or other property rights of the Company. In
addition, nothing contained herein shall be construed to limit or to preclude
the Company from joining with any action for injunctive or provisional relief
all monetary claims that the Company may have against Lessee
31
<PAGE>
which arise out of the acts or omissions to act giving rise to the action for
injunctive or provisional relief. This arbitration provision shall be deemed to
be self-executing and in the event that Lessee fails to appear at any properly
noticed arbitration proceeding, award may be entered against Lessee
notwithstanding its failure to appear.
(b) Nothing herein contained shall bar the right of either
party to seek and obtain temporary injunctive relief from a court of competent
jurisdiction in accordance with applicable law against threatened conduct that
will cause loss or damage, pending completion of the arbitration.
(c) It is the intent of the parties that any arbitration
between the Company and Lessee shall be of Lessee's individual claim and that
the claim subject to arbitration shall not be arbitrated on a classwide basis.
28. GOVERNING LAW. This Lease shall be construed in
accordance with and governed by the laws of the State in which
the Leased Premises is located.
29. COUNTERPARTS; EFFECTIVENESS. This Lease may be signed in any
number of counterparts, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Lease shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
30. ENTIRE AGREEMENT. This Lease, together with the Franchise
Agreement, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements, understandings
and negotiations, both written and oral, between the parties with respect to the
subject matter of this Lease. Neither this Lease nor any provision hereof is
intended to confer upon any person or entity other than the parties hereto any
rights or remedies hereunder, except the rights given to the Indemnified Parties
in Paragraph 13.
31. JURISDICTION. Each of the parties hereto
irrevocably submits to the jurisdiction of any state or federal
court sitting in the county and state in which the Leased
Premises is located, in any action or proceeding arising out of
or relating to this Lease, agrees that all claims in respect of
the action or proceeding may be heard and determined in any such
court, and agrees not to bring any action or proceeding arising
out of or relating to this Lease in any other court or to contest
the jurisdiction (in rem or in personam) or power or decision of
such court over or pertaining to the party or with respect to the
subject matter in any other court within or without the United
States other than appropriate appellate courts. Each of the
32
<PAGE>
parties hereto irrevocably waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety
or other security that might be required of the other party hereto with respect
thereto.
32. CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the
construction or interpretation hereof.
33. SEVERABILITY. If any provision of this Lease, or the application
thereof to any Person, place or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Lease and such provisions as applied to other Persons, places and
circumstances shall remain in full force and effect only if, after excluding the
portion deemed to be unenforceable, the remaining terms shall provide for the
consummation of the transactions contemplated hereby in substantially the same
manner as originally set forth at the later of the date this Lease was executed
or last amended.
34. CONSTRUCTION. Whenever required by the context,
any gender shall include any other gender, the singular shall
include the plural and the plural shall include the singular.
35. INCONSISTENCY. In the event of any conflict between the terms
and provisions of this Lease and the terms and provisions of the Franchise
Agreement or the Fleet Marketing Throughput Agreement, if applicable, the terms
and provisions of the Franchise Agreement or the Fleet Marketing Throughput
Agreement, as the case may be, shall govern and control.
36. NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two business days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by telex or telecopier, once such notice or other communication
is transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter mailed in accordance
with the provisions of clause (ii) above or (iv) if sent through a reputable
overnight delivery service in circum stances to which such service guarantees
next day delivery, the day following being so sent:
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<PAGE>
If to the Company,to: National Auto/Truckstops, Inc.
1650 East Golf Road
Schaumburg, Illinois 60196-1088
C. William Osborne
Telex:
Telecopy: (708) 330-5710
If to Lessee, to:
--------------------------------------
Attention:
---------------------------
Telex:
--------------------------------
Telecopy:
-----------------------------
Either party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it is
actually received by the individual for whom it is intended. Either party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
37. APPROVALS.
(a) Whenever this Lease requires the prior approval or consent
of the Company, Lessee shall make a timely written request to the Company
therefor, and, except as otherwise provided herein, any approval or consent
granted must be in writing to be binding upon the Company.
(b) The Company makes no warranties or guarantees upon which
Lessee may rely and assumes no liability or obligation to Lessee or any third
party to which it would not otherwise be subject, by providing any waiver,
approval, advice, consent or services to the Company in connection with this
Lease, or by reason of any neglect, delay or denial of any request therefor.
38. FORCE MAJEURE. The period of time during which either party
hereto is prevented or delayed in the performance or fulfilling any obligation,
other than payment of the Fixed Rent Amount (as defined in Exhibit B),
additional rent or any other fees or sums and charges due hereunder, due to
unavoidable delays caused by Acts of God, earthquake, fire, flood, or the
elements, malicious mischief, riots, strikes, lockouts, boycotts, picketing,
labor disputes or disturbance, war, compliance with any directive, order or
regulation of any governmental authority or representative thereof acting under
claim or color of
34
<PAGE>
authority, or for any reason beyond such party's reasonable control, whether or
not similar to the foregoing, shall be added to such party's time for
performance thereof, and such party shall have no liability by reason thereof.
39. SUBORDINATION AND NON-DISTURBANCE.
(a) This Lease shall be subordinate to each and every
underlying lease, deed of trust or mortgage encumbering the Leased Premises or
any portion thereof, whether now existing or in the future, and to any advances
made on the security thereof and to any renewals, modifications, consolidations,
replacements or extensions thereof, whenever made or recorded. The Company
covenants that Lessee's right to quiet possession of the Leased Premises during
the term hereof shall not be disturbed if Lessee pays the rent and performs all
of Lessee's obligations under this Lease and is not otherwise in default. The
Company shall use commercially reasonable efforts to obtain a non-disturbance
agreement embodying the provisions of the immediately preceding sentence from
all current and future holders of mortgages or deeds of trust affecting the
Leased Premises (hereinafter collectively referred to as the "Mortgagees");
provided, however, that the Company shall not be required to pay any sum
demanded by any Mortgagee as consideration for any such non-disturbance
agreement. If any ground lessor, beneficiary or mortgagee elects to have this
Lease prior to the lien of its ground lease, deed of trust or mortgage and gives
written notice thereof to Lessee, this Lease shall automatically be deemed prior
to such ground lease, deed of trust or mortgage whether this Lease is dated
prior or subsequent to the date of said ground lease, deed of trust or mortgage
or the date of recording thereof.
(b) If the Company's interest in the Leased Premises is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Lessee shall attorn to the transferee of or
successor to the Company's interest in the Leased Premises and recognize such
transferee or successor as the Company under this Lease. Lessee waives the
protection of any statute or rule of law which gives or purports to give Lessee
any right to terminate this Lease or surrender possession of the Leased Premises
upon the transfer of the Company's interest. The Company shall not assert any
claim against Lessee for any sums due under this Lease paid by Lessee to a third
party after receipt by Lessee of notice in writing from the Company directing
Lessee to pay any such sums to such third party, and before Lessee receives
notice from the Company revoking such direction.
(c) Lessee shall sign and deliver any instrument or documents
necessary or appropriate to evidence any such attornment or subordination or
agreement to do so, provided that
35
<PAGE>
such instruments or documents are consistent with the provisions of the
immediately preceding subparagraphs (a) and (b). If Lessee fails to do so within
twenty (20) days after written request, Lessee hereby makes, constitutes and
irrevocably appoints the Company, or any transferee or successor of the Company,
the attorney-in-fact, coupled with an interest, of Lessee to execute and deliver
any such instrument or document.
40. EXISTING CONDITION OF PREMISES. Lessee acknowledges that the
Leased Premises are and have been subject to active use by an operating business
and have experienced normal wear and tear as a result thereof. Lessee has had
reasonable opportunity to inspect, and has inspected, the Leased Premises and
accepts the Leased Premises in its present condition as of the date hereof. The
Company has no obligation to perform any work or make any alterations, additions
or improvements in order to prepare the Leased Premises for Lessee's occupancy.
Lessee acknowledges that neither the Company nor any agent of the Company has
made any representation as to the condition of the Leased Premises or its
suitability for Lessee's intended use.
41. COST OF ENFORCEMENT OR DEFENSE. If a claim for amounts owed by
Lessee to the Company is asserted in any legal proceeding before a court of
competent jurisdiction, or if the Company or Lessee is required to enforce this
Lease in a judicial proceeding, the prevailing party shall be entitled to
reimbursement of its costs, including reasonable accounting and legal fees, in
connection with such proceeding.
42. INJUNCTIVE RELIEF. Lessee shall have the right to obtain
injunctive relief against threatened or actual conduct by Lessee that will cause
the Company loss or damages, for Lessee's misuse or unauthorized use of the
Leased Premises, for Lessee's threatened actual violation of the provisions of
this Lease governing Confidential Information. Such injunctive relief shall be
governed under the usual equity rules, including the applicable rules for
obtaining restraining orders and preliminary injunctions.
43. LINE OF CREDIT. In order to guaranty the performance of the
monetary obligations to the Company pursuant to this Lease, Lessee shall
establish a line of credit with the Company's Credit Department in an amount
determined by the Company Credit Department. In the event that Lessee fails to
pay any amounts due pursuant to this Lease, the Company may refuse to extend
credit to Lessee if Lessee fails to meet the terms of credit.
44. CAVEAT. The success of the business venture
contemplated to be undertaken by Lessee by virtue of this Lease
is speculative and depends, to a large extent, upon the ability
36
<PAGE>
of Lessee as an independent business entity, and its active participation in the
daily affairs of the business as well as other factors. Franchisor does not make
any representation or warranty express or implied as to the potential success of
the business venture in this Lease.
45. ACKNOWLEDGEMENTS.
(a) Lessee represents and acknowledges that it has received,
read and understood this Lease; and that the Company has fully and adequately
explained the provisions herein to Lessee's satisfaction; and that the Company
has accorded Lessee ample time and opportunity to consult with advisors of its
own choosing about the potential benefits and risks of entering into this Lease.
(b) Lessee acknowledges that its has received a copy of this
Lease and the attachments thereto, at lease five (5) business days prior to the
date on which this Lease was executed. Lessee further acknowledges that Lessee
has received the disclosure document required by the Trade Regulation Rule of
the Federal Trade Commission entitled Disclosure Requirements and Prohibitions
Concerning Franchising and Business Opportunity Ventures, at least ten (10)
business days prior to the date on which this Lease was executed.
(c) Lessee has been advised to consult with its own advisors
with respect to the legal, financial and other aspects of this Lease, the
business franchised hereby, and the prospects for that business. Lessee has
either consulted with such advisors or has deliberately declined to do so.
(d) Lessee affairs that all information set forth in any and
all applications, financial statements and submissions to the Company is true,
complete and accurate in all respects, with Lessee expressly acknowledging that
the Company is relying upon the truthfulness, completeness and accuracy of such
information.
(e) Lessee has conducted an independent investigation of the
business contemplated by this Lease and recognizes that, like any other
business, an investment in a Franchised Business and the Leased Premises
involves business risks and that the success of the venture is primarily
dependent upon the business abilities and efforts of the Lessee.
(f) LESSEE UNDERSTANDS AND ACKNOWLEDGES THAT ALL
REPRESENTATIONS OF FACT MADE BY THE COMPANY HEREIN ARE MADE
SOLELY BY THE COMPANY. ALL DOCUMENTS, INCLUDING THE COMPANY'S
FRANCHISE AGREEMENT AND THIS LEASE, HAVE BEEN PREPARED SOLELY IN
RELIANCE UPON REPRESENTATIONS MADE AND INFORMATION PROVIDED BY
37
<PAGE>
THE COMPANY, ITS OFFICERS AND ITS DIRECTORS. LESSEE FURTHER AGREES THAT IT HAS
NO CLAIM AGAINST, AND WILL INDEMNIFY AND HOLD HARMLESS, THE PREPARER OF ANY AND
ALL SUCH FRANCHISE AGREEMENTS, LEASES AND OFFERING CIRCULARS AND EXHIBITS
THERETO, WITH RESPECT TO ANY AND ALL LOSS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES), DAMAGES AND LIABILITIES RESULTING FROM ANY REPRESENTATIONS AND/OR CLAIMS
MADE BY THE COMPANY IN SUCH DOCUMENTS.
NATIONAL AUTO/TRUCKSTOPS, INC.[LESSEE]
By: By:
-------------------------- -----------------------------
Name: Name:
Title: Title:
38
<PAGE>
INDEX TO AUTO/TRUCKSTOP LEASE PARAGRAPHS AND EXHIBITS
SUBJECT PAGE
1. PROPERTY............................................................ 2
2. TERM................................................................ 2
3. RENT................................................................ 3
4. RECORDS AND AUDIT................................................... 4
5. SERVICES AND USES................................................... 4
6. PROHIBITED USES..................................................... 8
7. OPERATING EXPENSES.................................................. 9
8. ALTERATIONS........................................................ 10
9. MAINTENANCE AND REPAIRS............................................. 10
10. TRANSFERABILITY OF INTEREST........................................ 11
11. UNDERLYING LEASE.................................................... 13
12. OPERATION BY LESSEE................................................ 13
13. INDEMNITY AND INSURANCE............................................ 14
14. TERMINATION........................................................ 22
15. MUTUAL TERMINATION................................................. 27
16. TERMINATION BY LESSEE.............................................. 28
17. CONDEMNATION....................................................... 28
18. DEATH OR INCAPACITY OF LESSEE...................................... 28
19. BANKRUPTCY......................................................... 29
20. TAXES AND ASSESSMENTS.............................................. 29
21. INDEPENDENT CONTRACTOR............................................. 29
22. CREDIT CARD SALES.................................................. 30
23. SURRENDER OF PREMISES.............................................. 30
24. INSPECTION OF LEASED PREMISES...................................... 30
25. AMENDMENTS; WAIVERS; REMEDIES...................................... 31
26. SUCCESSORS AND ASSIGNS............................................. 31
27. ARBITRATION........................................................ 31
28. GOVERNING LAW...................................................... 32
29. COUNTERPARTS; EFFECTIVENESS........................................ 32
30. ENTIRE AGREEMENT................................................... 32
31. JURISDICTION....................................................... 32
32. CAPTIONS........................................................... 33
33. SEVERABILITY....................................................... 33
34. CONSTRUCTION....................................................... 33
35. INCONSISTENCY...................................................... 33
36. NOTICES............................................................ 33
37. APPROVALS.......................................................... 34
38. FORCE MAJEURE...................................................... 34
39. SUBORDINATION AND NON-DISTURBANCE.................................. 35
40. EXISTING CONDITIONS OF PREMISES.................................... 36
41. COST OF ENFORCEMENT OR DEFENSE..................................... 36
42. INJUNCTIVE RELIEF.................................................. 36
43. LINE OF CREDIT..................................................... 36
44. CAVEAT............................................................. 36
45. ACKNOWLEDGEMENTS................................................... 37
1
<PAGE>
EXHIBIT A-I DESCRIPTION OF REAL PROPERTY
EXHIBIT A-II BUILDINGS, IMPROVEMENTS, FIXTURES
AND EQUIPMENT
EXHIBIT B RENTAL SCHEDULE
EXHIBIT C AUTO/TRUCKSTOP AND TRUCKSTOP MAINTENANCE
RESPONSIBILITY FORM
2
<PAGE>
EXHIBIT A-I
DESCRIPTION OF REAL PROPERTY
[To be inserted.]
1
<PAGE>
EXHIBIT A-II
BUILDINGS, IMPROVEMENTS, FIXTURES AND EQUIPMENT
[To be inserted.]
1
<PAGE>
EXHIBIT B
RENTAL SCHEDULE
Lessee shall pay the Company as rental for the Leased Premises during the term
of this Lease the following:
The "Fixed Rent Amount", as defined below, payable monthly on or before
the 10th day of each calendar month during the term of this Lease;
provided, however, that if the term of this Lease begins and/or ends on a
day other than the first or last day of a calendar month, the applicable
payment of the Fixed Rent Amount shall be appropriately prorated; and
provided further, however, that the Fixed Rent Amount with respect to the
first full or partial calendar month of the term of this Lease is payable
upon execution of this Lease.
As used herein, the Fixed Rent Amount shall be equal to the sum of
$ (the "Base Rent Amount") and $ ; provided, however,
---------- ----------
that the Base Rent Amount shall, as of the month of of each
-----------
calendar year, permanently increase by the percentage, if any, by which
the Deflator (as hereafter defined) for the quarter of such
--------
calendar year shall have increased over the Deflator for the
--------
quarter of the immediately preceding calendar year. Written notice of the
resulting increased Fixed Rent Amount to be paid by Lessee will be sent to
Lessee by the Company. As used herein, the "Deflator" shall mean the
Implicit Price Deflator for the Gross National Product (1982=100),
published by the U.S. Department of Commerce or, should such measurement
no longer be published or available, an appropriately adjusted successor
or substitute deflator.
Rentals shall be paid by Lessee by either (a) electronic fund transfer of
funds to an account maintained by the Company (such electronic fund
transfer may, but is not required to, use the ACCESS 76 System) or (b)
mailing or delivering the same to the Company at:
National Auto/Truckstops, Inc.
1650 East Gold Road
Schaumburg, Illinois 60196-1088
Attn: C. William Osborne
Any rental not paid when due shall bear interest from the due date until
paid at the rate of eighteen percent (18%) per annum, or the highest rate
allowed by law, whichever is less.
1
<PAGE>
On or before the 10th day of each calendar month during the term of this Lease
(other than the first full or partial calendar month), the Company shall pay to
Lessee an amount equal to the sum of (a) 9% of the Fixed Rent Amount that was
due and payable and actually paid by Lessee in the immediately prior calendar
month and (b) the product derived by multiplying (x) 3(cent) by (y) the sum of
(A) the number of gallons of diesel fuel, if any, purchased by Lessee from the
Company during the immediately prior calendar month and (B) the number of
gallons of diesel fuel, if any, pumped by Lessee and delivered to Fleet Accounts
in return for a per gallon service fee pursuant to the Fleet Marketing
Throughput Agreement, if applicable, during the immediately prior calendar
month.
2
<PAGE>
EXHIBIT C
AUTO/TRUCKSTOP AND TRUCKSTOP
MAINTENANCE RESPONSIBILITY FORM
FEE OWNED SINGLE LEASE
- --------------------------------------------------------------------------------
DEFINITIONS AND RESPONSIBILITIES
- --------------------------------------------------------------------------------
CLEANING
Cleaning shall mean all material, labor, and equipment required to keep
all dirt, dust grease, trash, and foreign material from the identified item in
accordance with minimum maintenance standards. The methods and cleaning material
are furnished by Lessee at his discretion. Lessee is responsible for the damage
to any material or equipment caused by improper cleaning methods, materials, or
by the omission of proper cleaning.
MAINTENANCE
Maintenance shall mean operating and preventive maintenance and/or repair
or replacement of component parts required to keep equipment and material in
good operating condition, in accordance with the manufacturer's recommendations
and minimum maintenance standards. Equipment and material shall be properly
maintained in order that it may attain its expected life before replacement is
required.
