Exhibit 2.1
EXECUTION
DRAFT
PURCHASE AGREEMENT
among
TravelCenters of America LLC
and
Petro Stopping
Centers, L.P.,
Petro Stopping
Centers Holdings, L.P.
and
the Partners of
Petro Stopping
Centers, L.P.
and of
Petro Stopping
Centers Holdings, L.P.
May 30
, 2007
TABLE OF
CONTENTS
ARTICLE I DEFINITIONS
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1
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Section 1.01 Certain Definitions.
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1
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ARTICLE II PURCHASE AND SALE
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9
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Section 2.01 Purchase and Sale.
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9
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Section 2.02 Purchase Price.
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10
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Section 2.03 Purchase Price Calculation.
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11
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Section 2.04 Escrow Agreement and Escrow Fund.
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14
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Section 2.05 Tax Withholding.
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14
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND OPERATING COMPANY
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14
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Section 3.01 Organization; Business of the Company.
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15
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Section 3.02 Subsidiaries.
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15
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Section 3.03 Capitalization.
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15
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Section 3.04 Authorization.
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16
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Section 3.05 No Violation.
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17
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Section 3.06 Approvals.
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17
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Section 3.07 Financial Statements.
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18
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Section 3.08 Absence of Certain Transactions.
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18
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Section 3.09 Taxes.
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19
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Section 3.10 Litigation.
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21
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Section 3.11 Environmental Matters.
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22
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Section 3.12 Title to Property.
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23
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Section 3.13 Personal Property.
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25
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Section 3.14 Contracts.
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25
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Section 3.15 Employee and Labor Matters and Plans.
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27
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Section 3.16 Insurance Policies.
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30
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Section 3.17 Intellectual Property.
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30
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Section 3.18 Permits.
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31
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Section 3.19 Compliance with Laws.
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31
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Section 3.20 Related Party Transactions.
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31
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Section 3.21 Brokerage Fees.
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32
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Section 3.22 Certain Payments.
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32
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Section 3.23 No Other Representations or Warranties.
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32
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
SELLERS
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32
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Section 4.01 Organization; Business of the Company.
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32
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Section 4.02 Ownership of Interest.
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33
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Section 4.03 Authorization.
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33
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Section 4.04 No Violation.
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33
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Section 4.05 Approvals.
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34
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Section 4.06 U.S. Person.
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34
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
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34
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Section 5.01 Organization.
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34
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Section 5.02 Authorization.
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34
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Section 5.03 No Violation.
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35
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Section 5.04 Approvals.
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35
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Section 5.05 Litigation.
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35
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Section 5.06 Available Funds.
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35
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Section 5.07 Brokerage Fees.
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36
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Section 5.08 No Other Representations or Warranties.
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36
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ARTICLE VI COVENANTS
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36
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Section 6.01 Interim Operations of the Company.
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36
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Section 6.02 Access to Information.
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39
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Section 6.03 Consents and Approvals.
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40
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Section 6.04 Employment Matters.
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40
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Section 6.05 Publicity.
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41
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Section 6.06 Notification of Certain Matters.
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41
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Section 6.07 Directors and Officers Indemnification.
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42
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Section 6.08 Additional Agreements.
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43
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Section 6.09 No Solicitation or Negotiation.
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43
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Section 6.10 Repayment/Repurchase of Outstanding
Indebtedness.
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43
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Section 6.11 No Control of Other Partys Business.
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44
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Section 6.12 Additional Financial Statements.
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45
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Section 6.13 Transfers of Assets.
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45
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Section 6.14 Termination/Amendment of Contracts.
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47
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Section 6.15 Return of Post-Closing Transaction Bonuses.
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48
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Section 6.16 Estoppel Certificates.
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48
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Section 6.17 Real Property Matters.
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48
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Section 6.18 Conduct of Business of Purchaser.
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48
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Section 6.19 Section 1445 Certifications and IRS Form
W-9.
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49
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Section 6.20 Tax Sharing Agreements.
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49
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Section 6.21 Petro Travel Plaza.
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49
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Section 6.22 Transation Bonus Agreements.
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49
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ARTICLE VII CONDITIONS
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50
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Section 7.01 Conditions to the Obligations of All
Parties.
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50
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Section 7.02 Conditions to the Obligations of Purchaser.
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50
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Section 7.03 Conditions to the Obligations of Sellers.
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52
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ARTICLE VIII CLOSING; TERMINATION
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53
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Section 8.01 Closing.
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53
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Section 8.02 Termination.
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53
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Section 8.03 Assumption and Assignment to Company
Partners on Closing.
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53
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Section 8.04 Effect of Termination.
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54
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ii
ARTICLE IX INDEMNIFICATION
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54
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Section 9.01 Survival.
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54
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Section 9.02 Indemnification by Purchaser.
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55
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Section 9.03 Indemnification by Sellers.
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55
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Section 9.04 Exclusive Remedy.
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55
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Section 9.05 Limitations on Indemnification Payments to
Seller Indemnitees.
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56
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Section 9.06 Limitations on Indemnification Payments to
Purchaser Indemnitees.