It is not practical to list each component part of all equipment and
material and each maintenance responsibility of Lessee; therefore, in addition
to the maintenance responsibili ties set forth in this Exhibit C, Lessee's
operating and preven tive maintenance responsibility shall also include, but not
be limited to, oiling and greasing of equipment, adjustment of pressure and
temperature settings, filter replacement, oil changing and other similar routine
maintenance operations established by manufacturer's standards or minimum
maintenance standards, or by guidelines published by the Company with at least
30 days' prior written notice thereof to Lessee.
Lessee is also responsible for routine repairs and replacement of
component parts that are relatively minor as compared to the replacement of an
entire piece of equipment or material. These include, but are not limited to,
pump couplings, pump impellers, motor capacitors, belts, belt guards,
thermostats, thermocouples, individual circuit breakers, door
1
<PAGE>
closer parts, relay switches, pressure relief valves, gate valves, and similar
types of parts and the labor required to install such parts.
REPLACEMENT
Replacement shall mean the physical replacement of equipment or material
due to normal wear and/or abuse or neglect. The anticipated life of equipment or
material shall be determined by combining manufacturer's information, usage of
the item and experience comparison with similar equipment or material.
If premature replacement of any equipment or material is required due to
Lessee's abuse or neglect, Lessee shall make the replacement at his expense,
regardless of the designated replace ment responsibility set forth in this
Exhibit C. Equipment or material replaced by Lessee shall be with like type of
equipment or material, to the extent practicable.
The Company may, at its sole election, replace equipment or material with
like or different equipment or material.
The Company may replace or rebuild a major component part of a unit of
equipment or material in lieu of replacing the entire unit of equipment or
material. Such replacement or rebuilding shall be the Company's responsibility.
As a general rule, a major component part shall be repaired or replaced if the
estimated cost versus replacement cost of the entire unit is not more than 50%
of such replacement cost; however the Company shall have the sole right to elect
to replace or rebuild a component part or replace the equipment or material.
The Leased Premises may not include all the buildings, improvements,
fixtures, equipment and machinery listed on this Exhibit "C"; therefore, the
cleaning, replacement and maintenance obligations of the Company and Lessee are
applicable only to the buildings, improvements, fixtures, equipment and
machinery located on the Leased Premises as of the effective date of this lease,
and the buildings, improvements, fixtures, equipment and machinery, if any,
placed on the Leased Premises by the Company during the term of this Lease. The
cleaning, maintenance and replacement of buildings, improvements, fixtures,
equipment and machinery, placed on the Leased Premises by Lessee, is the
obligation of Lessee.
--------------------------------------
Lessee Initial
2
EXHIBIT 12
TRAVELCENTERS OF AMERICA, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
OPERATING
PERIOD ENDED
DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------
1993 1994 1995 1996
------------------------------------------
(DOLLARS IN THOUSANDS)
HISTORICAL DATA:
<S> <C> <C> <C> <C>
Income before income taxes ............. $12,664 $16,253 $16,540 $ 8,882
Fixed charges:
Interest expense ..................... 9,395 13,918 14,190 15,965
Portion of rentals representative of
interest factor(1) ................. 99 199 225 1,152
Amortization of debt discount ........ 91 128 128 148
------- ------- ------- -------
Total fixed charges ................ 9,585 14,245 14,543 17,265
------- ------- ------- -------
Earnings before income taxes and
fixed charges ........................ $22,249 $30,498 $31,083 $26,147
Ratio of earnings to fixed charges ..... 2.3x 2.1x 2.1x 1.5x
SUPPLEMENTAL HISTORICAL DATA:(2)
Income before income taxes ............. $12,432 $22,710 $16,540 $ 8,882
Fixed charges:
Interest expense ..................... 9,836 22,041 22,674 22,072
Portion of rentals representative of
interest factor(1) ................. 99 1,107 1,033 1,152
Amortization of debt discount ........ 91 209 209 209
------- ------- ------- -------
Total fixed charges ................ 10,026 23,357 23,916 23,433
------- ------- ------- -------
Earnings before income taxes and
fixed charges ........................ $22,458 $46,067 $40,456 $32,315
Ratio of earnings to fixed charges ..... 2.2x 2.0x 1.7x 1.4x
PRO FORMA DATA:(3)
Income before income taxes ............. $ 6,287
Fixed charges:
Interest expense ..................... 27,161
Portion of rentals representative of
interest factor(1) ................. 1,152
Amortization of debt discount ........ --
-------
Total fixed charges ................ 28,313
-------
Earnings before income taxes and
fixed charges ........................ $34,600
=======
Ratio of earnings to fixed charges ..... 1.2x
=======
</TABLE>
- ------------------
(1)One-third of rental expense represents an appropriate interest factor.
<PAGE>
(2)The Company's investment in TA was presented as net assets of subsidiary held
for disposition for the period from December 10, 1993 through September 30,
1996. Furthermore, TA's results of operations were excluded from the
Company's consolidated results of operations until December 31, 1994, and
subsequently included therein as a single amount in the Company's
consolidated income statement. Effective September 30, 1996, the decision was
made to retain TA. As a result, beginning October 1, 1996, TA's results were
reconsolidated into the Company's financial state ments. The supplemental
historical data presentation sets forth consolidated amounts for the Company
as though TA had not been held for disposition and had instead been fully
consolidated.
(3)The pro forma data assumes that the following transactions occurred as of
January 1, 1996:
(a)consummation of the Refinancing; and
(b)consummation of certain aspects of the Combination Plan, which
collectively increase earnings by $2.7 million for the year ended December
31, 1996.
2
Exhibit 21
SUBSIDIARIES OF TRAVELCENTERS OF AMERICA, INC.
Name of Subsidiary State of Incorporation
- ------------------ ----------------------
TA Operating Corporation Delaware
National Auto/Truckstops, Inc. Delaware
TA Franchise Systems Inc. Delaware
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of TravelCenters of America, Inc. (the
"Company") of our reports dated March 6, 1997 relating to the financial
statements of the Company, National Auto/Truckstops, Inc. and TA Operating
Corporation, which appear in such Prospectus. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
April 30, 1997
EXHIBIT 25
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM T-1
--------------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
[ ] CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
FLEET NATIONAL BANK
----------------------------------------------------------
(Exact name of trustee as specified in its charter)
Not applicable 06-0850628
---------------------------- ------------------
(State of incorporation if (I.R.S. Employer
not a national bank) Identification No.)
777 Main Street, Hartford, Connecticut 06115
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Patricia Beaudry, 777 Main Street, Hartford, CT (860) 728-2065
------------------------------------------------------------------
(Name, address and telephone number of agent for service)
TRAVELCENTERS OF AMERICA, INC.
TA OPERATING CORPORATION
NATIONAL AUTO/TRUCKSTOPS, INC.
------------------------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 36-3856519
Delaware 34-1747077
Delaware 36-3853982
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24601 Center Ridge Road, Suite 300, Westlake, Ohio 44145-5634
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
10 1/4% Senior Subordinated Notes due 2007
------------------------------------------------------------------
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
--------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject:
The Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Boston
Boston, Massachusetts
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers:
The trustee is so authorized.
Item 2. Affiliations with obligor. If the obligor is an affiliate of
--------------------------
the trustee, describe each such affiliation.
None with respect to the trustee; none with respect to Fleet
Financial Group, Inc. and its affiliates (the "affiliates").
Item 16. List of exhibits. List below all exhibits filed as a part of
-----------------
this statement of eligibility and qualification.
1. A copy of the Articles of Association of the trustee as
now in effect.
2. A copy of the Certificate of Authority of the trustee
to do Business and the Certification of Fiduciary Powers.
3. A copy of the By-laws of the trustee as now in effect.
4. Consent of the trustee required by Section 321(b) of
the Act.
5. A copy of the latest Consolidated Report of Condition
and Income of the trustee, published pursuant to law or the requirements
of its supervising or examining authority.
<PAGE>
NOTES
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base its answer to Item 2, the answer to said
Item is based upon incomplete information. Said Item may, however, be
considered correct unless amended by an amendment to this Form T-1.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Fleet National Bank, a national banking association organized and
existing under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Hartford, and State of
Connecticut, on the 17th day of April, 1997.
FLEET NATIONAL BANK,
Trustee
By /s/ Susan T. Keller
-------------------------------------
Name: Susan T. Keller
Title: Assistant Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
FLEET NATIONAL BANK
FIRST. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "Fleet National Bank."
SECOND. The main office of the Association shall be in Springfield, Hampden
County Commonwealth of Massachusetts. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The board of directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
directors within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of the shareholders at any annual or special meeting thereof.
Unless otherwise provided by the laws of the United States, any vacancy in the
board of directors for any reason, including an increase in the number thereof,
may be filled by action of the board of directors.
FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the board of
directors may designate, on the day of each year specified therefore in the
bylaws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the board of
directors.
FIFTH. The authorized amount of capital stock of this Association shall be
eight million five hundred thousand (8,500,000) shares of which three million
five hundred thousand (3,500,000) shares shall be common stock with a
par value of six and 25/100 dollars ($6.25) each, and of which five million
(5,000,000) shares without par value shall be preferred stock. The capital
stock may be increased or decreased from time to time, in accordance with
the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such
price as the board of directors may from time to time fix.
<PAGE>
The board of directors of the Association is authorized, subject to limitations
prescribed by law and the provisions of this Article, to provide for the
issuance from time to time in one or more series of any number of the preferred
shares, and to establish the number of shares be included in each series, and
to fix the designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority of the board of
directors with respect to each series shall include, but not be limited to,
determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and whether they shall be
payable in preference to, or in another relation to, the dividends payable
to any other class or classes or series of stock;
c. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
d. Whether that series shall have conversion or exchange privileges, and,
if so, the terms and conditions of such conversion or exchange, including
provision for the adjustment of the conversion or exchange rate in such
events as the board of directors shall determine;
e. Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
f. Whether that series shall be entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of shares of that series, and, if
so, the terms and amounts of such sinking fund;
g. The right of the shares of that series to the benefit of conditions and
restrictions upon the creation of indebtedness of the Association or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Association or any subsidiary of
any outstanding stock of the Association;
h. The right of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Association and
whether such rights shall be in preference to, or in another relation to,
the comparable rights of any other class or classes or series of stock; and
i. Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.
Shares of any series of preferred stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of preferred stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the board of directors or as part of any other series or
preferred stock, all subject to the conditions and the restrictions adopted by
the board of directors providing for the issue of any series of preferred
stock and by the provisions of any applicable law.
Subject to the provisions of any applicable law, or except as otherwise
provided by the resolution or resolutions providing for the issue of any series
of preferred stock, the holders of outstanding shares of common stock shall
exclusively possess voting power for the election of directors and for all
purposes, each holder of record of shares of common stock being entitled to one
vote for each share of common stock standing in his name on the books of the
Association.
Except as otherwise provided by the resolution or resolutions providing for the
issue of any series of preferred stock, after payment shall have been made to
the holders of preferred stock of the full amount of dividends to which they
shall be entitled pursuant to the resolution or resolutions providing for the
issue of any other series of preferred stock, the holders of common stock shall
be entitled, to the exclusion of the holders of preferred stock of any and all
series, to receive such dividends as from time to time may be declared by the
board of directors.
Except as otherwise provided by the resolution or resolutions for the issue
of any series of preferred stock, in the event of any liquidation, dissolution
or winding up of the Association, whether voluntary or involuntary, after
payment shall have been made to the holders of preferred stock of the full
amount to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of preferred stock the
holders of common stock shall be entitled, to the exclusion of the holders of
preferred stock of any and all series, to share, ratable according to the
number of shares of common stock held by them, in all remaining assets of the
Association available for distribution to its shareholders.
The number of authorized shares of any class may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Association entitled to vote.
<PAGE>
SIXTH. The board of directors shall appoint one of its members president of
this Association, who shall be chairman of the board, unless the board appoints
another director to be the chairman. The board of directors shall have the
power to appoint one or more vice presidents; and to appoint a secretary and
such other officers and employees as may be required to transact the business
of this Association.
The board of directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a board of
directors to do and perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Hartford,
Connecticut, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The board of directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten percent (10%) of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first class mail, postage prepaid, mailed at
least ten (10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.
TENTH. (a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director, officer or employee of the Association or is or was
serving at the request of the Association as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, limited
liability company, trust, or other enterprise, including service with respect
to an employee benefit plan, shall be indemnified and held harmless by the
Association to the fullest extent authorized by the law of the state in which
the Association's ultimate parent company is incorporated, except as provided
in subsection (b). The aforesaid indemnity shall protect the indemnified
person against all expense, liability and loss (including attorney's fees,
judgements, fines ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred by such person in connection with such a
proceeding. Such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of his or
her heirs, executors, and administrators, but shall only cover such person's
period of service with the Association. The Association may, by action of its
Board of Directors, grant rights to indemnification to agents of the
Association and to any director, officer, employee or agent of any of its
subsidiaries with the same scope and effect as the foregoing indemnification
of directors and officers.
(b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no
person shall be indemnified hereunder by the Association against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by a federal bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and any advancement of expenses to that person in that proceeding
must be repaid; and (ii) no person shall be indemnified hereunder by the
Association and no advancement of expenses shall be made to any person
hereunder to the extent such indemnification or advancement of expenses would
violate or conflict with any applicable federal statute now or hereafter in
force or any applicable final regulation or interpretation now or hereafter
adopted by the Office of the Comptroller of the Currency ("OCC") or the Federal
Deposit Insurance Corporation ("FDIC"). The Association shall comply with any
requirements imposed on it by any such statue or regulation in connection with
any indemnification or advancement of expenses hereunder by the Association.
With respect to proceedings to enforce a claimant's rights to indemnification,
the Association shall indemnify any such claimant in connection with such a
proceeding only as provided in subsection (d) hereof.
(c) Advancement of Expenses. The conditional right to indemnification
conferred in this section shall be a contract right and shall include the
right to be paid by the Association the reasonable expenses (including
attorney's fees) incurred in defending a proceeding in advance of its final
disposition (an "advancement of expenses"); provided, however, that an
advancement of expenses shall be made only upon (i) delivery to the Association
of a binding written undertaking by or on behalf of the person receiving the
advancement to repay all amounts so advanced if it is ultimately determined
that such person is not entitled to be indemnified in such proceeding,
including if such proceeding results in a final order assessing civil money
penalties against that person, requiring affirmative action by that person
in the form of payments to the Association, or removing or prohibiting that
person from service with the Association, and (ii) compliance with any other
actions or determinations required by applicable law, regulation or OCC or FDIC
interpretation to be taken or made by the Board of Directors of the Association
<PAGE>
or other persons prior to an advancement of expenses. The Association shall
cease advancing expenses at any time its Board of Directors believes that any
of the prerequisites for advancement of expenses are no longer being met.
(d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the
section is not paid in full by the Association within thirty (30) days after
written claim has been received by the Association, the claimant may at any time
thereafter bring suit against the Association to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Association to recover an advancement of expenses pursuant
to the terms of an undertaking, the claimant shall be entitled to be paid also
the expense of prosecuting or defending such claim. It shall be a defense to
any such action brought by the claimant to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for an advancement
of expenses where the required undertaking, if any, has been tendered to the
Association) that the claimant has not met any applicable standard for
indemnification under the law of the state in which the Association's ultimate
parent company is incorporated. In any suit brought by the Association to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Association shall be entitled to recover such expenses upon a final
adjudication that the claimant has not met any applicable standard for
indemnification standard for indemnification under the law of the state in
which the Association's ultimate parent company is incorporated.
(e) Non-Exclusivity of Rights. The rights to indemnification and the
advancement of expenses conferred in this section shall not be exclusive of any
other right which any person may have or hereafter acquired under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
(f) Insurance. The Association may purchase, maintain, and make payment or
reimbursement for reasonable premiums on, insurance to protect itself and any
director, officer, employee or agent of the Association or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Association would have the power to
indemnify such person against such expense, liability or loss under the law of
the state in which the Association's ultimate parent company is incorporated;
provided however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.
ELEVENTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The notice of any shareholders' meeting at
which an amendment to the articles of association of this Association is to be
considered shall be given as hereinabove set forth.
I hereby certify that the articles of association of this Association, in their
entirety, are listed above in items first through eleventh.
Secretary/Assistant Secretary
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Dated at , as of .
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Revision of February 15, 1996
<PAGE>
EXHIBIT 2
AMENDED AND RESTATED BY-LAWS OF
FLEET NATIONAL BANK
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The regular annual meeting of the shareholders for
the election of Directors and the transaction of any other business that may
properly come before the meeting shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, on
the fourth Thursday of April in each year at 1:15 o'clock in the afternoon
unless some other hour of such day is fixed by the Board of Directors.
If, from any cause, an election of Directors is not made on such day, the Board
of Directors shall order the election to be held on some subsequent day, of
which special notice shall be given in accordance with the provisions of law,
and of these bylaws.
Section 2. Special Meetings. Special meetings of the shareholders may be called
at any time by the Board of Directors, the President, or any shareholders
owning not less than twenty-five percent (25%) of the stock of the Association.
Section 3. Notice of Meetings of Shareholders. Except as otherwise provided
by law, notice of the time and place of annual or special meetings of the
shareholders shall be mailed, postage prepaid, at least ten (10) days before
the date of the meeting to each shareholder of record entitled to vote thereat
at his address as shown upon the books of the Association; but any failure to
mail such notice to any shareholder or any irregularity therein, shall not
affect the validity of such meeting or of any of the proceedings thereat.
Notice of a special meeting shall also state the purpose of the meeting.
Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a
quorum for the transaction of business at every meeting of the shareholders
shall consist of not less than two-fifths (2/5) of the outstanding capital
stock represented in person or by proxy; less than such quorum may adjourn the
meeting to a future time. No notice need be given of an adjourned annual or
special meeting of the shareholders if the adjournment be to a definite place
and time.
Section 5. Votes and Proxies. At every meeting of the shareholders, each
share of the capital stock shall be entitled to one vote except as otherwise
provided by law. A majority of the votes cast shall decide every question
or matter submitted to the shareholder at any meeting, unless otherwise
provided by law or by the Articles of Association or these By-laws. Share-
holders may vote by proxies duly authorized in writing and filed with the
Cashier, but no officer, clerk, teller or bookkeeper of the Association may act
as a proxy.
<PAGE>
Section 6. Nominations to Board of Directors. At any meeting of shareholders
held for the election of Directors, nominations for election to the Board of
Directors may be made, subject to the provisions of this section, by any share-
holder of record of any outstanding class of stock of the Association entitled
to vote for the election of Directors. No person other than those whose names
are stated as proposed nominees in the proxy statement accompanying the notice
of the meeting may be nominated as such meeting unless a shareholder shall have
given to the President of the Association and to the Comptroller of the
Currency, Washington, DC written notice of intention to nominate such other
person mailed by certified mail or delivered not less than fourteen (14) days
nor more than fifty (50) days prior to the meeting of shareholders at which
such nomination is to be made; provided, however, that if less than twenty-one
(21) days' notice of such meeting is given to shareholders, such notice of
intention to nominate shall be mailed by certified mail or delivered to said
President and said Comptroller on or before the seventh day following the day
on which the notice of such meeting was mailed. Such notice of intention to
nominate shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the Association owned by the
notifying shareholder. In the event such notice is given, the proposed nominee
may be nominated either by the shareholder giving such notice or by any other
shareholder present at the meeting at which such nomination is to be made.