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56
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Section 9.07 Procedures.
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57
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Section 9.08 Opportunity to Defend Third Party Claims.
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57
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Section 9.09 Exercise of Remedies by Indemnitees.
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58
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Section 9.10 Adjustment to Purchase Price.
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58
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ARTICLE X RELEASES
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59
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Section 10.01 Releases by Purchaser and the Company.
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59
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Section 10.02 Releases by Sellers.
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59
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ARTICLE XI TAX MATTERS
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60
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Section 11.01 Tax Treatment.
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60
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Section 11.02 Tax Returns.
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60
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Section 11.03 Intentionally Omitted.
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61
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Section 11.04 Post-Closing Audits.
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61
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Section 11.05 Transfer Taxes.
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62
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Section 11.06 Tax Cooperation.
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63
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Section 11.07 Conflicts.
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63
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ARTICLE XII GENERAL PROVISIONS
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63
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Section 12.01 Costs and Expenses.
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63
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Section 12.02 Notices.
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64
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Section 12.03 Sellers Representative.
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66
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Section 12.04 Counterparts.
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67
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Section 12.05 Entire Agreement.
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67
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Section 12.06 Governing Law; Exclusive Jurisdiction.
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67
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Section 12.07 Third Party Rights; Assignment.
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67
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Section 12.08 Waivers and Amendments.
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68
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Section 12.09 Schedules.
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68
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Section 12.10 Bulk Transfer Laws.
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68
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Section 12.11 Enforcement.
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68
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Section 12.12 Headings; Interpretation.
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68
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THE FOLLOWING EXHIBITS, ANNEXES AND
SCHEDULES HAVE BEEN OMITTED AND WILL BE SUPPLEMENTARILY FURNISHED TO THE
SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
Exhibits
Exhibit A Form of Transition Services Agreement
Exhibit B Form of Escrow Agreement
Exhibit C Form of Assignment of Partnership Interest
iii
Exhibit D Form of Non-Competition Agreement
Exhibit E Form of Fuel
Transportation Agreement
Annexes
Annex
1 Company Partners
Annex 2 Sellers
Schedules
Schedule 1.01(a)
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Company knowledge
Individuals
|
Schedule 1.01(b)
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Purchaser knowledge
Individuals
|
Schedule 1.01(c)
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Additional Permitted Liens
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Schedule 1.01(d)
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Transactions Bonus Agreements
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Schedule 2.03(a)(iii)
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Additional Development Costs
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Schedule 2.03(a)(x)
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Mechanics Liens
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Schedule 6.01
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Interim Operations of the
Company
|
Schedule 6.10(c)
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Terms of Notice Offer to
Purchase
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Schedule 6.13(a)
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Transferred Owned Property
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Schedule 6.13(b)
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Transferred Leases
|
Schedule 6.14(a)
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Agreements to be Amended and
Restated
|
Schedule 6.14(b)
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Agreements to be Terminated
Without Cost
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Schedule 6.14(c)
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TSP Leased Property
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Schedule 6.14(e)
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North Baltimore Lease
|
Schedule 6.15
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Special Post-Closing
Transaction Bonus Allocation
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Schedule 6.22
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Form of Post-Closing
Transaction Bonus Agreement
|
iv
Index of
Definitions
2014 Indenture
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1
|
2014 Notes
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2
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2014 Prepayment Loan
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43
|
Accounting Firm
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13
|
Actual Balance Sheet
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12
|
Actual Net Working Capital
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12
|
Additional Financial Statements
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45
|
Affiliate
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2
|
Aggregate Purchase Price
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10
|
Agreement
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1