Such notice may contain the names of more than one proposed nominee, and if
more than one is named, any one or more of those named may be nominated.
Section 7. Action Taken Without a Shareholder Meeting. Any action requiring
shareholder approval or consent may be taken without a meeting and without
notice of such meeting by written consent of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Number. The Board of Directors shall consist of such number of
shareholders, not less than five (5) nor more than twenty-five (25), as from
time to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled, or by the Board of Directors as
hereinafter provided.
Section 2. Mandatory Retirement for Directors. No person shall be elected a
director who has attained the age of 68 and no person shall continue to serve
as a director after the date of the first meeting of the stockholders of the
Association held on or after the date on which such person attains the age of
68; provided, however, that any director serving on the Board as of December
15, 1995 who has attained the age of 65 on or prior to such date shall be
permitted to continue to serve as a director until the date of the first
meeting of the stockholders of the Association held on or after the date on
which such person attains the age of 70.
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<PAGE>
Section 3. General Powers. The Board of Directors shall exercise all the
corporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and disposition of all its
property and affairs.
Section 4. Annual Meeting. Immediately following a meeting of shareholders
held for the election of Directors, the Cashier shall notify the directors-
elect who may be present of their election and they shall then hold a meeting
at the Main Office of the Association, or such other place as the Board of
Directors may designate, for the purpose of taking their oaths, organizing the
new Board, electing officers and transacting any other business that may come
before such meeting.
Section 5. Regular Meeting. Regular meetings of the Board of Directors shall
be held without notice at the Main Office of the Association, or such other
place as the Board of Directors may designate, at such dates and times as the
Board shall determine. If the day designated for a regular meeting falls on a
legal holiday, the meeting shall be held on the next business day.
Section 6. Special Meetings. A special meeting of the Board of Directors may
be called at anytime upon the written request of the Chairman of the Board, the
President, or of two Directors, stating the purpose of the meeting. Notice of
the time and place shall be given not later than the day before the date of the
meeting, by mailing a notice to each Director at his last known address, by
delivering such notice to him personally, or by telephoning.
Section 7. Quorum; Votes. A majority of the Board of Directors at the time
holding office shall constitute a quorum for the transaction of all business,
except when otherwise provided by law, but less than a quorum may adjourn
a meeting from time to time, and the meeting may be held, as adjourned, without
further notice. If a quorum is present when a vote is taken, the affirmative
vote of a majority of Directors present is the act of the Board of Directors.
Section 8. Action by Directors Without a Meeting. Any action requiring
Director approval or consent may be taken without a meeting and without notice
of such meeting by written consent of all the Directors.
Section 9. Telephonic Participation in Directors' Meetings. A Director or
member of a Committee of the Board of Directors may participate in a meeting of
the Board or of such Committee may participate in a meeting of the Board or of
such Committee by means of a conference telephone or similar communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in such a meeting shall constitute presence in person
at such a meeting.
Section 10. Vacancies. Vacancies in the Board of Directors may be filled by
the remaining members of the Board at any regular or special meeting of the
Board.
Section 11. Interim Appointments. The Board of Directors shall, if the share-
holders at any meeting for the election of Directors have determined a number
of Directors less than twenty-five (25), have the power, by affirmative vote of
the majority of all the Directors, to increase such number of Directors to not
more than twenty-five (25) and to elect Directors to fill the resulting
vacancies and to serve until the next annual meeting of shareholders or the
next election of Directors; provided, however, that the number of Directors
shall not be so increased by more than two (2) if the number last determined
by shareholders was fifteen (15) or less, or increased by more than four (4) if
the number last determined by shareholders was sixteen (16) or more.
Section 12. Fees. The Board of Directors shall fix the amount and direct the
payment of fees which shall be paid to each Director for attendance at any
meeting of the Board of Directors or of any Committees of the Board.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The Board of Directors shall appoint from its
members an Executive Committee which shall consist of such number of persons as
the Board of Directors shall determine; the Chairman of the Board and the
President shall be members ex-officio of the Executive Committee with full
voting power. The Chairman of the Board or the President may from time to time
appoint from the Board of Directors as temporary additional members of the
Executive Committee, with full voting powers, not more than two members to serve
for such periods as the Chairman of the Board or the President may determine.
The Board of Directors shall designate a member of the Executive Committee to
serve as Chairman thereof. A meeting of the Executive Committee may be called
at any time upon the written request of the Chairman of the Board, the President
or the Chairman of the Executive Committee, stating the purpose of the meeting.
Not less than twenty four hours' notice of said meeting shall be given to each
member of the Committee personally, by telephoning, or by mail. The Chairman of
the Executive Committee or, in his absence, a member of the Committee chosen by
a majority of the members present shall preside at meetings of the Executive
Committee.
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<PAGE>
The Executive Committee shall possess and may exercise all the powers of the
Board when the Board is not in session except such as the Board, only, by law,
is authorized to exercise; it shall keep minutes of its acts and proceedings
and cause same to be presented and reported at every regular meeting and at any
special meeting of the Board including specifically, all its actions relating
to loans and discounts.
All acts done and powers and authority conferred by the Executive Committee,
from time to time, within the scope of its authority, shall be deemed to be,
and may be certified as being, the acts of and under the authority of the
Board.
Section 2. Risk Management Committee. The Board shall appoint from its
members a Risk Management Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Risk
Management Committee to serve as Chairman thereof. It shall be the duty of the
Risk Management Committee to (a) serve as the channel of communication with
management and the Board of Directors of Fleet Financial Group, Inc. to assure
that formal processes supported by management information systems are in place
for the identification, evaluation and management of significant risks inherent
in or associated with lending activities, the loan portfolio, asset-liability
management, the investment portfolio, trust and investment advisory activities,
the sale of nondeposit investment products and new products and services and
such additional activities or functions as the Board may determine from time
to time; (b) assure the formulation and adoption of policies approved by the
Risk Management Committee or Board governing lending activities, management of
the loan portfolio, the maintenance of an adequate allowance for loan and lease
losses, asset-liability management, the investment portfolio, the retail
sale of non-deposit investment products, new products and services and such
additional activities or functions as the Board may determine from time to time
(c) assure that a comprehensive independent loan review program is in place for
the early detection of problem loans and review significant reports of the loan
review department, management's responses to those reports and the risk
attributed to unresolved issues; (d) subject to control of the Board, exercise
general supervision over trust activities, the investment of trust funds, the
disposition of trust investments and the acceptance of new trusts and the terms
of such acceptance, and (e) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 3. Audit Committee. The Board shall appoint from its members and
Audit Committee which shall consist of such number as the Board shall determine
no one of whom shall be an active officer or employee of the Association or
Fleet Financial Group, Inc. or any of its affiliates. In addition, members of
the Audit Committee must not (i) have served as an officer or employee of the
Association or any of its affiliates at any time during the year prior to their
appointment; or (ii) own, control, or have owned or controlled at any time
during the year prior to appointment, ten percent (10%) or more of any
outstanding class of voting securities of the Association. At least two (2)
members of the Audit Committee must have significant executive, professional,
educational or regulatory experience in financial, auditing, accounting,
or banking matters. No member of the Audit Committee may have significant
direct or indirect credit or other relationships with the Association, the
termination of which would materially adversely affect the Association's
financial condition or results of operations.
The Board shall designate a member of the Audit Committee to serve as Chairman
thereof. It shall be the duty of the Audit Committee to (a) cause a continuous
audit and examination to be made on its behalf into the affairs of the
Association and to review the results of such examination; (b) review
significant reports of the internal auditing department, management's responses
to those reports and the risk attributed to unresolved issues; (c) review the
basis for the reports issued under Section 112 of The Federal Deposit Insurance
Corporation Improvement Act of 1991; (d) consider, in consultation with the
independent auditor and an internal auditing executive, the adequacy of the
Association's internal controls, including the resolution of identified material
weakness and reportable conditions; (e) review regulatory communications
received from any federal or state agency with supervisory jurisdiction or
other examining authority and monitor any needed corrective action by
management; (f) ensure that a formal system of internal controls is in place
for maintaining compliance with laws and regulations; (g) cause an audit of the
Trust Department at least once during each calendar year and within 15 months
of the last such audit or, in lieu thereof, adopt a continuous audit system and
report to the Board each calendar year and within 15 months of the previous
report on the performance of such audit function; and (h) perform such
additional duties and exercise such additional powers of the Board as the Board
may determine from time to time.
The Audit Committee may consult with internal counsel and retain its own
outside counsel without approval (prior or otherwise) from the Board or
management and obligate the Association to pay the fees of such counsel.
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<PAGE>
Section 4. Community Affairs Committee. The Board shall appoint from its
members a Community Affairs Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Community
Affairs Committee to serve as Chairman thereof. It shall be the duty of the
Community Affairs Committee to (a) oversee compliance by the Association with
the Community Reinvestment Act of 1977, as amended, and the regulations
promulgated thereunder; and (b) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 5. Regular Meetings. Except for the Executive Committee which shall
meet on an ad hoc basis as set forth in Section 1 of this Article, regular
meetings of the Committees of the Board of Directors shall be held, without
notice, at such time and place as the Committee or the Board of Directors may
appoint and as often as the business of the Association may require.
Section 6. Special Meetings. A Special Meeting of any of the Committees of
the Board of Directors may be called upon the written request of the Chairman
of the Board or the President, or of any two members of the respective
Committee, stating the purpose of the meeting. Not less than twenty-four
hours' notice of such special meeting shall be given to each member of the
Committee personally, by telephoning, or by mail.
Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees
of the Board of Directors may be called at the request of the Chairman of the
Board or the President, who shall state that an emergency exists, upon not
less than one hour's notice to each member of the Committee personally or by
telephoning.
Section 8. Action Taken Without a Committee Meeting. Any Committee of the
Board of Directors may take action without a meeting and without notice of such
meeting by resolution assented to in writing by all members of such Committee.
Section 9. Quorum. A majority of a Committee of the Board of Directors shall
constitute a quorum for the transaction of any business at any meeting of such
Committee. If a quorum is not available, the Chairman of the Board or the
President shall have power to make temporary appointments to a Committee of-
members of the Board of Directors, to act in the place and stead of members who
temporarily cannot attend any such meeting; provided, however, that any
temporary appointment to the Audit Committee must meet the requirements for
members of that Committee set forth in Section 3 of this Article.
Section 10. Record. The committees of the Board of Directors shall keep a
record of their respective meetings and proceedings which shall be presented
at the regular meeting of the Board of Directors held in the calendar month
next following the meetings of the Committees. If there is no regular Board
of Directors meeting held in the calendar month next following the meeting of
a Committee, then such Committee's records shall be presented at the next
regular Board of Directors meeting held in a month subsequent to such Committee
meeting.
Section 11. Changes and Vacancies. The Board of Directors shall have power
to change the members of any Committee at any time and to fill vacancies on any
Committee; provided, however, that any newly appointed member of the Audit
Committee must meet the requirements for members of that Committee set forth in
Section 3 of this Article.
Section 12. Other Committees. The Board of Directors may appoint, from time
to time, other committees of one or more persons, for such purposes and with
such powers as the Board may determine.
ARTICLE IV
WAIVER OF NOTICE OF MEETINGS
Section 1. Waiver. Whenever notice is required to be given to any shareholder,
Director, or member of a Committee of the Board of Directors, such notice may
be waived in writing either before or after such meeting by any shareholder,
Director or Committee member respectively, as the case may be, who may be
entitled to such notice; and such notice will be deemed to be waived by
attendance at any such meeting.
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<PAGE>
ARTICLE V
OFFICERS AND AGENTS
Section 1. Officers. The Board shall appoint a Chairman of the Board and a
President, and shall have the power to appoint one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Cashier, a Secretary, an Auditor, a Controller, one or more Trust Officers and-
such other officers as are deemed necessary or desirable for the proper
transaction of business of the Association. The Chairman of the Board and the
President shall be appointed from members of the Board of Directors. Any two
or more offices, except those of President and Cashier, or Secretary, may be
held by the same person. The Board may, from time to time, by resolution
passed by a majority of the entire Board, designate one or more officers of the
Association or of an affiliate or of Fleet Financial Group, Inc. with power to
appoint one or more Vice Presidents and such other officers of the Association
below the level of Vice President as the officer or officers designated in such
resolution deem necessary or desirable for the proper transaction of the
business of the Association.
Section 2. Chairman of the Board. The chairman of the Board shall preside at
all meetings of the Board of Directors. Subject to definition by the Board of
Directors, he shall have general executive powers and such specific powers and
duties as from time to time may be conferred upon or assigned to him by the
Board of Directors.
Section 3. President. The President shall preside at all meetings of the
Board of Directors if there be no Chairman or if the Chairman be absent.
Subject to definition by the Board of Directors, he shall have general
executive powers and such specific powers and duties as from time to time may
be conferred upon or assigned to him by the Board of Directors.
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<PAGE>
Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the
Board and of the Executive Committee, and shall keep accurate minutes of their
meetings and of all meetings of the shareholders. He shall attend to the
giving of all notices required by these By-laws. He shall be custodian of the
corporate seal, records, documents and papers of the Association. He shall
have such powers and perform such duties as pertain by law or regulation to the
office of Cashier, or as are imposed by these By-laws, or as may be delegated
to him from time to time by the Board of Directors, the Chairman of the Board
or the President.
Section 5. Auditor. The Auditor shall be the chief auditing officer of the
Association. He shall continuously examine the affairs of the Association and
from time to time shall report to the Board of Directors. He shall have such
powers and perform such duties as are conferred upon, or assigned to him by
these By-laws, or as may be delegated to him from time to time by the Board
of Directors.
Section 6. Officers Seriatim. The Board of Directors shall designate from
time to time not less than two officers who shall in the absence or disability
of the Chairman or President or both, succeed seriatim to the duties and
responsibilities of the Chairman and President respectively.
Section 7. Clerks and Agents. The Board of Directors may appoint, from time
to time, such clerks, agents and employees as it may deem advisable for the
prompt and orderly transaction of the business of the Association, define
their duties, fix the salaries to be paid them and dismiss them. Subject to
the authority of the Board of Directors, the Chairman of the Board or the
President, or any other officer of the Association authorized by either of them
may appoint and dismiss all or any clerks, agents and employees and prescribe
their duties and the conditions of their employment, and from time to time
fix their compensation.
Section 8. Tenure. The Chairman of the Board of Directors and the President
shall, except in the case of death, resignation, retirement or disqualification
under these By-laws, or unless removed by the affirmative vote of at least two-
thirds of all of the members of the Board of Directors, hold office for the
term of one year or until their respective successors are appointed. Either
of such officers appointed to fill a vacancy occurring in an unexpired term
shall serve for such unexpired term of such vacancy. All other officers,
clerks, agents, attorneys-in-fact and employees of the Association shall hold
office during the pleasure of the Board of Directors or of the officer or
committee appointing them respectively.
ARTICLE VI
TRUST DEPARTMENT
Section 1. General Powers and Duties. All fiduciary powers of the Association
shall be exercised through the Trust Department, subject to such regulations as
the Comptroller of the Currency shall from time to time establish. The Trust
Department shall be to placed under the management and immediate supervision
of an officer or officers appointed by the Board of Directors. The duties of
all officers of the Trust Department shall be to cause the policies and
instructions of the Board and the Risk Management Committee with respect to the
trusts under their supervision to be carried out, and to supervise the due
performance of the trusts and agencies entrusted to the Association and under
their supervision, in accordance with law and in accordance with the terms of
such trusts and agencies.
-7-
<PAGE>
ARTICLE VII
BRANCH OFFICES
Section 1. Establishment. The Board of Directors shall have full power to
establish, to discontinue, or, from time to time, to change the location of any
branch office, subject to such limitations as may be provided by law.
Section 2. Supervision and Control. Subject to the general supervision and
control of the Board of Directors, the affairs of branch offices shall be
under the immediate supervision and control of the President or of such other
officer or officers, employee or employees, or other individuals as the Board
of Directors may from time to time determine, with such powers and duties as
the Board of Directors may confer upon or assign to him or them.
ARTICLE VIII
SIGNATURE POWERS
Section 1. Authorization. The power of officers, employees, agents and
attorneys to sign on behalf of and to affix the seal of the Association shall
be prescribed by the Board of Directors or by the Executive Committee or by
both; provided that the President is authorized to restrict such power of any
officer, employee, agent or attorney to the business of a specific department
or departments, or to a specific branch office or branch offices. Facsimile
signatures may be authorized.
-8-
<PAGE>
ARTICLE IX
STOCK CERTIFICATES AND TRANSFERS
Section 1. Stock Records. The Trust Department shall have custody of the
stock certificate books and stock ledgers of the Association, and shall make
all transfers of stock, issue certificates thereof and disburse dividends
declared thereon.
Section 2. Form of Certificate. Every shareholder shall be entitled to a
certificate conforming to the requirements of law and otherwise in such form
as the Board of Directors may approve. The certificates shall state on the
face thereof that the stock is transferable only on the books of the
Association and shall be signed by such officers as may be prescribed from time
to time by the Board of Directors or Executive Committee. Facsimile signatures
may be authorized.
Section 3. Transfers of Stock. Transfers of stock shall be made only on the
books of the Association by the holder in person, or by attorney duly
authorized in writing, upon surrender of the certificate therefor properly
endorsed, or upon the surrender of such certificate accompanied by a properly
executed written assignment of the same, or a written power of attorney to
sell, assign or transfer the same or the shares represented thereby.
Section 4. Lost Certificate. The Board of Directors or Executive Committee
may order a new certificate to be issued in place of a certificate lost or
destroyed, upon proof of such loss or destruction and upon tender to the
Association by the shareholder, of a bond in such amount and with or without
surety, as may be ordered, indemnifying the Association against all liability,
loss, cost and damage by reason of such loss or destruction and the issuance
of a new certificate.
Section 5. Closing Transfer Books. The Board of Directors may close the
transfer books for a period not exceeding thirty days preceding any regular
or special meeting of the shareholders, or the day designated for the payment
of a dividend or the allotment of rights. In lieu of closing the transfer
books the Board of Directors may fix a day and hour not more than thirty days
prior to the day of holding any meeting of the shareholders, or the day
designated for the payment of a dividend, or the day designated for the
allotment of rights, or the day when any change of conversion or exchange of
capital stock is to go into effect, as the day as of which shareholders
entitled to notice of and to vote at such meetings or entitled to such dividend
or to such allotment of rights or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, shall be determined, and
only such shareholders as shall be shareholders of record on the day and hour
so fixed shall be entitled to notice of and to vote at such meeting or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, as the case may be.
ARTICLE X
THE CORPORATE SEAL
Section 1. Seal. The following is an impression of the seal of the
Association adopted by the Board of Directors.
ARTICLE XI
BUSINESS HOURS
Section 1. Business Hours. The main office of this Association and each
branch office thereof shall be open for business on such days, and for such
hours as the Chairman, or the President, or any Executive Vice President, or
such other officer as the Board of Directors shall from time to time
designate, may determine as to each office to conform to local custom and
convenience, provided that any one or more of the main and branch offices or
certain departments thereof may be open for such hours as the President, or
such other officer as the Board of Directors shall from time to time designate,
may determine as to each office or department on any legal holiday on which
work is not prohibited by law, and provided further that any one or more of
the main and branch offices or certain departments thereof may be ordered
closed or open on any day for such hours as to each office or department as
the President, or such other officer as the Board of Directors shall from time
to time designate, subject to applicable laws regulations, may determine when
such action may be required by reason of disaster or other emergency condition.
ARTICLE IX
CHANGES IN BY-LAWS
Section 1. Amendments. These By-laws may be amended upon vote of a majority
of the entire Board of Directors at any meeting of the Board, provided ten (10)
day's notice of the proposed amendment has been given to each member of the
Board of Directors. No amendment may be made unless the By-law, as amended, is
consistent with the requirements of law and of the Articles of Association.
These By-laws may also be amended by the Association's shareholders.
A true copy
Attest:
Secretary/Assistant Secretary
- ---------------------------------------
Dated at , as of .
--------------------------------------- ----------------------
Revision of January 11, 1993
-9-
<PAGE>
[LOGO] Exhibit 3
- -------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- -------------------------------------------------------------------------------
Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et
seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "Fleet National Bank," (Charter No. 1338) is a National Banking
Association formed under the laws of the United States and is authorized
thereunder to transact the business of banking and exercise Fiduciary Powers on
the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of office
to be affixed to these presents at the Treasury
Department in the City of Washington and
[SEAL]
District of Columbia, this 11th day of
March, 1997.
/s/
----------------------
Comptroller of the Currency
<PAGE>
EXHIBIT 4
CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
The undersigned, as Trustee under an Indenture to be entered into
between Travelcenters of America, Inc. and Fleet National Bank, Trustee,
does hereby consent that, pursuant to Section 321(b) of the Trust Indenture
Act of 1939, reports of examinations with respect to the undersigned by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
FLEET NATIONAL BANK,
Trustee
By /s/ Susan T. Keller
---------------------------------
Name: Susan T. Keller
Title: Assistant Vice President
Dated: April , 1997
<PAGE>
[FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL LETTERHEAD]
- -------------------------------------------------------------------------------
Please refer to page i,
[LOGO] Table of Contents, for 1
the required disclosure
of estimated burden.
- -------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND
FOREIGN OFFICES - FFIEC 031
(961231)
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1996 -----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks); 12
U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- ------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, Giro S. DeRosa, Vice President
- -----------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and are
true to the best of my knowledge and belief.
/s/ Giro DeRosa
- ----------------------------------------------
Signature of Officer Authorized to Sign Report
January 23, 1997
- -----------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/
- ------------------
Director (Trustee)
/s/
- ------------------
Director (Trustee)
/s/
- -------------------
Director (Trustee)
- -----------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- -------------------------------------------------------------------------------
FDIC Certificate Number [02499] Banks should affix the address label in
----------- this space.
(RCRI 9050)
Fleet National Bank
---------------------------------------
Legal Title of Bank (TEXT 9010)
One Monarch Place
---------------------------------------
City (TEXT 9131)
Springfield, MA 01102
---------------------------------------
State Abbrev. Zip Code
(TEXT 9200) (TEXT 9220)
<PAGE>
FFIEC 031
Consolidated Reports of Condition and Income for a Bank With Page i
Domestic and Foreign Offices 2
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
SIGNATURE PAGE Cover
REPORT OF INCOME
Schedule RI--Income Statement.....................RI-1, 2, 3
Schedule RI-A--Changes in Equity Capital................RI-4
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance For Loan and Lease Losses.............RI-4, 5
Schedule RI-C--Applicable Income Taxes by Taxing
Authority.............................................RI-5
Schedule RI-D--Income from International Operations.....RI-6
Schedule RI-E--Explanations..........................RI-7, 8
REPORT OF CONDITION
Schedule RC--Balance Sheet...........................RC-1, 2
Schedule RC-A--Cash and Balances Due from Depository
Institutions..........................................RC-3
Schedule RC-B--Securities.........................RC-3, 4, 5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases..........................RC-6, 7
Part II. Loans to Small Businesses and Small
Farms (included in the forms for June 30
only).........................................RC-7a, 7b
Schedule RC-D--Trading Assets and Liabilities (to
be completed only be selected banks)..................RC-8
Schedule RC-E--Deposit Liabilities..............RC-9, 10, 11
Schedule RC-F--Other Assets............................RC-11
Schedule RC-G--Other Liabilities.......................RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices.....................................RC-12
Schedule RC-I--Selected Assets and Liabilities of
IBFs.................................................RC-13
Schedule RC-K--Quarterly Averages......................RC-13
Schedule RC-L--Off-Balance Sheet Items.........RC-14, 15, 16
Schedule RC-M--Memoranda...........................RC-17, 18
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets.........................RC-19, 20
Schedule RC-O--Other Data for Deposit Insurance
Assessments......................................RC-21, 22
Schedule RC-R--Regulatory Capital..................RC-23, 24
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of Condition
and Income...........................................RC-25
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only
to and to be completed by savings banks)
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is
32.2 hours per respondent and is estimated to vary from 15 to 230 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the
required form, and completing the information collection, but exclude the time
for compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs, Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For Information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington,
D.C. 20429, toll free on (800) 688-FDIC(3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RI-1
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
CONSOLIDATED REPORT OF INCOME
FOR THE PERIOD JANUARY 1, 1996-DECEMBER 31, 1996
ALL REPORT OF INCOME SCHEDULES ARE TO BE REPORTED ON A CALENDAR YEAR-TO-DATE BASIS IN THOUSANDS OF DOLLARS.
SCHEDULE RI--INCOME STATEMENT
I480
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income: //////////////////
a. Interest and fee income on loans: //////////////////
(1) In domestic offices: //////////////////
(a) Loans secured by real estate................................................. 4011 1,092,992 1.a.(1)(a)
(b) Loans to depository institutions............................................. 4019 1,482 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers.......... 4024 501 1.a.(1)(c)
(d) Commercial and industrial loans.............................................. 4012 1,132,500 1.a.(1)(d)
(e) Acceptances of other banks................................................... 4026 264 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expeditures: //////////////////
(1) Credit cards and related plans............................................ 4054 16,485 1.a.(1)(f)(1)
(2) Other.................................................................... 4055 189,926 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions....................... 4056 0 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political //////////////////
subdivisions in the U.S.: //////////////////
(1) Taxable obligations...................................................... 4503 0 1.a.(1)(h)(1)
(2) Tax-exempt obligations................................................... 4504 10,381 1.a.(1)(h)(2)
(i) All other loans in domestic offices.......................................... 4058 147,087 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4059 4,161 1.a.(2)
b. Income from lease financing receivables: //////////////////
(1) Taxable leases................................................................... 4505 152,848 1.b.(1)
(2) Tax-exempt leases................................................................ 4307 1,511 1.b.(2)
c. Interest income on balances due from depository instituions: (1) //////////////////
(1) In domestic offices.............................................................. 4105 1,644 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4106 142 1.c.(2)
d. Interest and dividend income on securities: //////////////////
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations.. 4027 422,212 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: //////////////////
(a) Taxable securities........................................................... 4506 0 1.d.(2)(a)
(b) Tax-Exempt securities........................................................ 4507 6,495 1.d.(2)(b)
(3) Other domestic debt securities................................................... 3657 12,976 1.d.(3)
(4) Foreign debt securities.......................................................... 3658 6,621 1.d.(4)
(5) Equity securities (including investments in mutual funds)........................ 3659 17,504 1.d.(5)
e. Interest income from trading assets.................................................. 4069 479 1.e.
------------------
</TABLE>
- ----------
(1) Includes interest income on time certificates of deposit not held for
trading.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RI-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI--CONTINUED
Dollar Amounts in Thousands Year-to-date
RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income (continued)
f. Interest income on federal funds sold and securities purchased under //////////////////
agreements to resell in domestic offices of the bank and of its Edge //////////////////
and Agreement subsidiaries, and in IBFs ............................. 4020 25,839 1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ 4107 3,244,050 1.g.
2. Interest expense: //////////////////
a. Interest on deposits: //////////////////
(1) Interest on deposits in domestic offices: //////////////////
(a) Transaction accounts (NOW accounts, ATS accounts, and //////////////////
telephone and preauthorized transfer accounts) .............. 4508 13,070 2.a.(1)(a)
(b) Nontransaction accounts: //////////////////
(1) Money market deposit accounts (MMDAs) ................... 4509 257,330 2.a.(1)(b)(1)
(2) Other savings deposits .................................. 4511 48,169 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ 4174 170,575 2.a.(1)(b)(3)
(4) All other time deposits ................................. 4512 403,831 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement //////////////////
subsidiaries, and IBFs .......................................... 4172 100,766 2.a.(2)
b. Expense of federal funds purchased and securities sold under //////////////////
agreements to repurchase in domestic offices of the bank and of its //////////////////
Edge and Agreement subsidiaries, and in IBFs ........................ 4180 282,599 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading //////////////////
liabilities, and other borrowed money ............................... 4185 161,582 2.c.
d. Interest on mortgage indebtedness and obligations under capitalized //////////////////
leases .............................................................. 4072 859 2.d.
e. Interest on subordinated notes and debentures ....................... 4200 69,434 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... 4073 1,508,215 2.f.
3. Net interest income (item 1.g minus 2.f) .............................. ////////////////// RIAD 4074 1,735,835 3.
4. Provisions: //////////////////
a. Provision for loan and lease losses ................................. ////////////////// RIAD 4230 (6,834) 4.a.
b. Provision for allocated transfer risk ............................... ////////////////// RIAD 4243 0 4.b.
5. Noninterest income: //////////////////
a. Income from fiduciary activities .................................... 4070 295,272 5.a.
b. Service charges on deposit accounts in domestic offices ............. 4080 222,313 5.b.
c. TRADING REVENUE (MUST EQUAL SCHEDULE RI, SUM OF MEMORANDUM //////////////////
ITEMS 8.a THROUGH 8.d) .............................................. A220 25,253 5.c.
d. Other foreign transaction gains (losses) ............................ 4076 346 5.d.
e. Not applicable //////////////////
f. Other noninterest income: //////////////////
(1) Other fee income ................................................ 5407 797,631 5.f.(1)
(2) All other noninterest income* ................................... 5408 350,869 5.f.(2)
g. Total noninterest income (sum of items 5.a through 5.f) ............. ////////////////// RIAD 4079 1,691,684 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. ////////////////// RIAD 3521 52 6.a.
b. Realized gains (losses) on available-for-sale securities ............ ////////////////// RIAD 3196 12,071 6.b.
7. Noninterest expense: //////////////////
a. Salaries and employee benefits ...................................... 4135 645,873 7.a.
b. Expenses of premises and fixed assets (net of rental income) //////////////////
(excluding salaries and employee benefits and mortgage interest ..... 4217 211,199 7.b.
c. Other noninterest expense* .......................................... 4092 1,243,839 7.c.
d. Total noninterest expense (sum of items 7.a through 7.c) ............ ////////////////// RIAD 4093 2,100,911 7.d.
8. Income (loss) before income taxes and extraordinary items and other //////////////////
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) ////////////////// RIAD 4301 1,345,565 8.
9. Applicable income taxes (on item 8) .................................... ////////////////// RIAD 4302 548,252 9.
10. Income (loss) before extraordinary items and other adjustments (item 8 //////////////////
minus 9) ............................................................... ////////////////// RIAD 4300 797,313 10.
- ------------
*Describe on Schedule RI-E--Explanations.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI--CONTINUED
Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11. Extraordinary items and other adjustments: //////////////////
a. Extraordinary items and other adjustments, //////////////////
gross of income taxes*..................................... 4310 0 11.a.
b. Applicable income taxes (on item 11.a)*.................... 4315 0 11.b.
c. Extraordinary items and other adjustments, //////////////////
net of income taxes (item 11.a minus 11.b)................. ////////////////// RIAD 4320 0 11.c.
12. Net income (loss) (sum of items 10 and 11.c)................... ////////////////// RIAD 4340 797,313 12.
----------------------------------------------------
</TABLE>
<TABLE>
I481
------------
Memoranda Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after //////////////////
August 7, 1986, that is not deductible for federal income tax purposes....................... 4513 2,891 M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices //////////////////
(included in Schedule RI, item 8)............................................................ 8431 46,475 M.2.
3.-4. Not applicable //////////////////
5. Number of full-time equivalent employees on payroll at end of current period (round to //// Number
nearest whole number)........................................................................ 4150 12,425 M.5.
6. Not applicable //////////////////
7. If the reporting bank has restated its balance sheet as a result of applying push down //// MM DD YY
accounting this calendar year, report the date of the bank's acquisition..................... 9106 00/00/00 M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) //////////////////
(SUM OF MEMORANDUM ITEMS 8.a THROUGH 8.d MUST EQUAL SCHEDULE RI, ITEM 5.c): //// Bil Mil Thou
a. Interest rate exposures.................................................................. 8757 5,738 M.8.a.
b. Foreign exchange exposures............................................................... 8758 19,515 M.8.b.
c. Equity security and index exposures...................................................... 8759 0 M.8.c.
d. Commodity and other exposures............................................................ 8760 0 M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: //////////////////
a. Net increase (decrease) to interest income............................................... 8761 2,698 M.9.a.
b. Net (increase) decrease to interest expense.............................................. 8762 (4,902) M.9.b.
c. Other (noninterest) allocations.......................................................... 8763 12 M.9.c.
10. CREDIT LOSSES ON OFF-BALANCE SHEET DERIVATIVES (SEE INSTRUCTIONS)............................ A251 0 M.10.
</TABLE>
- -----------------
*Describe on Schedule RI-E--Explanations.
5
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-A--CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses.
I483
-----------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Total equity capital originally reported in the December 31, 1995, Reports of Condition //////////////////
and Income............................................................................... 3215 1,342,473 1.
2. Equity capital adjustments from amended Reports of Income, net*.......................... 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2)..................... 3217 1,342,473 3.
4. Net income (loss) (must equal Schedule RI, item 12)...................................... 4340 797,313 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net....................... 4346 0 5.
6. Changes incident to business combinations, net........................................... 4356 4,161,079 6.
7. LESS: Cash dividends declared on preferred stock......................................... 4470 11,688 7.
8. LESS: Cash dividends declared on common stock............................................ 4460 761,473 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions //////////////////
for this schedule)....................................................................... 4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions for this
schedule)................................................................................ 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities......... 8433 (4,870) 11.
12. Foreign currency translation adjustments................................................. 4414 0 12.
13. Other transactions with parent holding company* (not included in items 5,7, or 8 above).. 4415 (1,003,722) 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal //////////////////
Schedule RC, item 28).................................................................... 3210 4,519,112 14.
-------------------
</TABLE>
- ---------------
*Describe on Schedule RI-E--Explanations.
<TABLE>
<CAPTION>
SCHEDULE RI-B--CHARGE-OFFS AND RECOVERIES AND CHANGES
IN ALLOWANCE FOR LOAN AND LEASE LOSSES
PART I. CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES
PART I EXCLUDES CHARGE-OFFS AND RECOVERIES THROUGH
THE ALLOCATED TRANSFER RISK RESERVE.
I486
--------
(Column A) (Column B)
Charge-offs Recoveries
----------------------------------------
Calendar year-to-date
----------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate: ////////////////// //////////////////
a. To U.S. addressees (domicile)................................... 4651 65,946 4661 16,055 1.a.
b. To non-U.S. addressees (domicile)............................... 4652 0 4662 0 1.b.
2. Loans to depository institutions and acceptances of other banks: ////////////////// //////////////////
a. To U.S. banks and other U.S. depository institutions............ 4653 0 4663 0 2.a.
b. To foreign banks................................................ 4654 0 4664 0 2.b.
3. Loans to finance agricultural production and other loans to farmers. 4655 69 4665 105 3.
4. Commercial and industrial loans: ////////////////// //////////////////
a. To U.S. addressees (domicile)................................... 4645 73,869 4617 43,048 4.a.
b. To non-U.S. addressees (domicile)............................... 4646 0 4618 102 4.b.
5. Loans to individuals for household, family, and other personal ////////////////// //////////////////
expenditures: ////////////////// //////////////////
a. Credit cards and related plans.................................. 4656 2,356 4666 1,468 5.a.
b. Other (includes single payment, installment, and all student
loans).............................................................. 4657 29,089 4667 5,303 5.b.
6. Loans to foreign governments and official institutions.............. 4643 0 4627 0 6.
7. All other loans..................................................... 4644 5,253 4628 965 7.
8. Lease financing receivables: ////////////////// //////////////////
a. Of U.S. addressees (domicile)................................... 4658 12,926 4668 4,622 8.a.
b. Of non-U.S. addressees (domicile)............................... 4659 0 4669 0 8.b.
9. Total (sum of items 1 through 8).................................... 4635 189,508 4605 71,668 9.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-B--CONTINUED
PART I. CONTINUED
(Column A) (Column B)
Charge-offs Recoveries
-------------------------------------
Calendar-year-to-date
-------------------------------------
Memoranda
Dollar Amounts in Thousands RIAD BIL MIL THOU RIAD BIL MIL THOU
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1-3. Not applicable ////////////////// //////////////////
4. Loans to finance commercial real estate, construction, and land ////////////////// //////////////////
development activities (NOT SECURED BY REAL ESTATE) included in ////////////////// //////////////////
Schedule RI-B, part I, items 4 and 7, above.......................... 5409 714 5410 1,374 M.4.
5. Loans secured by real estate in domestic offices (included in ////////////////// //////////////////
Schedule RI-B, part I, item 1, above): ////////////////// //////////////////
a. Construction and land development................................. 3582 266 3583 337 M.5.a.
b. Secured by farmland............................................... 3584 145 3585 304 M.5.b.
c. Secured by 1-4 family residential properties: ////////////////// //////////////////
(1) Revolving, open-end loans secured by 1-4 family residential ////////////////// //////////////////
properties and extended under lines of credit................. 5411 4,428 5412 619 M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties.. 5413 31,124 5414 3,602 M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties.......... 3588 5,579 3589 590 M.5.d.
e. Secured by nonfarm nonresidential properties...................... 3590 24,404 3591 10,603 M.5.e.
--------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PART II. CHANGES IN ALLOWANCE FOR LOAN AND LEASE LOSSES
Dollar Amounts in Thousands RIAD BIL MIL THOU
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Balance originally reported in the December 31, 1995, Reports of Condition and Income....... 3124 266,943 1.
2. Recoveries (must equal part I, item 9, column B above)...................................... 4605 71,668 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above)................................ 4635 189,508 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)...................... 4230 (6,834) 4.
5. Adjustments* (see instructions for this schedule)........................................... 4815 634,542 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, //////////////////
item 4.b)................................................................................... 3123 776,811 6.
------------------
- ------------
*Describe on Schedule RI-E--Explanations.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RI-C--APPLICABLE INCOME TAXES BY TAXING AUTHORITY
SCHEDULE RI-C IS TO BE REPORTED WITH THE DECEMBER REPORT OF INCOME.
I489
-----------------
Dollar Amounts in Thousands RIAD BIL MIL THOU
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Federal................................................................................... 4780 461,184 1.