|
Audit
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61
|
Balance Sheet Date
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18
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Business Day
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2
|
Cardwell Group
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2
|
Closing
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53
|
Closing Date
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53
|
COBRA
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28
|
Code
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2
|
Company
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1
|
Company Balance Sheet
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18
|
Company Closing Costs
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|
2
|
Company Disclosure Letter
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14
|
Company Interests
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1
|
Company Material Adverse Effect
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|
2
|
Company Options
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10
|
Company Partners
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|
1
|
Company Sellers
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1
|
Company Subsidiary
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|
3
|
Confidentiality Agreement
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|
39
|
Covenant Defeasance Loan
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|
44
|
Covered Parties
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42
|
Covered Party
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|
42
|
Credit Facility
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|
3
|
Credit Facility Agent
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|
3
|
Credit Facility Lenders
|
|
3
|
Credit Facility Loan
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|
44
|
Credit Facility Notice Waiver
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43
|
D&T
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13
|
Debt Restructuring Costs
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|
3
|
Employee Plan
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27
|
End Date
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53
|
Environmental Law
|
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3
|
Environmental Permit
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3
|
EPAC
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47
|
EPAC Additional Purchase Price
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47
|
EPAC Fee
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47
|
EPAC Payment Amount
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47
|
ERISA
|
|
3
|
ERISA Affiliate
|
|
3
|
Escrow Agent
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|
14
|
Escrow Agreement
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|
14
|
Escrow Amount
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14
|
Escrow Fund
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14
|
Estimated Net Working Capital
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12
|
Estimated Purchase Price
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|
10
|
Excess Payment
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13
|
Exchange Act
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4
|
Excluded Contracts
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|
25
|
Financial Statements
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|
18
|
Financing
|
|
4
|
Fuel Transportation Agreement
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|
48
|
GAAP
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|
4
|
Governmental Entity
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4
|
Hazardous Materials
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|
4
|
HPT
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|
1
|
HPT Closing
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|
9
|
HPT Purchase Agreement
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|
1
|
HPT Reimbursable Costs
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|
4
|
Improvements
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|
46
|
Income Taxes
|
|
4
|
Indebtedness
|
|
4
|
Indemnifying Party
|
|
58
|
Insurance Policies
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|
30
|
Intellectual Property
|
|
31
|
Intercompany Indebtedness
|
|
5
|
Interests
|
|
1
|
IRS
|
|
5
|
Judgment
|
|
5
|
knowledge
|
|
5
|
KPMG
|
|
45
|
Law
|
|
5
|
Lease
|
|
24
|
Leased Property
|
|
23
|
Letters of Credit Loan
|
|
44
|
v
Liabilities
|
|
5
|
Lien
|
|
5
|
LLC Subsidiary
|
|
5
|
Losses
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|
55
|
Material Contracts
|
|
25
|
Net Working Capital
|
|
11
|
Notice of Disagreement
|
|
13
|
Operating Agreement
|
|
49
|
Operating Company
|
|
1
|
Operating Company Indenture
|
|
5
|
Operating Company Interests
|
|
1
|
Operating Company Notes
|
|
6
|
Option Cancellation Fee
|
|
6
|
Option Cancellation Fee Schedule
|
|
10
|
Organizational Documents
|
|
6
|
Owned Property
|
|
23
|
Partnership Tax Returns
|
|
6
|
Payment Shortfall
|
|
14
|
Permits
|
|
6
|
Permitted Lien
|
|
6
|
Permitted Operations
|
|
36
|
Person
|
|
7
|
Petro Financial
|
|
15
|
Petro GP
|
|
1
|
Petro Stopping Marks
|
|
30
|
Post-Closing Transaction
Bonuses
|
|
7
|
Pre-Closing Tax Period
|
|
7
|
Proceeding
|
|
7
|
Purchaser
|
|
1
|
Purchaser Claim
|
|
57
|
Purchaser Claims Notice
|
|
57
|
Purchaser Indemnitees
|
|
55
|
Purchaser Securities
|
|
7
|
Purchaser/Company Released Claims
|
|
59
|
Purchaser/Company Releasees
|
|
59
|
Purchaser/Company Releasors
|
|
59
|
Purchasers Deductible Amount
|
|
57
|
Real Property Agreement
|
|
24
|
Reimbursable Costs
|
|
7
|
REIT Note
|
|
5
|
REIT Subsidiary
|
|
7
|
Requisite Regulatory Approvals
|
|
8
|
SEC
|
|
8
|
SEC Reports
|
|
8
|
Securities Act
|
|
8
|
Seller Claim
|
|
57
|
Seller Claims Notice
|
|
57
|
Seller Indemnitees
|
|
55
|
Seller Released Claims
|
|
60
|
Seller Releasees
|
|
59
|
Seller Releasors
|
|
59
|
Sellers
|
|
1
|
Sellers Deductible Amount
|
|
56
|
Sellers Representative
|
|
66
|
Special Purpose Subsidiary
|
|
8
|
Split Dollar Receivable
|
|
41
|
Subsidiary
|
|
8
|
Target Net Working Capital
|
|
8
|
Tax Return
|
|
8
|
Taxes
|
|
8
|
Tejon Financial Statements
|
|
49
|
Tejon Purchase Price
|
|
49
|
Tejon Travel Plaza
|
|
49
|
Transaction Bonus Agreements
|
|
9
|
Transaction Bonuses
|
|
9
|
Transfer Taxes
|
|
63
|
Transferred Assets
|
|
45
|
Transferred Leased Property Adjustment
|
|
9
|
Transferred Property
|
|
46
|
Transition Services Agreement
|
|
9
|
TSP
|
|
47
|
TSP Option Fee
|
|
47
|
TSP Payment Amount
|
|
47
|
TSP Reduction Amount
|
|
47
|
Working Capital Statement
|
|
12
|
vi
PURCHASE AGREEMENT
This
PURCHASE
AGREEMENT
(the
Agreement
), dated May 30,
2007,
among TravelCenters of America LLC, a Delaware limited liability company (
Purchaser
),
Petro Stopping
Centers Holdings, L.P., a Delaware limited partnership (the
Company
),
Petro Stopping Centers, L.P., a Delaware limited partnership (the
Operating
Company
), the partners of the Company identified on
Annex 1
(the
Company Partners
(who, other than
Cardwell, are parties to this Agreement solely for the purposes of Sections 8.03
and 12.03)), Petro Holdings GP, LLC, a Delaware limited liability company (
Petro
GP
, and with the Company, the
Company Sellers
), James A.
Cardwell, Jr. (
Cardwell
) and Petro, Inc., a Delaware corporation (
Petro
and with Cardwell and the Company Sellers, the
Sellers
).
WHEREAS
,
Sellers own all of the limited and general partnership interests of the
Operating Company (the
Operating Company Interests
); and
WHEREAS
,
Sellers desire to sell, and Purchaser desires to purchase, all of the Operating
Company Interests upon the terms and subject to the conditions set forth
herein; and
WHEREAS
,
contemporaneously with the execution of this Agreement the Company and the
Company Partners are entering into a Purchase Agreement (the
HPT Purchase
Agreement
) with Hospitality
Properties Trust, a Maryland real estate investment trust
(
HPT
), pursuant to which the Company
Partners will sell, and HPT will purchase, all the limited and general
partnership interests of the Company (the
Company Interests
and with the
Operating Company Interests, the
Interests
) on the Closing Date upon
terms and subject to the conditions set forth in the HPT Purchase Agreement;
and
WHEREAS
,
the Company Partners also desire that the transactions contemplated by this
Agreement be consummated and have agreed to enter into this Agreement to induce
Purchaser to enter into this Agreement;
NOW,
THEREFORE
, in
consideration of the premises and the mutual covenants and agreements of the
parties hereto contained herein, and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, and subject to the
satisfaction or waiver of the conditions hereof, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01
Certain Definitions
.
Certain terms used in this Agreement and the Schedules hereto are defined
as follows:
2014 Indenture
shall mean that certain Indenture, dated as of February 9, 2004, by and among
the Company, Petro Financial and The Bank of New York, as Trustee, as amended.
2014 Notes
shall
mean the Senior Third Secured Notes due 2014 issued pursuant to the 2014
Indenture.
Affiliate
of a Person shall mean another Person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, such Person.
Business
Day
shall mean any day, other than Saturday, Sunday or a day on which
banking institutions in the City of New York are generally closed.
Cardwell
Group
shall mean J. A. Cardwell, Sr. and James A. Cardwell, Jr.
Code
shall mean the Internal Revenue Code of 1986, as amended.
Company
Closing Costs
shall mean any and all costs and expenses of the Company and
the Company Subsidiaries incurred prior to the Closing in connection with, or
as a result of or related to, the sale of the Interests and the negotiation,
preparation, execution and closing of the transactions contemplated hereby,
including, but not limited to, the fees and expenses of all professional
advisors (including those described in Section 3.21), investment bankers,
brokers, accountants, attorneys, consultants, engineers and representatives of
the Company and the Company Subsidiaries and any costs of terminating
employment agreements (other than the Transaction Bonuses),
provided
,
however
,
any HPT Reimbursable Costs or Reimbursable Costs shall not be deemed to be, or
included in the calculation of, Company Closing Costs.
Company Material
Adverse Effect
shall mean any
event, change, development or occurrence that (a) has resulted, or would
reasonably be expected to result, in a material adverse effect on the business,
assets, financial condition or results of operations of the Company and the
Company Subsidiaries, taken as a whole or (b) would prevent or materially delay
the consummation of the transactions contemplated by this Agreement, other than
any change or effect resulting from (i) changes in general economic
conditions, (ii) general changes or developments in the industries in
which the Company and the Company Subsidiaries operate, including changes in
refined product margin, (iii) the announcement of this Agreement and the
transactions contemplated hereby, including any termination of, reduction in or
similar negative impact on relationships, contractual or otherwise, with any
customers, suppliers, distributors or employees of the Company and the Company
Subsidiaries or the performance of this Agreement and the transactions
contemplated hereby, (iv) changes in any Tax Laws or applicable accounting
regulations or principles, (v) any attack on, or by, outbreak or
escalation of hostilities or acts of terrorism involving, the United States,
any declaration of war by the United States or any other national or
international calamity, (vi) the failure by the Company or the Company
Subsidiaries to take any action prohibited by this Agreement, (vii) in and of
itself, any change in the Companys or the Operating Companys credit ratings,
(viii) any eminent domain or condemnation proceeding with respect to the
properties owned or leased by the Company or the Company Subsidiaries or (ix)
the matter disclosed in
Section 3.10(v) of the Company Disclosure Letter
,
unless, in the case of the foregoing clauses (i) and (ii), such changes
referred to therein have a materially disproportionate effect on the Company
and the Company Subsidiaries taken
2
as a whole relative to
other participants in the industries in which the Company and the Company
Subsidiaries operate.
Company
Subsidiary
shall mean the Operating Company and any other Subsidiary,
direct or indirect, of the Company,
provided
, however, for the purposes
of Articles III and IV, the term Company Subsidiary shall not include either
Special Purpose Subsidiary.
Credit
Facility
shall mean that certain Credit Agreement, dated as of February 9,
2004, as amended, by and among the Operating Company and the guarantors and
financial institutions party thereto.
Credit
Facility Agent
shall mean Wells Fargo Bank, N.A. in its capacity as
administrative agent pursuant to the Credit Facility.