2. State and local........................................................................... 4790 87,068 2.
3. Foreign................................................................................... 4795 0 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b)........ 4770 548,252 4.
5. Deferred portion of item 4............................................ RIAD 4772 274,648 ////////////////// 5.
------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RI-6
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-D--INCOME FROM INTERNATIONAL OPERATIONS
FOR ALL BANKS WITH FOREIGN OFFICES, EDGE OR AGREEMENT SUBSIDIARIES, OR IBFs WHERE INTERNATIONAL OPERATIONS ACCOUNT FOR MORE THAN
10 PERCENT OF TOTAL REVENUES, TOTAL ASSETS, OR NET INCOME.
PART I. ESTIMATED INCOME FROM INTERNATIONAL OPERATIONS
I492
-------------------
Year-to-date
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, //////////////////
and IBFs //////////////////
a. Interest income booked............................................................... 4837 N/A 1.a.
b. Interest expense booked.............................................................. 4038 N/A 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and //////////////////
IBFs (item 1.a minus 1.b)............................................................ 4839 N/A 1.c.
2. Adjustments for booking location of international operations: //////////////////
a. Net interest income attributable to international operations booked at domestic //////////////////
offices.............................................................................. 4840 N/A 2.a.
b. Net interest income attributable to domestic business booked at foreign offices...... 4841 N/A 2.b.
c. Net booking location adjustment (item 2.a minus 2.b)................................. 4842 N/A 2.c.
3. Noninterest income and expense attributable to international operations: //////////////////
a. Noninterest income attributable to international operations.......................... 4097 N/A 3.a.
b. Provision for loan and lease losses attributable to international operations......... 4235 N/A 3.b.
c. Other noninterest expense attributable to international operations................... 4239 N/A 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a //////////////////
minus 3.b and 3.c).................................................................. 4843 N/A 3.d.
4. Estimated pretax income attributable to international operations before capital //////////////////
allocation adjustment (sum of items 1.c, 2.c, and 3.d)................................. 4844 N/A 4.
5. Adjustment to pretax income for internal allocations to international operations to //////////////////
reflect the effects of equity capital on overall bank funding costs.................... 4845 N/A 5.
6. Estimated pretax income attributable to international operations after //////////////////
capital allocation adjustment (sum of items 4 and 5)................................... 4846 N/A 6.
7. Income taxes attributable to income from international operations as estimated in //////////////////
item 6................................................................................. 4797 N/A 7.
8. Estimated net income attributable to international operations (item 6 minus 7)......... 4341 N/A 8.
</TABLE>
<TABLE>
<CAPTION>
memoranda Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Intracompany interest income included in item 1.a above................................ 4847 N/A M.1.
2. Intracompany interest expense included in item 1.b above............................... 4848 N/A M.2.
</TABLE>
PART II. SUPPLEMENTARY DETAILS ON INCOME FROM INTERNATIONAL OPERATIONS REQUIRED
BY THE DEPARTMENTS OF COMMERCE AND TREASURY FOR PURPOSES OF THE U.S.
INTERNATIONAL ACCOUNTS AND THE U.S. NATIONAL INCOME AND PRODUCT ACCOUNTS
<TABLE>
<CAPTION>
Year-to-date
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income booked at IBFs......................................................... 4849 N/A 1.
2. Interest expense booked at IBFs........................................................ 4850 N/A 2.
3. Noninterest income attributable to international operations booked at domestic //////////////////
offices (excluding IBFs): //////////////////
a. Gains (losses) and extraordinary items.............................................. 5491 N/A 3.a.
b. Fees and other noninterest income................................................... 5492 N/A 3.b.
4. Provision for loan and lease losses attributable to international operations booked at //////////////////
domestic offices (excluding IBFs)...................................................... 4852 N/A 4.
5. Other noninterest expense attributable to international operations booked at domestic //////////////////
offices (excluding IBFs)............................................................... 4853 N/A 5.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RI-7
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-E--EXPLANATIONS
SCHEDULE RI-E IS TO BE COMPLETED EACH QUARTER ON A CALENDER YEAR-TO-DATE BASIS.
Detail all adjustments in Schedule RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
I495
-------------------
Year-to-date
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) //////////////////
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): //////////////////
a. Net gains on other real estate owned................................................ 5415 0 1.a.
b. Net gains on sales of loans......................................................... 5416 0 1.b.
c. Net gains on sales of premises and fixed assets..................................... 5417 0 1.c.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, //////////////////
item 5.f.(2): //////////////////
d. TEXT 4461 INCOME ON MORTGAGES HELD FOR RESALE 4461 147,813 1.d.
e. TEXT 4462 GAIN FROM BRANCH DIVESTITURES 4462 77,976 1.e.
f. TEXT 4463 4463 1.f.
2. Other noninterest expense (from Schedule RI, item 7.c): //////////////////
a. Amortization expense of intangible assets........................................... 4531 278,276 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: //////////////////
b. Net losses on other real estate owned............................................... 5418 0 2.b.
c. Net losses on sales of loans........................................................ 5419 0 2.c.
d. Net losses on sales of premises and fixed assets.................................... 5420 0 2.d.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, //////////////////
item 7.c: //////////////////
e. TEXT 4464 INTERCOMPANY CORPORATE SUPPORT FUNCTION CHARGES 4464 296,172 2.e.
f. TEXT 4467 INTERCOMPANY DATA PROCESSING & PROGRAMMING CHARGES 4467 315,897 2.f.
g. TEXT 4468 4468 2.g.
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and applicable //////////////////
income tax effect (from Schedule RI, item 11.b) (itemize and describe all extraordinary //////////////////
items and other adjustments): //////////////////
a. (1) TEXT 4469 4469 3.a.(1)
(2) Applicable income tax effect RIAD 4486 ////////////////// 3.a.(2)
b. (1) TEXT 4487 4487 3.b.(1)
(2) Applicable income tax effect RIAD 4488 ////////////////// 3.b.(2)
c. (1) TEXT 4489 4489 3.c.(1)
(2) Applicable income tax effect RIAD 4491 ////////////////// 3.c.(2)
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2) //////////////////
(itemize and describe all adjustments): //////////////////
a. TEXT 4492 4492 4.a.
b. TEXT 4493 4493 4.b.
5. Cumulative effect of changes in accounting principles from prior years (from Schedule //////////////////
RI-A, item 9) (itemize and describe all changes in accounting principles): //////////////////
a. TEXT 4494 4494 5.a.
b. TEXT 4495 4495 5.b.
6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10) //////////////////
(itemize and describe all corrections): //////////////////
a. TEXT 4496 4496 6.a.
b. TEXT 4497 4497 6.b.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RI-8
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RI-E--CONTINUED
-------------------
Year-to-date
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) //////////////////
(itemize and describe all such transactions): //////////////////
a. TEXT 4498 FLEET NATIONAL BANK SURPLUS DISTRIBUTION TO FFG .......................... 4498 (1,003,722) 7.a.
b. TEXT 4499 ........................................................................... 4499 7.b.
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, item 5) //////////////////
(itemize and describe all adjustments): //////////////////
a. TEXT 4521 12/31/95 ENDING BALANCE OF POOLED ENTITIES ............................... 4521 636,497 8.a.
b. TEXT 4522 DIVESTED ALLOWANCE RELATED TO SOLD LOANS ................................. 4522 (1,955) 8.b.
9. Other explanations (the space below is provided for the bank to briefly describe, at its -------------------
option, any other significant items affecting the Report of Income): I498 | I499
No comment [X] (RIAD 4769) -------------------
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-1
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
SCHEDULE RC -- BALANCE SHEET
C400
------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////////
a. Noninterest-bearing balances and currency and coin (1) ........................... 0081 3,923,408 1.a.
b. Interest-bearing balances(2) ..................................................... 0071 68,691 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) ....................... 1754 261,390 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ..................... 1773 4,958,338 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic //////////////////
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: //////////////////
a. Federal funds sold .............................................................. 0276 25,709 3.a.
b. Securities purchased under agreements to resell .................................. 0277 0 3.b.
4. Loans and lease financing receivables: //////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 31,260,436 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses ................... RCFD 3123 776,811 ////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ....................... RCFD 3128 0 ////////////////// 4.c.
d. Loans and leases, net of unearned income, //////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) .............................. 2125 30,483,625 4.d.
5. Trading assets (from Schedule RC-D) ................................................. 3545 73,333 5.
6. Premises and fixed assets (including capitalized leases) ............................ 2145 536,686 6.
7. Other real estate owned (from Schedule RC-M) ........................................ 2145 18,911 7.
8. Investments in unconsolidated subsidiaries and associated companies //////////////////
(from Schedule RC-M) ................................................................ 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding......................... 2155 6,380 9.
10. Intangible assets (from Schedule RC-M) .............................................. 2143 2,316,633 10.
11. Other assets (from Schedule RC-F) ................................................... 2160 3,907,689 11.
12. Total assets (sum of items 1 through 11) ............................................ 2170 46,580,793 12.
------------------
</TABLE>
- ------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC--CONTINUED
-----------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES ///////////////////////
13. Deposits: ///////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, ///////////////////////
part I) ........................................................................... RCON 2200 32,792,158 13.a.
(1) Noninterest-bearing(1) .............................. RCON 6631 10,359,674 /////////////////////// 13.a.(1)
(2) Interest-bearing .................................... RCON 6636 22,432,484 /////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from ///////////////////////
Schedule RC-E, part II ............................................................ RCFN 2200 2,414,427 13.b.
(1) Noninterest-bearing ................................. RCFN 6631 51,133 /////////////////////// 13.b.(1)
(2) Interest-bearing .................................... RCFN 6636 2,363,294 /////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in domestic ///////////////////////
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: ///////////////////////
a. Federal funds purchased ........................................................... RCFD 0278 2,999,129 14.a.
b. Securities sold under agreements to repurchase .................................... RCFD 0279 119,013 14.b.
15. a. Demand notes issued to the U.S. Treasury .......................................... RCON 2840 2,393 15.a.
b. Trading liabilities (from Schedule RC-D) .......................................... RCFD 3548 60,855 15.b.
16. Other borrowed money: ///////////////////////
a. WITH A REMAINING MATURITY OF ONE YEAR OR LESS ..................................... RCFD 2332 304,551 16.a.
b. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR ................................... RCFD 2333 631,435 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ....................... RCFD 2910 11,267 17.
18. Bank's liability on acceptances executed and outstanding ............................. RCFD 2920 6,380 18.
19. Subordinated notes and debentures .................................................... RCFD 3200 1,213,219 19.
20. Other liabilities (from Schedule RC-G) ............................................... RCFD 2930 1,506,854 20.
21. Total liabilities (sum of items 13 through 20) ....................................... RCFD 2948 42,061,681 21.
///////////////////////
22. Limited-life preferred stock and related surplus ..................................... RCFD 3282 0 22.
EQUITY CAPITAL ///////////////////////
23. Perpetual preferred stock and related surplus ........................................ RCFD 3838 125,000 23.
24. Common stock ......................................................................... RCFD 3230 19,487 24.
25. Surplus (exclude all surplus related to preferred stock) ............................. RCFD 3839 2,551,927 25.
26. a. Undivided profits and capital reserves ............................................ RCFD 3632 1,813,664 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ............ RCFD 8434 9,034 26.b.
27. Cumulative foreign currency translation adjustments .................................. RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) .................................... RCFD 3210 4,519,112 28.
29. Total liabilities, limited-life preferred stock, and equity capital ///////////////////////
(sum of items 21, 22, and 28)......................................................... RCFD 3300 46,580,793 29.
Memorandum
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external ---------------------
auditors as of any date during 1995 .................................................. RCFD 6724 N/A M.1.
---------------------
</TABLE>
1 - Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 - Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 - Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 - Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 - Review of the bank's financial statements by external auditors
6 - Compilation of the bank's financial statements by external auditors
7 - Other audit procedures (excluding tax preparation work)
8 - No external audit work
- ------------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
12
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE Page RC-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-A--CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
Exclude assets held for trading.
--------
C405
--------------------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
--------------------------------------
Dollar Amounts in Thousands RCFD BIL MIL THOU RCFD BIL MIL THOU
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and ////////////////// //////////////////
coin ................................................................... 0022 3,548,380 ////////////////// 1.
a. Cash items in process of collection and unposted debits.............. ////////////////// 0020 2,693,954 1.a.
b. Currency and coin ................................................... ////////////////// 0080 854,426 1.b.
2. Balances due from depository institutions in the U.S.................... ////////////////// 0082 87,601 2.
a. U.S. branches and agencies of foreign banks (including their IBFs)... 0083 0 ////////////////// 2.a.
b. Other commercial banks in the U.S. and other depository ////////////////// //////////////////
institutions in the U.S. (including their IBFs)...................... 0085 87,676 ////////////////// 2.b.
3. Balances due from banks in foreign countries and foreign central banks.. ////////////////// 0070 12,440 3.
a. Foreign branches of other U.S. banks................................. 0073 208 ////////////////// 3.a.
b. Other banks in foreign countries and foreign central banks........... 0074 12,491 ////////////////// 3.b.
4. Balances due from Federal Reserve Banks................................. 0090 343,344 0090 343,344 4.
5. Total (sum of items 1 through 4) (total of column A must equal ////////////////// //////////////////
Schedule RC, sum of items 1.a and 1.b).................................. 0010 3,992,099 0010 3,991,765 5.
--------------------------------------
-----------------
Memorandum Dollar Amounts in Thousands RCON BIL MIL THOU
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Non interest-bearing balances due from commercial banks in the U.S. (included in item 2, //////////////////
column B above) ............................................................................ 0050 71,678 M.1.
------------------
SCHEDULE RC-B--SECURITIES
Exclude assets held for trading.
--------
C410
------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Amortized Cost Amortized Cost Amortized Cost
------------------------------------------------------------------------------
Dollar Amounts in Thousands RCFD BIL MIL THOU RCFD BIL MIL THOU RCFD BIL MIL THOU RCFD BIL MIL THOU
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. U.S. Treasury securities......... 0211 250 0213 250 1286 715,535 1287 718,580 1.
2. U.S. Government agency ////////////////// ////////////////// ////////////////// //////////////////
and corporation obligations ////////////////// ////////////////// ////////////////// //////////////////
(exclude mortgage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities): ////////////////// ////////////////// ////////////////// //////////////////
a. Issued by U.S. Govern- ////////////////// ////////////////// ////////////////// //////////////////
ment agencies(2).............. 1289 0 1290 0 1291 0 1293 0 2.a.
b. Issued by U.S. ////////////////// ////////////////// ////////////////// //////////////////
Government-sponsored ////////////////// ////////////////// ////////////////// //////////////////
agencies(3)................... 1294 0 1295 0 1297 500 1298 500 2.b.
------------------------------------------------------------------------------
- ------------
(1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and
Export-Import Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the Farm Credit System, the Federal Home
Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing
Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-B--Continued
Held-to-maturity Available-for-sale
--------------------------------------- ---------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value(1)
------------------ ------------------ ------------------ ------------------
Dollar Amounts in Thousands RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3. Securities issued by states ////////////////// ////////////////// ////////////////// //////////////////
and political subdivisions in the ////////////////// ////////////////// ////////////////// //////////////////
U.S.: ////////////////// ////////////////// ////////////////// //////////////////
a. General obligations........... 1676 151,418 1677 151,394 1678 0 1679 0 3.a.
b. Revenue obligations........... 1681 12,415 1686 12,419 1690 0 1691 0 3.b.
c. Industrial development ////////////////// ////////////////// ////////////////// //////////////////
and similar obligations....... 1694 0 1695 0 1696 0 1697 0 3.c.
4. Mortage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities (MBS): ////////////////// ////////////////// ////////////////// //////////////////
a. Pass-through securities ////////////////// ////////////////// ////////////////// //////////////////
(1) Guaranteed by ////////////////// ////////////////// ////////////////// //////////////////
GNMA..................... 1698 0 1699 0 1701 792,519 1702 790,901 4.a.(1)
(2) Issued by FNMA ////////////////// ////////////////// ////////////////// //////////////////
and FHLMC................ 1703 0 1705 0 1706 3,163,278 1707 3,176,341 4.a.(2)
(3) Other pass-through ////////////////// ////////////////// ////////////////// //////////////////
securities............... 1709 0 1710 0 1711 1 1713 1 4.a.(3)
b. Other mortgage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities (include CMOs, ////////////////// ////////////////// ////////////////// //////////////////
REMICs, and stripped ////////////////// ////////////////// ////////////////// //////////////////
MBS): ////////////////// ////////////////// ////////////////// //////////////////
(1.) Issued or guaranteed ////////////////// ////////////////// ////////////////// //////////////////
by FNMA, FHLMC ////////////////// ////////////////// ////////////////// //////////////////
or GNMA................. 1714 0 1715 0 1716 0 1717 0 4.b.(1)
(2.) Collateralized ////////////////// ////////////////// ////////////////// //////////////////
by MBS issued or ////////////////// ////////////////// ////////////////// //////////////////
guaranteed by FNMA, ////////////////// ////////////////// ////////////////// //////////////////
FHLMC, or GNMA.......... 1718 0 1719 0 1731 0 1732 0 4.b.(2)
(3.) All other mortgage- ////////////////// ////////////////// ////////////////// //////////////////
backed securities....... 1733 0 1734 0 1735 453 1736 453 4.b.(3)
5. Other debt securities: ////////////////// ////////////////// ////////////////// //////////////////
a. Other domestic debt ////////////////// ////////////////// ////////////////// //////////////////
securities................... 1737 0 1738 0 1739 629 1741 621 5.a.
b. Foreign debt ////////////////// ////////////////// ////////////////// //////////////////
securities................... 1742 97,307 1743 87,332 1744 0 1746 0 5.b.
6. Equity securities: ////////////////// ////////////////// ////////////////// //////////////////
a. Investments in mutual ////////////////// ////////////////// ////////////////// //////////////////
funds........................ ////////////////// ////////////////// 1747 52,843 1748 52,843 6.a.
b. Other equity securities ////////////////// ////////////////// ////////////////// //////////////////
with readily determinable ////////////////// ////////////////// ////////////////// //////////////////
fair values.................. ////////////////// ////////////////// 1749 0 1751 0 6.b.
c. All other equity ////////////////// ////////////////// ////////////////// //////////////////
securities(1)................ ////////////////// ////////////////// 1752 218,098 1753 218,098 6.c.
7. Total (sum of items 1 ////////////////// ////////////////// ////////////////// //////////////////
through 6) (total of ////////////////// ////////////////// ////////////////// //////////////////
column A must equal ////////////////// ////////////////// ////////////////// //////////////////
Schedule RC, item 2.a) ////////////////// ////////////////// ////////////////// //////////////////
(total of column D must ////////////////// ////////////////// ////////////////// //////////////////
equal Schedule RC, ////////////////// ////////////////// ////////////////// //////////////////
item 2.b)....................... 1754 261,390 1771 251,395 1772 4,943,856 1773 4,958,338 7.
----------------------------------------------------------------------------------
</TABLE>
- -----------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
14
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE Page RC-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-B--CONTINUED
--------
C412
------------------
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Pledged securities(2).......................................................................... 0416 2,436,831 M.1.