Credit
Facility Lenders
shall mean those certain lenders under the Credit
Facility.
Debt
Restructuring Costs
shall mean any (i) make-whole or similar premium
(including consent fee and negative carry costs), change of control fees or
premiums, breakage costs or penalty payable pursuant to the terms of the Credit
Facility, the 2014 Indenture or the Operating Company Indenture, as applicable,
or otherwise agreed to between the parties, in connection with or as a result
of, the prepayment of the Credit Facility, discharge of the 2014 Notes or
defeasance of the Operating Company Notes or otherwise extinguishing any such
Indebtedness as of the Closing, whether or not then due (but excluding any
principal and accrued and unpaid interest thereon) and (ii) out-of-pocket costs
and expenses of the Company and the Company Subsidiaries, incurred on or prior
to the Closing Date in connection with, or as a result of or related to,
prepayment of the Credit Facility, discharge of the 2014 Notes or defeasance of
the Operating Company Notes, including, but not limited to, the fees and
expenses of all soliciting agents, dealer-manager arrangements and legal
advisors.
Environmental
Law
shall mean any and all applicable Laws relating to protection of
natural resources, the environment or human health (as relating to exposure to
Hazardous Materials) including, without limitation, laws relating to releases
of Hazardous Materials and the manufacture, processing, distribution, use,
treatment, storage, transport or handling of Hazardous Materials.
Environmental
Permit
shall mean any Permit required under any Environmental Law for the
operation of business of the Company or any Company Subsidiary as currently
conducted.
ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended.
ERISA
Affiliate
shall mean each trade or business (whether or not incorporated)
which together with the Company or a Company Subsidiary would be deemed to be a
single employer within the meaning of Section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of Section 414 of the Code.
3
Exchange
Act
shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Financing
shall mean any borrowing by Purchaser from an institutional lender(s) for the
purpose of consummating the transactions contemplated by this Agreement.
GAAP
shall mean United States generally accepted accounting principles consistently
applied.
Governmental
Entity
shall mean any federal, state, local or foreign government or
political subdivision thereof, or any court, administrative agency or
commission, or other governmental authority or instrumentality or any
subdivision thereof.
Hazardous
Materials
shall mean any substance, material, waste, pollutant, or
contaminant that is regulated as toxic or hazardous or other term of similar
regulatory import or that is subject to remedial, investigatory or reporting
obligations under any Environmental Law including without limitation petroleum
and petroleum products (including without limitation oil, gasoline and diesel
fuel), friable asbestos and polychlorinated biphenyls.
HPT
Reimbursable Costs
shall mean (i) any and all out-of-pocket costs and
expenses incurred by the Company or a Company Subsidiary in connection with
compliance with Sections 6.13, 6.14(c) and, to the extent related to the
Transferred Properties, 6.17 including without limitation, attorneys fees, any title searches, title insurance
commitments or title insurance policies, including endorsements,
local counsel fees, Transfer
Taxes, survey expenses and any title company charges or expenses (but excluding
any premium, costs, charges or expenses of any title company not engaged, or
title searches not ordered, by Purchaser or HPT or their counsel in the absence
of a default by Purchaser under Section 6.13), (ii) any and all out-of-pocket
costs and expenses incurred by the Company or a Company Subsidiary in
connection with its compliance with Sections 6.11 and 6.13 of the HPT
Agreement, and (iii) any and all other out-of-pocket costs and expenses
incurred by the Company or a Company Subsidiary at the request of HPT pursuant
to the HPT Purchase Agreement and which HPT has agreed in writing are to be HPT
Reimbursable Costs, in each case incurred or paid by the Company or any Company
Subsidiary at or prior to the Closing.
Income
Taxes
shall mean all federal, state, local, or foreign Taxes based upon,
measured by, or calculated with respect to (i) gross or net income or gross or
net receipts or profits (including, but not limited to, any capital gains or
minimum taxes, but not including sales, use, goods and services, fuel, real or
personal property transfer or other similar Taxes); (ii) multiple bases
(including, but not limited to, corporate franchise, doing business or
occupation Taxes) if one or more of the bases upon which such Tax may be based
upon, measured, or calculated with respect to, is described in clause (i); or
(iii) any federal, state, local or foreign withholding Taxes imposed with
respect to any Taxes referred to in clause (i) or (ii) or on the distribution
of cash or property from a partnership to its partners.
Indebtedness
shall mean, with respect to the Company and the Company Subsidiaries, without
duplication and exclusive of Intercompany Indebtedness, all indebtedness for
borrowed money, including purchase money financing and capitalized and
synthetic lease
4
obligations
(it being understood that any obligations existing on or prior to the Balance
Sheet Date will not be recharacterized as capitalized or synthetic lease
obligations if not otherwise characterized as such in the Company Balance
Sheet), including the aggregate principal amount thereof, and any accrued and
unpaid interest thereon and any accrued and unpaid prepayment premiums,
penalties, breakage costs or other similar obligations in respect thereof;
provided
,
however
, that Indebtedness shall not include any Debt Restructuring
Costs, trade payables or the $100,000 Demand Promissory Note issued by the
Company to the REIT Subsidiary and any accrued interest thereon (the
REIT
Note
). For the sake of clarity, it
is acknowledged that Indebtedness does not include undrawn amounts under
letters of credit outstanding under the Credit Facility.
Intercompany
Indebtedness
shall mean, with respect to the Company and the Company
Subsidiaries,
all outstanding indebtedness owed by the Company or any
Company Subsidiary to the Company or any wholly owned Company Subsidiary.
IRS
shall mean the United States Internal Revenue Service, or any successor
thereto.
Judgment
shall mean any and all judgments, orders, writs, directives, rulings,
decisions, injunctions (temporary, preliminary or permanent), decrees or awards
of any Governmental Entity.
knowledge
in the phrase
to its knowledge
or a similar phrase, when used to
qualify a representation of a party, shall be deemed to be the actual
knowledge, after reasonable investigation of the officer or employee with
primary responsibility for the applicable subject matter, of (i) the
individuals listed on
Schedule 1.01(a)
, if the Company or Operating
Company is making such representation, (ii) the individuals listed on
Schedule
1.01(b)
, if Purchaser is making such representation, and (iii) the officer
or employee of such Seller with primary responsibility for the applicable subject
matter, if a Seller (other than the Company) is making such representation.
LLC
Subsidiary
shall mean HPT PSC Properties LLC, a Maryland limited liability
company.
Law
shall mean all laws (whether statutory or otherwise), ordinances, codes, rules
and regulations of all Governmental Entities.
Liabilities
shall mean any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, whether due or to become due.
Lien
shall mean, with respect to any property or asset, any mortgage, pledge,
security interest, lien (statutory or other), charge, encumbrance or other
similar restrictions or limitations of any kind or nature whatsoever on or with
respect to such property or asset.
Operating
Company Indenture
shall mean the Indenture dated as of February 9, 2004 by
and among the Operating Company and Petro Financial Corporation as Issuers and
the
5
Company,
Petro Financial and Petro Distributing, Inc. as Guarantors and The Bank of New
York, as Trustee as amended by a First Supplemental Indenture dated as of
February 9, 2004.
Operating
Company Notes
shall mean the Operating Companys 9% Senior Secured Notes
due 2012 issued in the aggregate original principal amount of $225,000,000 on
February 4, 2004 and $25,000,000 on July 25, 2005 pursuant to the Operating
Company Indenture.
Option
Cancellation Fee
shall mean the aggregate amount required to be paid to
the holders of the Company Options as a result of the cancellation of the
Company Options as set forth in the Option Cancellation Fee Schedule.
Organizational
Documents
shall mean
with respect to a corporation, its charter and bylaws; with respect to
a limited liability company, its certificate or articles of organization or
formation and operating agreement; with respect to a partnership, its
certificate of limited partnership, if any, and partnership agreement; with
respect to a trust, its declaration or indenture of trust; and with respect to
any other entity, such similar organizational documents.
Partnership Tax Returns
shall mean the federal partnership Tax Returns (together with all schedules
required to be attached thereto) filed on IRS Form 1065, Form 8308 and Form
8804, or any successor form, together with any state or local Income Tax
Returns that are filed on the basis that either the Company or the Operating
Company, as applicable, is taxable as a pass-through entity for state or local
Income Tax purposes.
Permits
shall mean all franchises, licenses, authorizations, approvals, permits,
consents or other rights granted by any Governmental Entity and all
certificates of convenience or necessity, immunities, privileges, licenses,
concessions, consents, grants, ordinances and other rights, of every character
whatsoever required for the conduct of business and the use of properties by
the Company and the Company Subsidiaries as currently conducted or used.
Permitted
Lien
shall mean Liens (i) for
Taxes, assessments and other charges
of Governmental Entities (a) not yet due and payable, or (b) being contested in
good faith (with collection or enforcement stayed by appropriate proceedings)
and reserved against on the Company Balance Sheet; (ii) for mechanics, carriers,
workmens, repairmens, materialmens or other Liens or security interests that
secure a liquidated amount that are being contested in good faith and by
appropriate proceedings; (iii) for leases, subleases and licenses listed in
Sections
3.12(b)
,
3.12(b)(ii) or 3.12(c) of the Company Disclosure Letter
or
which are terminable by the Company or a Company Subsidiary on 90 days notice
without premium or penalty; (iv) imposed by applicable Law; (v) for pledges or
deposits to secure obligations under workers compensation Laws or similar
legislation or to secure public or statutory obligations, in each case, not
constituting Indebtedness; (vi) for pledges and deposits to secure the
performance of bids, trade contracts, leases, surety and appeal bonds,
performance bonds and other obligations of a similar nature, in each case, not
representing Indebtedness and incurred in the ordinary course of business;
(vii) for easements covenants, rights of way and other similar restrictions
each of record, and zoning and building codes and ordinances, in each case
that, individually or in the aggregate, do not detract or impair in any
material respect from the value or continued use,
6
in the ordinary course as
currently conducted or contemplated, of the applicable property; (viii) the
existence of which are specifically disclosed in the notes to the consolidated
financial statements of the Company included in the SEC Reports; (ix) referred
to or disclosed in any title policy, or any title report, commitment or search
(but in the case of a title report, commitment or search, only to the extent no
title policy was subsequently issued for the applicable Owned Property or
Leased Property), and/or any survey delivered to or obtained by Purchaser or
Purchasers counsel prior to the date hereof (other than Liens for
Indebtedness, Taxes, mechanics liens, unrecorded leases or parties in
possession); (x) not securing or representing a monetary obligation that,
individually or in the aggregate, do not detract or impair in any material
respect from the value or continued use in the ordinary course of business as
currently conducted or contemplated by the Company or any Company Subsidiary,
of any property subject to such Liens; and (xi) identified on
Schedule
1.01(c)
provided no such Lien shall be deemed to be a Permitted Lien if it
secures a trade payable.