2. Maturity and repricing data for debt securities(2), (3), (4) (excluding those in //////////////////
nonaccrual status): //////////////////
a. Fixed rate debt securities with a remaining maturity of: //////////////////
(1) Three months or less.................................................................... 0343 44,985 M.2.a.(1)
(2) Over three months through 12 months..................................................... 0344 105,214 M.2.a.(2)
(3) Over one year through five years........................................................ 0345 1,418,544 M.2.a.(3)
(4) Over five years ........................................................................ 0346 2,274,468 M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a(1) through 2.a.(4)........ 0347 3,843,211 M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: //////////////////
(1) Quarterly or more frequently............................................................ 4544 302,855 M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly......................... 4545 802,642 M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually.................. 4551 79 M.2.b.(3)
(4) Less frequently than every five years................................................... 4552 0 M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4))... 4553 1,105,576 M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total //////////////////
debt securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus //////////////////
nonaccrual debt securities included in Schedule RC-N, item 9, column C)..................... 0393 4,948,787 M.2.c.
3. Not applicable //////////////////
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included //////////////////
in Schedule RC-B, items 3 through 5, column A, above).......................................... 5365 0 M.4.
5. Not applicable //////////////////
6. Floating rate debt securities with a remaining maturity of one year or less(2), (4) (included in //////////////////
Memorandum items 2.b.(1) through 2.b.(4) above)................................................. 5519 4,000 M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or //////////////////
trading securities during the calendar year-to-date (report the amortized cost at date of sale //////////////////
or transfer)................................................................................... //////////////////
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale //////////////////
accounts in Schedule RC-B, item 4.b): //////////////////
a. Amortized cost.............................................................................. 8780 0 M.8.a.
b. Fair value.................................................................................. 8781 0 M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale account in //////////////////
Schedule RC-B, items 2, 3, and 5): //////////////////
a. Amortized cost.............................................................................. 8782 0 M.9.a.
b. Fair value.................................................................................. 8783 0 M.9.b.
- ----------------
(2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE Page RC-6
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-C--LOANS AND LEASE FINANCING RECEIVABLES
PART I. LOANS AND LEASES
Do not deduct the allowance for loan and lease losses from amounts ------------
reported in this schedule. Report total loans and leases, net of unearned C415
income. Exclude assets held for trading. --------------------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
--------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RFCD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Loans secured by real estate............................................ 1410 11,606,306 ////////////////// 1.
a. Construction and land development.................................... ////////////////// 1415 599,823 1.a.
b. Secured by farmland (including farm residential and other ////////////////// //////////////////
improvements)........................................................ ////////////////// 1420 1,990 1.b.
c. Secured by 1-4 family residential properties: ////////////////// //////////////////
(1) Revolving, open-end loans secured by 1-4 family residential ////////////////// //////////////////
properties and extended under lines of credit.................... ////////////////// 1797 1,906,776 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: ////////////////// //////////////////
(a) Secured by first liens....................................... ////////////////// 5367 4,239,378 1.c.(2)(a)
(b) Secured by junior liens...................................... ////////////////// 5368 616,562 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties............ ////////////////// 1460 473,710 1.d.
e. Secured by nonfarm nonresidential properties......................... ////////////////// 1480 3,768,067 1.e.
2. Loans to depository institutions: ////////////////// //////////////////
a. To commercial banks in the U.S. ..................................... ////////////////// 1505 76,227 2.a.
(1) To U.S. branches and agencies of foreign banks................... 1506 0 ////////////////// 2.a.(1)
(2) To other commercial banks in the U.S. ........................... 1507 76,227 ////////////////// 2.a.(2)
b. To other depository institutions in the U.S. ........................ 1517 13,345 1517 13,345 2.b.
c. To banks in foreign countries........................................ ////////////////// 1510 928 2.c.
(1) To foreign branches of other U.S. banks.......................... 1513 160 ////////////////// 2.c.(1)
(2) To other banks in foreign countries.............................. 1516 768 ////////////////// 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers..... 1590 4,351 1590 4,351 3.
4. Commercial and industrial loans: ////////////////// //////////////////
a. To U.S. addressees (domicile)........................................ 1763 12,626,132 1763 12,574,435 4.a.
b. To non-U.S. addressees (domicile).................................... 1764 78,513 1764 31,092 4.b.
5. Acceptances of other banks: ////////////////// //////////////////
a. Of U.S. banks........................................................ 1756 0 1756 0 5.a.
b. Of foreign banks..................................................... 1757 0 1757 0 5.b.
6. Loans to individuals for household, family, and other personal ////////////////// //////////////////
expenditures (i.e., consumer loans) (includes purchased paper).......... ////////////////// 1975 2,101,041 6.
a. Credit cards and related plans (includes check credit and other ////////////////// //////////////////
revolving credit plans).............................................. 2008 94,750 ////////////////// 6.a.
b. Other (includes single payment, installment, and all student loans).. 2011 2,006,291 ////////////////// 6.b.
7. Loans to foreign governments and official institutions (including ////////////////// //////////////////
foreign central banks).................................................. 2081 0 2081 0 7.
8. Obligations (other than securities and leases) of states and political ////////////////// //////////////////
subdivisions in the U.S. (includes nonrated industrial development ////////////////// //////////////////
obligations)............................................................ 2107 149,176 2107 149,176 8.
9. Other loans ............................................................ 1563 2,018,484 ////////////////// 9.
a. Loans for purchasing or carrying securities (secured and unsecured).. ////////////////// 1545 179,603 9.a.
b. All other loans (exclude consumer loans)............................. ////////////////// 1564 1,838,881 9.b.
10. Lease financing receivables (net of unearned income).................... ////////////////// 2165 2,585,933 10.
a. Of U.S. addressees (domicile) ....................................... 2182 2,585,933 ////////////////// 10.a.
b. Of non-U.S. addressees (domicile).................................... 2183 0 ////////////////// 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above......... 2123 0 2123 0 11.
12. Total loans and leases, net of unearned income (sum of items 1 ////////////////// //////////////////
through 10 minus item 11) (total of column A must equal ////////////////// //////////////////
Schedule RC, item 4.a) ................................................. 2122 31,260,436 2122 31,161,318 12.
--------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-7
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-C--CONTINUED
PART I. CONTINUED
(Column A) (Column B)
Consolidated Domestic
Bank Offices
Memoranda ------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above........................ 1496 0 1496 0 M.1.
2. Loans and leases restructured and in compliance with modified terms ////////////////// //////////////////
(included in Schedule RC-C, part I, above and not reported as past due ////////////////// //////////////////
or nonaccrual in Schedule RC-N, Memorandum item 1): ////////////////// //////////////////
a. Loans secured by real estate: ////////////////// //////////////////
(1) To U.S. addressees (domicile)............................................. 1687 1,681 M.2.a.(1)
(2) To non-U.S. addressees (domicile)......................................... 1689 0 M.2.a.(2)
b. All other loans and lease financing receivable (exclude loans to //////////////////
individuals for household, family, and other personal expenditures)........... 8691 0 M.2.b.
c. Commercial and industrial loans to and lease financing receivables //////////////////
of non-U.S. addressees (domicile) included in Memorandum item 2.b //////////////////
above......................................................................... 8692 0 M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those in //////////////////
nonaccrual status): //////////////////
a. Fixed rate loans with a remaining maturity of: //////////////////
(1) Three months or less...................................................... 0348 690,294 M.3.a.(1)
(2) Over three months through 12 months....................................... 0349 566,523 M.3.a.(2)
(3) Over one year through five years.......................................... 0356 2,658,468 M.3.a.(3)
(4) Over five years........................................................... 0357 5,501,645 M.3.a.(4)
(5) Total fixed rate loans and leases (sum of Memorandum //////////////////
items 3.a.(1) through 3.a.(4))............................................ 0358 9,416,930 M.3.a.(5)
b. Floating rate loans with a repricing frequency of: //////////////////
(1) Quarterly or more frequently.............................................. 4554 17,235,629 M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly........... 4555 3,186,865 M.3.b.(2)
(3) Every five years or more frequently, but less frequently than //////////////////
annually.................................................................. 4561 977,978 M.3.b.(3)
(4) Less frequently than every five years..................................... 4564 129,282 M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) //////////////////
through 3.b.(4)........................................................... 4567 21,529,754 M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and //////////////////
3.b.(5)) (must equal the sum of total loans and leases, net, from //////////////////
Schedule RC-C, part I, item 12, plus unearned income from //////////////////
Schedule RC-C, part I, item 11, minus total nonaccrual loans and //////////////////
leases from Schedule RC-N, sum of items 1 through 8, column C)................ 1479 30,946,684 M.3.c.
d. FLOATING RATE LOANS WITH A REMAINING MATURITY OF ONE YEAR OR LESS //////////////////
(INCLUDED IN MEMORANDUM ITEMS 3.b.(1) THROUGH 3.b.(4) ABOVE).................. A246 0 M.3.d.
4. Loans to finance commercial real estate, construction, and land //////////////////
development activities (NOT SECURED BY REAL ESTATE) included in //////////////////
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2)..................... 2746 335,734 M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, //////////////////
above)........................................................................... 5369 0 M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family //////////////////
residential properties (included in Schedule RC-C, part I, item 1.c.(2)(a), ////////////////// RCON Bil Mil Thou
column B, page RC-6)............................................................. ////////////////// 5370 1,841,822 M.6.
</TABLE>
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in RC-C, part I,
item 1, column A.
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-8
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-D--TRADING ASSETS AND LIABILITIES
Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional
amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D).
---------
C420
----------------------
Dollar Amounts in Thousands //////// Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS //////////////////////
1. U.S. Treasury securities in domestic offices............................................. RCON 3531 0 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- //////////////////////
backed securities)....................................................................... RCON 3532 0 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices... RCON 3533 0 3.
4. Mortgage-backed securities (MBS) in domestic offices: //////////////////////
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA.................. RCON 3534 0 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA //////////////////////
(include CMOs, REMICs, and stripped MBS).............................................. RCON 3535 0 4.b.
c. All other mortgage-backed securities.................................................. RCON 3536 0 4.c.
5. Other debt securities in domestic offices................................................ RCON 3537 0 5.
6. Certificates of deposit in domestic offices.............................................. RCON 3538 0 6.
7. Commercial paper in domestic offices..................................................... RCON 3539 0 7.
8. Bankers acceptances in domestic offices.................................................. RCON 3540 0 8.
9. Other trading assets in domestic offices................................................. RCON 3541 0 9.
10. Trading assets in foreign offices........................................................ RCFN 3542 0 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity //////////////////////
contracts: //////////////////////
a. In domestic offices................................................................... RCON 3543 64,043 11.a.
b. In foreign offices.................................................................... RCFN 3544 9,290 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5)........ RCFD 3545 73,333 12.
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES //////// Bil Mil Thou
----------------------
<S> <C> <C> <C>
13. Liability for short positions............................................................ RFCD 3546 0 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and //////////////////////
equity contracts......................................................................... RFCD 3547 60,855 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b)... RCFD 3548 60,855 15.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RC-9
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-E--DEPOSIT LIABILITIES
PART I. DEPOSITS IN DOMESTIC OFFICES
--------------
C425
--------------
Nontransaction
Transactions Accounts Accounts
---------------------------------------------------------------
(Column A) (Column B) (Column C)
Total transaction Memo: Total Total
accounts (including demand deposits nontransaction
total demand (included in accounts
deposits) column A) (including MMDAs)
----------------------------------------------------------------
Dollar Amounts in Thousands RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Deposits of: ////////////////// ////////////////// //////////////////
1. Individuals, partnerships, and corporations..... 2201 8,925,633 2240 8,417,538 2346 21,118,482 1.
2. U.S. Government................................. 2202 170,644 2280 170,617 2520 5,680 2.
3. States and political subdivisions in the U.S.... 2203 531,934 2290 508,362 2530 777,806 3.
4. Commercial banks in the U.S..................... 2206 836,406 2310 836,406 2550 397 4.
5. Other depository institutions in the U.S........ 2207 223,383 2312 223,383 2349 2,868 5.
6. Banks in foreign countries...................... 2213 23,850 2320 23,850 2236 0 6.
7. Foreign governments and official institutions ////////////////// ////////////////// //////////////////
(including foreign central banks)............... 2216 0 2300 0 2377 0 7.
8. Certified and official checks................... 2330 175,075 2330 175,075 ////////////////// 8.
9. Total (sum of items 1 through 8) (sum of columns ////////////////// ////////////////// //////////////////
A and C must equal Schedule RC, item 13.a....... 2215 10,886,925 2210 10,355,231 2385 21,905,233 9.
----------------------------------------------------------------
</TABLE>
Memoranda
<TABLE>
Dollar Amounts in Thousands RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): //////////////////
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts.................... 6835 2,607,397 M.1.a.
b. Total brokered deposits................................................................ 2365 1,415,235 M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): //////////////////
(1) Issued in denominations of less than $100,,000.................................... 2343 2,240 M.1.c.(1)
(2) Issued EITHER in denominations of $100,000 OR in denominations greater than //////////////////
$100,000 and participated out by the broker in shares of $100,000 or less......... 2344 1,412,995 M.1.c.(2)
D. MATURITY DATA FOR BROKERED DEPOSITS: //////////////////
(1) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF LESS THAN $100,000 WITH A REMAINING //////////////////
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.C.(1) ABOVE).......... A243 20 M.1.d.(1)
(2) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF $100,000 OR MORE WITH A REMAINING //////////////////
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.B ABOVE).............. A244 584,547 M.1.d.(2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the //////////////////
U.S. reported in item 3 above which are secured or collateralized as required under //////////////////
state law)............................................................................. 5590 346,573 M.1.e.
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d //////////////////
must equal item 9, column C above): //////////////////
a. Savings deposits: //////////////////
(1) Money market deposit accounts (MMDAs)............................................. 6810 10,252,364 M.2.a.(1)
(2) Other savings deposits (excludes MMDAs).......................................... 0352 2,397,861 M.2.a.(2)
b. Total time deposits of less than $100,000.............................................. 6648 6,781,917 M.2.b.
c. Time certificates of deposit of $100,000 or more....................................... 6645 2,473,091 M.2.c.
d. Open-account time deposits of $100,000 or more......................................... 6646 0 M.2.d.
3. All NOW accounts (included in column A above).............................................. 2398 531,694 M.3.
4. Not applicable
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-10
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-E--CONTINUED
PART I. CONTINUED
Memoranda (continued)
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000 (sum of //////////////////
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1) //////////////////
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of: //////////////////
(1) Three months or less .............................................................. A225 1,722,551 M.5.a.(1)
(2) Over three months through 12 months ............................................... A226 3,024,143 M.5.a.(2)
(3) Over one year ..................................................................... A227 1,975,207 M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of: //////////////////
(1) Quarterly or more frequently ...................................................... A228 60,016 M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ................... A229 0 M.5.b.(2)
(3) Les frequently than annually ...................................................... A230 0 M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of //////////////////
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above) ......... A231 39,531 M.5.c.
6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates //////////////////
of deposit of $100,000 or more and open-account time deposits of $100,000 or more) //////////////////
(sum of Memorandum items 6.a.(1) through 6.b.(4) must equal the sum of Memorandum //////////////////
items 2.c and 2.d above): (1) //////////////////
a. Fixed rate time deposits of $100,000 or more with a remaining maturity of: //////////////////
(1) Three months or less .............................................................. A232 720,549 M.6.a.(1)
(2) Over three months through 12 months ............................................... A233 695,947 M.6.a.(2)
(3) Over one year through five years .................................................. A234 1,014,722 M.6.a.(3)
(4) Over five years ................................................................... A235 8,868 M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a repricing frequency of: //////////////////
(1) Quarterly or more frequently ...................................................... A236 33,005 M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ................... A237 0 M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ............ A238 0 M.6.b.(3)
(4) Less frequently than every five years ............................................. A239 0 M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of //////////////////
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above).......... A240 1,896 M.6.c.
------------------
</TABLE>
- ------------
(1) Memorandum items 5 and 6 are not applicable to savings banks that
must complete supplemental Schedule RC-J.
20
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-11
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-E--CONTINUED
PART II. DEPOSITS IN FOREIGN OFFICES (INCLUDING EDGE AND
AGREEMENT SUBSIDIARIES AND IBFS)
------------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits of: //////////////////
1. Individuals, partnerships, and corporations.......................................... 2621 2,410,097 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks)....................... 2623 0 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including
their IBFs).......................................................................... 2625 0 3.
4. Foreign governments and official institutions (including foreign central banks)...... 2650 0 4.
5. Certified and official checks........................................................ 2330 0 5.
6. All other deposits................................................................... 2668 4,330 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b)................. 2200 2,414,427 7.
</TABLE>
<TABLE>
<CAPTION>
------------------
Memorandum Dollar Amounts in Thousands RCFN Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. TIME DEPOSITS WITH A REMAINING MATURITY OF ONE YEAR OR LESS (INCLUDED IN PART II, //////////////////
ITEM 7 ABOVE)........................................................................ A245 2,414,425 M.1.
</TABLE>
SCHEDULE RC-F--OTHER ASSETS
<TABLE>
<CAPTION>
---------
C430
-----------------------
Dollar Amounts in Thousands ////////// Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Income earned, not collected on loans................................................ RCFD 2164 243,319 1.
2. Net deferred tax assets (1).......................................................... RCFD 2148 0 2.
3. Excess residential mortgage servicing fees receivable................................ RCFD 5371 173,148 3.
4. Other (itemize and describe amounts that exceed 25% of this item).................... RCFD 2168 3,491,222 4.
--------- --------------------
a. TEXT 3549 MORTGAGE HELD FOR RESALE RCFD 3549 1,517,133 /////////////////////// 4.a.
-------------------------------------------------------------
b. TEXT 3550 RCFD 3550 /////////////////////// 4.b.
-------------------------------------------------------------
c. TEXT 3551 RCFD 3551 /////////////////////// 4.c.
-------------------------------------------------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11)................... RCFD 2160 3,907,689 5.
-----------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------
Memorandum Dollar Amounts in Thousands //////////// Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes.................. RFCD 5610 0 M.1.
</TABLE>
SCHEDULE RC-G--OTHER LIABILITIES
<TABLE>
<CAPTION>
-----------
C435
------------------------
Dollar Amounts in thousands ////////// Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices (2).................... RCON 3645 50,636 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable)......... RCFD 3646 509,357 1.b.
2. Net deferred tax liabilities(1)....................................................... RCFD 3049 434,426 2.
3. Minority interest in consolidated subsidiaries........................................ RCFD 3000 0 3.
4. Other (itemize and describe amounts that exceed 25% of this item)..................... RCFD 2938 512,435 4.
---------
a. TEXT 3552 RCFD 3552 /////////////////////// 4.a.
-------------------------------------------------------------
b. TEXT 3553 RCFD 3553 /////////////////////// 4.b.
-------------------------------------------------------------
c. TEXT 3554 RCFD 3554 /////////////////////// 4.c.
-------------------------------------------------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20).................... RCFD 2930 1,506,854 5.
</TABLE>
- ----------------
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-12
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
---------------
SCHEDULE RC-H--SELECTED BALANCE SHEET ITEMS FOR DOMESTIC OFFICES
C440
------------------
Domestic Offices
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Customers' liability to this bank on acceptances outstanding......................... 2155 6,380 1.