Person
shall mean any individual, corporation, partnership, limited liability company,
joint venture, trust, unincorporated organization or other entity or government
or any agency or political subdivision thereof.
Post-Closing
Transaction Bonuses
shall mean Transaction Bonuses, in the aggregate
amount of $4,811,875.05, which by the terms of the Transaction Bonus Agreements
are not payable until after the Closing Date as an inducement to continued
employment.
Pre-Closing
Tax Period
shall mean (a) any taxable period that begins on or before the
Closing Date and ends on or before the Closing Date, and (b) with respect to
any other taxable period that includes the Closing Date, the portion of such
taxable period prior to and including the Closing Date.
Proceeding
shall mean any action, claim, suit, or legal, administrative, arbitration or
other alternative dispute resolution proceeding or investigation.
Purchaser
Securities
shall mean any debt, equity, equity-linked or hybrid securities
of Purchaser.
Reimbursable
Costs
shall mean (i) any and all out of pocket costs and expenses incurred
by the Company or a Company Subsidiary in connection with a Financing, (ii) any
and all out of pocket costs and expenses incurred by the Company or a Company
Subsidiary in connection with its compliance with Section 6.12 and, to the
extent not related to the Transferred Properties, Section 6.17, and (iii) any
and all other out of pocket costs and
expenses incurred by the Company or a Company Subsidiary at the request of
Purchaser and which Purchaser has agreed in writing are to be Reimbursable Costs, in each case
incurred or paid by the Company or any Company Subsidiary at or prior to the
Closing.
REIT
Subsidiary
shall mean HPT PSC Properties Trust, a Maryland real estate
investment trust.
7
Requisite
Regulatory Approvals
shall mean all permits, approvals, consents and
filings required to be obtained or made with or by any Governmental Entity
under any Law or Judgment, and all waiting periods required to expire prior to
the Closing under applicable Laws.
SEC
shall mean the Securities and Exchange Commission.
SEC
Reports
shall mean the Operating Companys Annual Report on Form 10-K for
the fiscal year ending December 31, 2006 as filed with the SEC and any other
reports filed or furnished by the Operating Company to the SEC pursuant to
applicable statutes, regulations, policies and rules to the extent furnished or
filed by the Operating Company subsequent to March 29, 2007 and prior to the
date of this Agreement.
Securities
Act
shall mean the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Special
Purpose Subsidiary
shall mean either the REIT Subsidiary or the LLC
Subsidiary, each of which was formed by the Company at the request of HPT in
connection with the transfers contemplated by Sections 6.13 and 6.14(c).
Subsidiary
shall mean, in respect of any specified Person, any company or other entity of
which 50% or more of the outstanding share capital or other equity interest is
owned, directly or indirectly, by such specified Person.
Target Net Working
Capital
shall mean Fourteen Million Five Hundred Thousand Dollars
($14,500,000).
Tax Return
shall
mean any report, return, document, declaration or other information or filing
required to be supplied to any Governmental Entity (foreign or domestic) with
respect to Taxes, including Partnership Tax Returns.
Taxes
shall mean
(a) any and all taxes, charges, fees, levies or other assessments, including
income, gross receipts, excise, real or personal property, lease, sales,
withholding, social security, occupation, use, service, service use, value
added, license, net worth, payroll, franchise, transfer and recording taxes,
ad
valorem
, stamp, capital, environmental, employment, workers
compensation, disability, social security, utility, production, unemployment
compensation, windfall profits, duties, registration, business organization,
alternative or add-on minimum, fees and charges, imposed by any Governmental
Entity (whether domestic or foreign including any state, local or foreign
government or any subdivision or taxing agency thereof (including a United
States possession)), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest,
penalties or additional amounts attributable to, or imposed upon, or with
respect to, any such taxes, charges, fees, levies or other assessments, (b)
liability for the payment of any amounts of the type described in clause (a) as
a result of being or having been a member of an affiliated, consolidated,
combined or unitary group, and (c) liability for the payment of any amounts as
a result of being party to any Tax sharing agreement or arrangement or as a
result of any obligation to indemnify any other Person with respect to the
payment of any amounts of the type described in clause (a) or (b).