2. Bank's liability on acceptances executed and outstanding............................. 2920 6,380 2.
3. Federal funds sold and securities purchased under agreements to resell............... 1350 25,709 3.
4. Federal funds purchased and securities sold under agreements to repurchase........... 2800 3,118,142 4.
5. Other borrowed money................................................................. 3190 935,986 5.
EITHER //////////////////
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs.......... 2163 N/A 6.
OR //////////////////
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs............ 2941 2,311,663 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, //////////////////
and IBFs)............................................................................ 2192 46,468,505 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement //////////////////
subsidiaries, and IBFs).............................................................. 3129 39,637,730 9.
ITEMS 10-17 INCLUDE HELD-TO-MATURITY AND AVAILABLE-FOR-SALE SECURITIES IN DOMESTIC OFFICES.
</TABLE>
<TABLE>
<CAPTION>
------------------
RCON Bil Mil Thou
------------------
<S> <C> <C> <C>
10. U.S. Treasury securities............................................................. 1779 718,830 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed //////////////////
securities).......................................................................... 1785 500 11.
12. Securities issued by states and political subdivisions in the U.S.................... 1786 163,833 12.
13. Mortgage-backed securities (MBS): //////////////////
a. Pass-through securities: //////////////////
(1) Issued or guaranteed by FNMA, FHLMC, OR GNMA................................ 1787 3,967,242 13.a.(1)
(2) Other pass-through securities............................................... 1869 1 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): //////////////////
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA................................ 1877 0 13.b.(1)
(2) All other mortgage-backed securities........................................ 2253 453 13.b.(2)
14. Other domestic debt securities....................................................... 3159 621 14.
15. Foreign debt securities.............................................................. 3160 97,307 15.
16. Equity securities: //////////////////
a. Investments in mutual funds...................................................... 3161 52,843 16.a.
b. Other equity securities with readily determinable fair values.................... 3162 0 16.b.
c. All other equity securities...................................................... 3169 218,098 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) 3170 5,219,728 17.
</TABLE>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
<TABLE>
<CAPTION>
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EITHER //////////////////
1. Net due from the IBF of the domestic offices of the reporting bank................... 3051 0 M.1.
OR //////////////////
2. Net due to the IBF of the domestic offices of the reporting bank..................... 3059 N/A M.2.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RC-13
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-I--SELECTED ASSETS AND LIABILITIES OF IBFs
C445
------------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12)........ 2133 0 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, //////////////////
item 12, column A)................................................................... 2076 0 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, //////////////////
item 4, column A).................................................................... 2077 0 3.
4. Total IBF liabilities (component of Schedule RC, item 21)............................ 2898 0 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule //////////////////
RC-E, part II, items 2 and 3)........................................................ 2379 0 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, //////////////////
items 1,4,5, and 6................................................................... 2381 0 6.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-K--QUARTERLY AVERAGES (1)
C455
------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
ASSETS ///////////////////////
<S> <C> <C> <C>
1. Interest-bearing balances due from depository institutions...................... RCFD 3381 28,972 1.
2. U.S. Treasury securities and U.S. Government agency and corporation
obligations (2)................................................................. RCFD 3382 5,849,801 2.
3. Securities issued by states and political subdivisions in the U.S. (2).......... RCFD 3383 171,480 3.
4. a. Other debt securities (2)................................................... RCFD 3647 98,635 4.a.
b. Equity securities (3) (includes investments in mutual funds and Federal ///////////////////////
Reserve stock).................................................................. RCFD 3648 290,211 4.b.
5. Federal funds sold and securities purchased under agreements to resell in ///////////////////////
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in ///////////////////////
IBFs............................................................................ RCFD 3365 34,073 5.
6. Loans:
a. Loans in domestic offices:
(1) Total loans............................................................ RCON 3360 28,772,871 6.a.(1)
(2) Loans secured by real estate........................................... RCON 3385 11,782,561 6.a.(2)
(3) Loans to finance agricultural production and other loans to ///////////////////////
farmers................................................................ RCON 3386 4,568 6.a.(3)
(4) Commercial and industrial loans........................................ RCON 3387 12,208,378 6.a.(4)
(5) Loans to individuals for household, family, and other personal ///////////////////////
expenditures........................................................... RCON 3388 2,106,517 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs... RCFN 3360 93,116 6.b.
7. Trading assets.................................................................. RCFD 3401 70,398 7.
8. Lease financing receivables (net of unearned income)............................ RCFD 3484 2,414,362 8.
9. Total assets(4)................................................................. RCFD 3368 47,043,625 9.
LIABILITIES
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS ///////////////////////
accounts, and telephone and preauthorized transfer accounts) (exclude demand ///////////////////////
deposits)....................................................................... RCON 3485 554,831 10.
11. Nontransaction accounts in domestic offices: ///////////////////////
a. Money market deposit accounts (MMDAs)....................................... RCON 3486 10,212,141 11.a.
b. Other savings deposits...................................................... RCON 3487 2,477,260 11.b.
c. Time certificates of deposit of $100,000 or more............................ RCON 3345 2,533,067 11.c.
d. All other time deposits..................................................... RCON 3469 6,982,619 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, ///////////////////////
and IBFs........................................................................ RCFN 3404 2,117,139 12.
13. Federal funds purchased and securities sold under agreements to repurchase in ///////////////////////
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in ///////////////////////
IBFs............................................................................ RCFD 3353 4,817,518 13.
14. Other borrowed money............................................................ RCFD 3355 985,125 14.
- ---------------
(1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized cost.
(3) Quarterly averages for all equity securities should be based on historical cost.
(4) The quarterly average for total assets should reflect all debt securities (not held for trading) at amortized
cost, equity securities with readily determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE Page RC-14
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-L--OFF BALANCE SHEET ITEMS
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.
C460
Dollar Amounts in Thousands RCFD BIL MIL THOU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Unused commitments: //////////////////
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home equity //////////////////
lines....................................................................................... 3814 2,159,101 1.a.
b. Credit card lines........................................................................... 3815 37,038 1.b.
c. Commercial real estate, construction, and land development: //////////////////
(1) Commitments to fund loans secured by real estate........................................ 3816 538,163 1.c.(1)
(2) Commitments to fund loans not secured by real estate.................................... 6550 513,346 1.c.(2)
d. Securities underwriting..................................................................... 3817 0 1.d.
e. Other unused commitments.................................................................... 3818 20,572,462 1.e.
2. Financial standby letters of credit and foreign office guarantees.............................. 3819 2,322,445 2.
--------------------
a. Amount of financial standby letters of credit conveyed to others RCFD 3820 89,650 ////////////////// 2.a.
--------------------
3. Performance standby letters of credit and foreign office guarantees............................ 3821 179,230 3.
--------------------
a. Amount of performance standby letters of credit conveyed to others RCFD 3822 6,004 ////////////////// 3.a.
--------------------
4. Commercial and similar letters of credit....................................................... 3411 137,503 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by the //////////////////
reporting bank................................................................................. 3428 112 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting //////////////////
(nonaccepting) bank............................................................................ 3429 12,837 6.
7. Securities borrowed............................................................................ 3432 0 7.
8. Securities lent (including customers' securities lent where the customer is indemnified against //////////////////
loss by the reporting bank).................................................................... 3433 965,792 8.
9. Loans transferred (i.e., sold or swapped) with recourse that have been treated as sold for //////////////////
Call Report purposes: //////////////////
a. FNMA and FHLMC residential mortgage loan pools: //////////////////
(1) Outstanding principal balance of mortgages transferred as or the report date............ 3650 298,423 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.................... 3651 298,423 9.a.(2)
b. Private (nongovernment-issued or guaranteed) residential mortgage loan pools: //////////////////
(1) Outstanding principal balance of mortgages transferred as of the report date............ 3652 289,942 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.................... 3653 289,942 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: //////////////////
(1) Outstanding principal balance of mortgages transferred as of the report date............ 3654 0 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.................... 3655 0 9.c.(2)
d. Small business obligations transferred with recourse under Section 208 of the //////////////////
Riegle Community Development and Regulatory improvement Act of 1994: //////////////////
(1) Outstanding principal balance of small business obligations transferred //////////////////
as of the report date................................................................... A249 0 9.d.(1)
(2) Amount of retained recourse on these obligations as of the report date.................. A250 0 9.d.(2)
10. When-issued securities: //////////////////
a. Gross commitments to purchase............................................................... 3434 0 10.a
b. Gross commitments to sell................................................................... 3435 0 10.b.
11. Spot foreign exchange contracts................................................................ 8765 487,442 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and //////////////////
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") 3430 0 12.
------------------------------------------------------------------------------------------- //////////////////
a. TEXT 3555 ........................................................ RCFD 3555 ////////////////// 12.a.
b. TEXT 3556 ........................................................ RCFD 3556 ////////////////// 12.b.
c. TEXT 3557 ........................................................ RCFD 3557 ////////////////// 12.c.
d. TEXT 3558 ........................................................ RCFD 3558 ////////////////// 12.d.
---------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-15
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-L--CONTINUED
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and //////////////////
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") 5591 0 13.
--------- ------------------------------ //////////////////
a. TEXT 5592 RCFD 5592 ////////////////// 13.a.
b. TEXT 5593 RCFD 5593 ////////////////// 13.b.
c. TEXT 5594 RCFD 5594 ////////////////// 13.c.
d. TEXT 5595 RCFD 5595 ////////////////// 13.d.
--------------------------------------------------------------------------------------------------------------
C461
----------------- ----------------- ----------------- ------------------
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
- ---------------------------------------- Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives ----------------- ----------------- ----------------- ------------------
Position Indicators Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou
---------------------------------------- ----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
14. Gross amounts (e.g., notional ///////////////// ///////////////// ///////////////// /////////////////
amounts) (for each column, sum of ///////////////// ///////////////// ///////////////// /////////////////
items 14.a through 14.e must equal ///////////////// ///////////////// ///////////////// /////////////////
sum of items 15, 16.a, and 16.b): ///////////////// ///////////////// ///////////////// /////////////////
----------------- ----------------- ----------------- -----------------
a. Futures contracts ................ 0 0 0 39,037 14.a
----------------- ----------------- ----------------- -----------------
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
----------------- ----------------- ----------------- -----------------
b. Forward contracts ................ 2,684,800 2,284,466 0 45,604 14.b
----------------- ----------------- ----------------- -----------------
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
----------------- ----------------- ----------------- -----------------
c. Exchange-traded option contracts: ///////////////// ///////////////// ///////////////// /////////////////
----------------- ----------------- ----------------- -----------------
(1) Written options .............. 225,000 0 0 0 14.c.(1)
----------------- ----------------- ----------------- -----------------
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
----------------- ----------------- ----------------- -----------------
(2) Purchased options ............ 1,276,400 0 0 1,245 14.c.(2)
----------------- ----------------- ----------------- -----------------
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
----------------- ----------------- ----------------- -----------------
d. Over-the-counter option contracts: ///////////////// ///////////////// ///////////////// /////////////////
----------------- ----------------- ----------------- -----------------
(1) Written options .............. 5,051,792 5,200 0 0 14.d.(1)
----------------- ----------------- ----------------- -----------------
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
----------------- ----------------- ----------------- -----------------
(2) Purchased options ............ 19,427,829 5,200 0 0 14.d.(2)
----------------- ----------------- ----------------- -----------------
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
----------------- ----------------- ----------------- -----------------
e. Swaps ............................ 24,549,614 0 0 0 14.e
----------------- ----------------- ----------------- -----------------
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
----------------- ----------------- ----------------- -----------------
15. Total gross notional amount of ///////////////// ///////////////// ///////////////// /////////////////
derivative contracts held for trading. 5,289,505 2,294,866 0 l,245 15
----------------- ----------------- ----------------- -----------------
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
----------------- ----------------- ----------------- -----------------
l6. Total gross notional amount of ///////////////// ///////////////// ///////////////// /////////////////
derivative contracts held for ///////////////// ///////////////// ///////////////// /////////////////
purposes other than trading: ///////////////// ///////////////// ///////////////// /////////////////
----------------- ----------------- ----------------- -----------------
a. Contracts marked to market ...... 4,239,800 0 0 39,037 16.a.
----------------- ----------------- ----------------- -----------------
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
----------------- ----------------- ----------------- -----------------
b. Contracts not marked to market .. 43,686,130 0 0 45,604 16.b.
----------------- ----------------- ----------------- -----------------
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
----------------- ----------------- ----------------- -----------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-16
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-L--CONTINUED
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
Off-balance Sheet Derivatives Contracts Contracts Contracts Other Contracts
Position Indicators ------------------ ------------------ ------------------ ------------------
RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
17. Gross fair values of ////////////////// ////////////////// ////////////////// //////////////////
derivative contracts: ////////////////// ////////////////// ////////////////// //////////////////
a. Contracts held for ////////////////// ////////////////// ////////////////// //////////////////
trading: ////////////////// ////////////////// ////////////////// //////////////////
(1) Gross positive ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8733 31,626 8734 41,468 8736 0 8736 59 17.a.(1)
(2) Gross negative ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8737 22,099 8738 38,756 8739 0 8740 0 17.a.(2)
b. Contracts held for ////////////////// ////////////////// ////////////////// //////////////////
purposes other than ////////////////// ////////////////// ////////////////// //////////////////
trading that are marked ////////////////// ////////////////// ////////////////// //////////////////
to market: ////////////////// ////////////////// ////////////////// //////////////////
(1) Gross positive ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8741 2,258 8742 0 8743 0 8744 1,698 17.b.(1)
(2) Gross negative ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8745 1,417 8746 0 8747 0 8748 0 17.b.(2)
c. Contracts held for ////////////////// ////////////////// ////////////////// //////////////////
purposes other than ////////////////// ////////////////// ////////////////// //////////////////
trading that are not ////////////////// ////////////////// ////////////////// //////////////////
marked to market: ////////////////// ////////////////// ////////////////// //////////////////
(1) Gross positive ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8749 165,643 8750 0 8751 0 8752 169 17.c.(1)
(2) Gross negative ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8737 76,308 8754 0 8755 0 8756 0 17.c.(2)
---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands RFCD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.-2. Not applicable //////////////////
3. Unused commitments with an original maturity exceeding one year that are reported in //////////////////
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments //////////////////
that are fee paid or otherwise legally binding).................................................. 3833 18,552,873 M.3.
a. Participations in commitments with an original maturity //////////////////
exceeding one year to be conveyed to others......................... RCFD 3834 | 1,789,549 ////////////////// M.3.a.
4. To be completed only by banks with $1 billion or more in total assets: //////////////////
Standby letters of credit and foreign office guarantees (both financial and performance) issued //////////////////
to non-U.S. addresses (domicile) included in Schedule RC-L, items 2 and 3, above................. 3377 360,019 M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that //////////////////
have been securitized and sold without recourse (with servicing retained), amounts outstanding //////////////////
by type of loan: //////////////////
a. Loans to purchase private passenger automobiles (TO BE COMPLETED FOR THE //////////////////
SEPTEMBER REPORT ONLY)........................................................................ 2741 N/A M.5.a.
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY).................................... 2742 0 M.5.b.
c. All other consumer installment credit (including mobile home loans)(TO BE COMPLETED FOR THE //////////////////
SEPTEMBER REPORT ONLY)........................................................................ 2743 N/A M.5.c.
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-17
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-M--MEMORANDA
--------
C465
------------------
Dollar Amounts in Thousands RFCD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal //////////////////
shareholders, and their related interests as of the report date: //////////////////
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal //////////////////
shareholders, and their related interests...................................................... 6164 552,349 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of //////////////////
all extensions of credit by the reporting bank (including extensions of credit to //////////////////
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number //////////////////
of total capital as defined for this purpose in agency regulations. RFCD 6165 | 20 ////////////////// 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches //////////////////
and agencies of FOREIGN BANKS(1) (included in Schedule RC, items 3.a and 3.b)..................... 3405 0 2.
3. Not applicable. //////////////////
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others //////////////////
(include both retained servicing and purchased servicing): //////////////////
a. Mortgages serviced under a GNMA contract....................................................... 5500 25,732,152 4.a.
b. Mortgages services under a FHLMC contract: //////////////////
(1) Serviced with recourse to servicer......................................................... 5501 48,720 4.b.(1)
(2) Serviced without recourse to servicer...................................................... 5502 34,857,978 4.b.(2)
c. Mortgages serviced under a FNMA contract: //////////////////
(1) Serviced under a regular option contract................................................... 5503 249,703 4.c.(1)
(2) Serviced under a special option contract................................................... 5504 41,105,444 4.c.(2)
d. Mortgages serviced under other servicing contracts............................................. 5505 11,267,486 4.d.
5. To be completed only by banks with $1 billion or more in total assets: //////////////////
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must //////////////////
equal Schedule RC, item 9): //////////////////
a. U.S. addresses (domicile)...................................................................... 2103 6,244 5.a.
b. Non-U.S. addresses (domicile).................................................................. 2104 136 5.b.
6. Intangible assets: //////////////////
a. Mortgage servicing rights...................................................................... 3164 1,563,176 6.a.
b. Other identifiable intangible assets //////////////////
(1) Purchased credit card relationships........................................................ 5506 0 6.b.(1)
(2) All other identifiable intangible assets................................................... 5507 105,984 6.b.(2)
c. Goodwill....................................................................................... 3163 647,473 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)......................... 2143 2,316,633 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or //////////////////
are otherwise qualifying for regulatory capital purposes....................................... 6442 0 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to //////////////////
redeem the debt................................................................................... 3295 75,000 7.
</TABLE>
- -----------------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this time.
27
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE Page RC-18
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-M--CONTINUED
------------------
Dollar Amounts in Thousands BIL MIL THOU
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
8. a. Other real estate owned: /////////////////////////
(1) Direct and indirect investments in real estate ventures......................... RCFD 5372 0 8.a.(1)
(2) All other real estate owned: /////////////////////////
(a) Construction and land development in domestic offices........................ RCON 5508 332 8.a.(2)(a)
(b) Farmland in domestic offices................................................. RCON 5509 0 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices........................ RCON 5510 9,789 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices........... RCON 5511 347 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices........................ RCON 5512 8,443 8.a.(2)(e)
(f) In foreign offices........................................................... RCFN 5513 0 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7)........ RCFD 2150 18,911 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: /////////////////////////
(1) Direct and indirect investments in real estate ventures.......................... RCFD 5374 0 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies.... RCFD 5375 0 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8)........ RCFD 2130 0 8.b.(3)
c. TOTAL ASSETS of unconsolidated subsidiaries and associated companies................. RCFD 5376 0 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, /////////////////////////
item 23, "Perpetual preferred stock and related surplus"................................ RCFD 3778 125,000 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include /////////////////////////
proprietary, private label, and third party products): /////////////////////////
a. Money market funds................................................................... RCON 6441 204,326 10.a.
b. Equity securities funds.............................................................. RCON 8427 116,418 10.b.
c. Debt securities funds................................................................ RCON 8428 12,837 10.c.
d. Other mutual funds................................................................... RCON 8429 0 10.d.
e. Annuities............................................................................ RCON 8430 103,868 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a. through /////////////////////////
10.e. above)......................................................................... RCON 8784 302,177 10.f.
-------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Interbank holdings of capital instruments (TO BE COMPLETED FOR THE DECEMBER REPORT ONLY): //////////////////
a. Reciprocal holdings of banking organizations' capital instruments........................... 3836 0 M.1.a.
b. Nonreciprocal holdings of banking organizations' capital instruments........................ 3837 0 M.1.b.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-19
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-N--PAST DUE AND NONACCRUAL LOANS, LEASES,
AND OTHER ASSETS
The FFIEC regards the information reported in
all of Memorandum item 1, in items 1 through 10,
column A, and in Memorandum items 2 through 4,
column A, as confidential.
--------
C470
------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
------------------ ------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Loans secured by real estate: ////////////////// ////////////////// //////////////////
a. To U.S. addressees (domicile) .................... 1245 1246 65,607 1247 215,496 1.a.
b. To non-U.S. addressees (domicile) ................ 1248 1249 0 1250 0 1.b.
2. Loans to depository institutions and acceptances ////////////////// ////////////////// //////////////////
of other banks: ////////////////// ////////////////// //////////////////
a. To U.S. banks and other U.S. depository ////////////////// ////////////////// //////////////////
institutions ..................................... 5377 5378 0 5379 0 2.a.
b. To foreign banks ................................. 5380 5381 0 5382 0 2.b.
3. Loans to finance agricultural production and ////////////////// ////////////////// //////////////////
other loans to farmers ............................... 1594 1597 0 1583 625 3.
4. Commercial and industrial loans: ////////////////// ////////////////// //////////////////
a. To U.S. addressees (domicile) .................... 1251 1252 12,042 1253 76,393 4.a.
b. To non-U.S. addressees (domicile) ................ 1254 1255 0 1256 0 4.b.
5. Loans to individuals for household, family, and ////////////////// ////////////////// //////////////////
other personal expenditures: ////////////////// ////////////////// //////////////////
a. Credit cards and related plans ................... 5383 5384 1,574 5385 370 5.a.
b. Other (includes single payment, installment, ////////////////// ////////////////// //////////////////
and all student loans) ........................... 5386 5387 24,812 5388 7,184 5.b.
6. Loans to foreign governments and official ////////////////// ////////////////// //////////////////
institutions ......................................... 5389 5390 0 5391 0 6.
7. All other loans ...................................... 5459 5460 11,122 5461 9,921 7.
8. Lease financing receivables: ////////////////// ////////////////// //////////////////
a. Of U.S. addressees (domicile) .................... 1257 1258 21 1259 3,763 8.a
b. Of non-U.S. addressees (domicile) ................ 1271 1272 0 1791 0 8.b.
9. Debt securities and other assets (exclude other ////////////////// ////////////////// //////////////////
real estate owned and other repossessed assets) ...... 3506 3506 0 3507 32,566 9.
- ---------------------------------------------------------------------------------------------------------------------------------
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
------------------ ------------------ ------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
10. Loans and leases reported in items 1 ------------------------------------------------------------
through 8 above which are wholly or partially ////////////////// ////////////////// //////////////////
guaranteed by the U.S. Government .................... 5612 5613 17,347 5614 14,395 10.
a. Guaranteed portion of loans and leases ////////////////// ////////////////// //////////////////
included in item 10 above ........................ 5615 5616 17,056 5617 11,954 10.a.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-20
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-N--CONTINUED
--------
C473
------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
and still and still
accruing accruing
Memoranda ------------------ ------------------ ------------------
Dollar Amounts in Thousands RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Restructured loans and leases included in ////////////////// ////////////////// //////////////////
Schedule RC-N, items 1 through 8, above (and not ////////////////// ////////////////// //////////////////
reported in Schedule RC-C, part I, Memorandum ////////////////// ////////////////// //////////////////
item 2)................................................ 1658 1659 1661 M.1.
2. Loans to finance commercial real estate, ////////////////// ////////////////// //////////////////
construction, and land development activities ////////////////// ////////////////// //////////////////
(NOT SECURED BY REAL ESTATE) included in ////////////////// ////////////////// //////////////////
Schedule RC-N, items 4 and 7 above..................... 6558 6559 105 6560 1,919 M.2.
3. Loans secured by real estate in domestic offices RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
(included in Schedule RC-N, item 1, above): ////////////////// ////////////////// //////////////////
a. Construction and land development................... 2759 2769 0 3492 19,990 M.3.a.
b. Secured by farmland................................. 3493 3494 0 3495 144 M.3.b.
c. Secured by 1-4 family residential properties: ////////////////// ////////////////// //////////////////
(1) Revolving, open-end loans secured by ////////////////// ////////////////// //////////////////
1-4 family residential properties and ////////////////// ////////////////// //////////////////
extended under lines of credit.................. 5398 5399 5,009 5400 10,700 M.3.c.(1)
(2) All other loans secured by 1-4 residential ////////////////// ////////////////// //////////////////
properties...................................... 5401 5402 49,978 5403 100,900 M.3.c.(2)
d. Secured by multifamily (5 or more) residential ////////////////// ////////////////// //////////////////
properties.......................................... 3499 3500 934 3501 9,456 M.3.d.
e. Secured by nonfarm nonresidential properties........ 3502 3503 9,886 3504 74,306 M.3.e.
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------
(Column A) (Column B)
Past due 30 Past due 90
through 89 days days or more
---------------------------------------
RFCD Bil Mil Thou RFCD Bil Mil Thou
---------------------------------------
<S> <C> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other ////////////////// //////////////////
commodity and equity contracts: ////////////////// //////////////////
a. Book value of amounts carried as assets............. 3522 3528 0 M.4.a.
b. Replacement cost of contracts with a ////////////////// //////////////////
positive replacement cost........................... 3529 3530 0 M.4.b.
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE Page RC-21
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-O--OTHER DATA FOR DEPOSIT INSURANCE ASSESSMENTS
--------
C475
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Unposted debits (see instructions): //////////////////
a. Actual amount of all unposted debits........................................................ 0030 0 1.a
OR //////////////////
b. Separate amount of unposted debits: //////////////////
(1) Actual amount of unposted debits to demand deposits..................................... 0031 N/A 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1)........................ 0032 N/A 1.b.(2)
2. Unposted credits (see instructions): //////////////////
a. Actual amount of all unposted credits....................................................... 3510 0 2.a.
OR //////////////////
b. Separate amount of unposted credits: //////////////////
(1) Actual amount of unposted credits to demand deposits.................................... 3512 N/A 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1)....................... 3514 N/A 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total //////////////////
deposits in domestic offices).................................................................. 3520 142,277 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in Puerto //////////////////
Rico and U.S. territories and possessions (not included in total deposits): //////////////////
a. Demand deposits of consolidated subsidiaries................................................ 2211 196,951 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries................................... 2351 15,807 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries........................ 5514 0 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: //////////////////
a. Demand deposits in insured branches (included in Schedule RC-E, Part II).................... 2229 0 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II)....... 2383 0 5.b.
c. Interest accrued and unpaid on deposits in insured branches //////////////////
(included in Schedule RC-G, item 1.b)....................................................... 5515 0 5.c.
------------------
------------------
Item 6 is not applicable to state nonmember banks that have not been authorized by the //////////////////
Federal Reserve to act as pass-through correspondents. //////////////////
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on //////////////////
behalf of its respondent depository institutions that are also reflected as deposit liabilities //////////////////
of the reporting bank: //////////////////
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, item 4 or 5, //////////////////
column B)................................................................................... 2314 0 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, //////////////////
item 4 or 5, column A or C, but not column B)............................................... 2315 0 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) //////////////////
a. Unamortized premiums........................................................................ 5516 748 7.a.
b. Unamortized discounts....................................................................... 5517 0 7.b.
------------------
- -----------------------------------------------------------------------------------------------------------------------
8. TO BE COMPLETED BY BANKS WITH "OAKAR DEPOSITS." ------------------
Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of //////////////////
the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s))....... 5518 1,395,996 8.
------------------
- -----------------------------------------------------------------------------------------------------------------------
------------------
9. Deposits in lifeline accounts.................................................................. 5596 ///////////// 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total //////////////////
deposits in domestic offices).................................................................. 8432 0 10.
- ----------------
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction accounts
and all transaction accounts other than demand deposits.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-22
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-O--CONTINUED
-------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for //////////////////
certain reciprocal demand balances: //////////////////
a. Amount by which demand deposits will be reduced if reciprocal demand balances //////////////////
between the reporting bank and savings associations were reported on a net basis //////////////////
rather than a gross basis in Schedule RC-E........................................ 8785 0 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances //////////////////
between the reporting bank and U.S. branches and agencies of foreign banks were //////////////////
reported on a gross basis rather than a net basis in Schedule RC-E................ A181 0 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of //////////////////
collection were included in the calculation of net reciprocal demand balances //////////////////
between the reporting bank and the domestic offices of U.S. banks and savings //////////////////
associations in Schedule RC-E..................................................... A182 0 11.c.
-------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
Memoranda (to be completed each quarter except as noted)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and //////////////////
1.b.(1) must equal Schedule RC, item 13.a): //////////////////
a. Deposit accounts of $100,000 or less: //////////////////
(1) Amount of deposit accounts of $100,000 or less.................................. 2702 18,219,759 M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (TO BE Number //////////////////
COMPLETED FOR THE JUNE REPORT ONLY)........................... RCON 3779 N/A ////////////////// M.1.a.(2)
b. Deposit accounts of more than $100,000: //////////////////
(1) Amount of deposit accounts of more than $100,000................................ 2710 14,572,399 M.1.b.(1)
Number //////////////////
(2) Number of deposit accounts of more than $100,000 ............. RCON 2772 28,722 ////////////////// M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits than the YES NO
estimate described above.............................................................. 6861 /// X M.2.a.
b. If the box marked YES has been checked, report the estimate of uninsured deposits RCON Bil Mil Thou
determined by using your bank's method or procedure................................. 5597 N/A M.2.b.
</TABLE>
- -------------------------------------------------------------------------------
Person to whom questions about the Reports of Condition and Income should be
directed: C477
PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
- ------------------------------- ----------------------
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
32
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE PAGE RC-23
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-R--REGULATORY CAPITAL
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. BANKS WITH ASSETS OF LESS THAN $1 BILLION
MUST COMPLETE ITEMS 1 THROUGH 3 BELOW OR SCHEDULE RC-R IN ITS ENTIRETY, DEPENDING ON THEIR RESPONSE TO ITEM 1 BELOW.
<S> <C> <C> <C>
---------------
C480
1. TEST FOR DETERMINING THE EXTENT TO WHICH SCHEDULE RC-R MUST BE COMPLETED. TO BE --------------------------------
COMPLETED ONLY BY BANKS WITH TOTAL ASSETS OF LESS THAN $1 BILLION. Indicate in the YES NO
appropriate box at the right whether the bank has total capital greater than or --------------------------------
equal to eight percent of adjusted total assets............................................ RCFD 6056 //// 1.
--------------------------------
</TABLE>
For purposes of this test, adjusted total assets equals total assets less
cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent of
U.S. Government-sponsored agency obligations plus the allowance for loan and
lease losses and selected off-balance sheet items as reported on Schedule
RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete
items 2 and 3 below. If the box marked NO has been checked, the bank must
complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual
risk-based capital ratio is less than eight percent or that the bank is not
in compliance with the risk-based capital guidelines.
<TABLE>
- -------------------------------------------------------------------
NOTE: ALL BANKS ARE REQUIRED TO COMPLETE ITEMS 2 AND 3 BELOW.
SEE OPTIONAL WORKSHEET FOR ITEMS 3.a THROUGH 3.f. -----------------------------------------
- ----------------------------------------------------------------------------- (Column A) (Column B)
Dollar Amounts in Thousands Subordinated Debt(1) Other
- ----------------------------------------------------------------------------- and Intermediate Limited-Life
2. Subordinated debt(1) and other limited-life capital instruments (original Term Preferred Stock Capital Instruments
weighted average maturity of at least five years) with a remaining -----------------------------------------
maturity of: RCFD Bil Mil Thou RCFD Bil Mil Thou
-----------------------------------------
<S> <C> <C> <C> <C> <C>
a. One year or less....................................................... 3780 25,737 3786 0 2.a.
b. Over one year through two years........................................ 3781 737 3787 0 2.b.
c. Over two years through three years..................................... 3782 10,745 3788 0 2.c.
d. Over three years through four years.................................... 3783 0 3789 0 2.d.
e. Over four years through five years..................................... 3784 341,000 3790 0 2.e.
f. Over five years........................................................ 3785 760,000 3791 0 2.f.
3. AMOUNTS USED IN CALCULATING REGULATORY CAPITAL RATIOS (REPORT AMOUNTS //////////////////
DETERMINED BY THE BANK FOR ITS OWN INTERNAL REGULATORY CAPITAL ANALYSES //////////////////
CONSISTENT WITH APPLICABLE CAPITAL STANDARDS):
-------------------------
RCFD Bil Mil Thou
-------------------------
a. TIER 1 CAPITAL................................................................................ 8274 3,756,621 3.a.
b. TIER 2 CAPITAL................................................................................ 8275 1,688,820 3.b.
c. TOTAL RISK-BASED CAPITAL...................................................................... 3792 5,445,441 3.c.
d. EXCESS ALLOWANCE FOR LOAN AND LEASE LOSSES.................................................... A222 200,236 3.d.
e. RISK-WEIGHTED ASSETS (NET OF ALL DEDUCTIONS, INCLUDING EXCESS ALLOWANCE)...................... A223 45,925,732 3.e.
f. "AVERAGE TOTAL ASSETS" (NET OF ALL ASSETS DEDUCTED FROM TIER 1 CAPITAL)(2).................... A224 46,290,168 3.f.
------------------
</TABLE>
<TABLE>
-----------------------------------------
(Column A) (Column B)
ITEMS 4-9 AND MEMORANDA ITEMS 1 AND 2 ARE TO BE COMPLETED Assets Credit Equiv-
BY BANKS THAT ANSWERED NO TO ITEM 1 ABOVE AND Recorded alent Amount
BY BANKS WITH TOTAL ASSETS OF $1 BILLION OR MORE. on the of Off-Balance
Balance Sheet Sheet Items(3)
-----------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou
-----------------------------------------
<S> <C> <C> <C> <C> <C>
4. Assets and credit equivalent amounts of off-balance sheet items
assigned to the Zero percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet: ////////////////// //////////////////
(1) Securities issued by, other claims on, and claims unconditionally ////////////////// //////////////////
guaranteed by, the U.S. Government and its agencies and ////////////////// //////////////////
other OECD central governments..................................... 3794 1,519,575 ////////////////// 4.a.(1)
(2) All other.......................................................... 3795 1,316,143 ////////////////// 4.a.(2)
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3796 1,079,527 4.b
</TABLE>
- -------------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not deduct excess allowance for loan and lease losses.
(3) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address : ONE MONARCH PLACE Page RC-24
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
SCHEDULE RC-R--CONTINUED
Column A) (Column B)
Assets Credit Equiv-
Recorded alent Amount
on the of Off-Balance
Balance Sheet Sheet Items(1)
--------------------------------------
Dollar Amounts in Thousands RCFD BIL MIL THOU RCFD BIL MIL THOU
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 20 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet: ////////////////// //////////////////
(1) Claims conditionally guaranteed by the U.S. Government and ////////////////// //////////////////
its agencies and other OECD central governments.................... 3798 726,530 ////////////////// 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Government ////////////////// //////////////////
and its agencies and other OECD central governments; by ////////////////// //////////////////
securities issued by U.S. Government-sponsored agencies; and ////////////////// //////////////////
by cash on deposit................................................. 3799 0 ////////////////// 5.a.(2)
(3) All other.......................................................... 3800 7,055,416 ////////////////// 5.a.(3)
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3801 1,058,252 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 50 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet................................... 3802 5,371,795 ////////////////// 6.a.
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3803 866,687 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items ////////////////// //////////////////
assigned to the 100 percent risk category: ////////////////// //////////////////
a. Assets recorded on the balance sheet................................... 3804 31,276,374 ////////////////// 7.a.
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3805 10,715,771 7.b.
8. On-balance sheet asset values excluded from the calculation of the ////////////////// //////////////////
risk-based capital ratio (2).............................................. 3806 91,771 ////////////////// 8.
9. Total assets recorded on the balance sheet (sum of ////////////////// //////////////////
items 4.a, 5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC, ////////////////// //////////////////
item 12 plus items 4.b and 4.c)........................................... 3807 47,357,604 ////////////////// 9.
--------------------------------------
<CAPTION>
Memoranda ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Current credit exposure across all off-balance sheet derivative contracts covered by the //////////////////
risk-based capital standards.................................................................. 8764 236,389 M.1.
------------------
----------------------------------------------------------------------
With a remaining maturity of
----------------------------------------------------------------------
(Column A) (Column B) (Column C)
One year or less Over one year Over five years
through five years
2. Notional principal amounts of ----------------------------------------------------------------------
off-balance sheet derivative contracts(3): RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou
----------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
a. Interest rate contracts................ 3809 7,502,891 8766 33,994,382 8767 779,970 M.2.a.
b. Foreign exchange contracts............. 3812 1,366,429 8769 84,993 8770 0 M.2.b.
c. Gold contracts......................... 8771 33,478 8772 0 8773 0 M.2.c.
d. Other precious metals contracts........ 8774 13,371 8775 0 8776 0 M.2.d.
e. Other commodity contracts.............. 8777 0 8778 0 8779 0 M.2.e.
f. Equity derivative contracts............ A000 0 A001 0 A002 0 M.2.f.
----------------------------------------------------------------------
- -----------------
(1) Do not report in column B the risk-weighted amount of assets reported in column A.
(2) Include the difference between the fair value and the amortized cost of available-for-sale securities in item 8 and report
the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or
portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables not included
in the calculation of credit equivalent amounts of off-balance sheet derivatives as well as any portion of the allowance for
loan and lease losses in excess of the amount that may be included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all futures contracts.
</TABLE>
34
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RC-25
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
</TABLE>
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS
REPORTED IN THE REPORTS OF CONDITION AND INCOME
at close of business on December 31, 1996
Fleet National Bank Springfield , Massachusetts
- -----------------------------------------------------------------------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of Schedule
RC-N is regarded as confidential and will not be released to the public. BANKS
CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT
DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK
CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN
SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE
PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing
not to make a statement may check the "No comment" box below and should make no
entries of any kind in the space provided for the narrative statement; i.e., DO
NOT enter in this space such phrases as "No statement," "Not applicable,"
"N/A," "No comment," and "None."
The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement
must not exceed 750 characters, including punctuation, indentation, and
standard spacing between words and sentences. If any submission should exceed
750 characters, as defined, it will be truncated at 750 characters with no
notice to the submitting bank and the truncated statement will appear as the
bank's statement both on agency computerized records and in computer-file
releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- --------------------------------------------------------------------------------
No comment [X] (RCON 6979) C471 C472
--- ------------
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
/s/ Jan 23, 1997
------------------------ ------------------------
Signature of Executive Date of Signature
Officer of Bank
35