8
Transaction Bonus
Agreements
shall mean those transaction bonus agreements entered into or
to be entered into between the Operating Company and the employees of the
Operating Company identified on
Schedule 1.01(d)
.
Transaction Bonuses
shall mean transaction bonuses paid or payable by the Operating Company at the
Closing or thereafter pursuant to the Transaction Bonus Agreements.
Transferred Leased
Property Adjustment
shall mean, with respect to any Lease listed on
Schedule
6.13(b)
that is not a Transferred Asset as a result of the failure to have
obtained a required consent of a landlord with respect to the transfer of such
Lease to the Company prior to the Closing, the amount specified in
Schedule
6.13(b)
as the Transferred Lease Property Adjustment for such Lease.
ARTICLE II
PURCHASE AND SALE
Section
2.01
Purchase and Sale
.
(a)
At the Closing:
(i)
Sellers
shall sell, assign and transfer to Purchaser all of the Operating Company
Interests and Purchaser shall (A) deliver the Estimated Purchase Price, less an
amount equal to the Escrow Amount, to Sellers in the percentages and to the
accounts set forth in
Annex 2
by wire transfer of immediately available
funds, and (B) deliver the amounts deducted from the Estimated Purchase Price
in respect of the Escrow Amount to the Escrow Agent by wire transfer of
immediately available funds;
(ii)
immediately
after the sale, assignment and transfer of the Operating Company Interests
contemplated by Section 2.01(a)(i), but prior to the closing under the HPT
Purchase Agreement (the
HPT Closing
), Petro GP shall distribute to the
Company the amount received by it from the sale of its Operating Company
Interests and the Company shall distribute to the Company Partners, in the
percentages and to the accounts set forth in
Annex 1
, the aggregate
amount received by it and Petro GP from the sale of their Operating Company
Interests;
(iii)
Purchaser
and the other parties thereto shall enter into a Transition Services Agreement
in the form attached hereto as
Exhibit A
(the
Transition Services
Agreement
);
(iv)
Purchaser
shall pay the EPAC Payment Amount to EPAC as contemplated by Section 6.14(d);
and
(v)
If
requested by the Operating Company at least one (1) Business Day prior to the
Closing, Purchaser shall pay the Option Cancellation Fee to the Operating
Company and such amount shall be paid by the Operating Company in connection
with the Operating Companys payroll immediately following the Closing to
9
the former
holders of options to acquire Company Interests (the
Company Options
)
identified, and in the amounts set forth, on a schedule to be delivered by the
Operating Company to Purchaser prior to the Closing (the
Option
Cancellation Fee Schedule
) and the Operating Company shall comply with all
federal, state and local Tax reporting and withholding obligations with respect
to such payments to former holders of Company Options.
(b)
Except as otherwise
provided herein, each Sellers obligations under this Agreement are the
several, and not joint, obligations of such Seller and no Seller shall have any
obligation or liability for the performance or non-performance by the other
Sellers of such other Sellers obligations under this Agreement.
Section 2.02
Purchase Price
(a)
The
Aggregate
Purchase Price
shall be an amount equal to:
(i)
Sixty-Seven Million Six Hundred Thousand Dollars
($67,600,000),
(ii)
minus
the aggregate amount of Indebtedness of the Company and the Company
Subsidiaries outstanding immediately prior to the Closing
other
than
(without duplication) any Indebtedness evidenced by the 2014 Notes, the Credit
Facility, the Operating Company Notes, the 2014 Prepayment Loan, the Credit
Facility Loan, the Letters of Credit Loan and the Covenant Defeasance Loan, if
any,
(iii)
plus
(or
minus
) the amount, if any, by which the Actual Net Working Capital
is greater (or less) than the Target Net Working Capital,
(iv)
minus
the Option Cancellation Fee, if any, paid by Purchaser pursuant to Section
2.01(a)(v),
(v)
minus
the EPAC Additional Purchase Price,
(vi)
minus
Company Closing Costs and all Transaction Bonuses (other than Post-Closing
Transaction Bonuses) paid by Purchaser at the direction of the Operating
Company on the Closing Date, and
(vii)
plus
the aggregate amount of Transferred Leased Property Adjustments.
(b)
The
Estimated
Purchase Price
shall be the Aggregate Purchase Price calculated using the
Estimated Net Working Capital instead of Actual Net Working Capital in Section
2.02(a)(iii).
10
Section 2.03
Purchase Price Calculation
.
(a)
Net Working Capital
.
Net Working Capital
shall mean the
current assets less the current liabilities of the Company and the Company
Subsidiaries as of the Closing, all as determined on a consolidated basis in
accordance with GAAP applied in a manner consistent with the Company Balance
Sheet; provided that, in determining Net Working Capital amounts in respect of
the following shall be adjusted as set forth below:
(i)
any
Indebtedness shall be excluded from current liabilities,
(ii)
all
Company Closing Costs, if any, incurred by the Company or a Company Subsidiary
but not paid by the Company or a Company Subsidiary on or prior to the Closing
Date shall be included as a current liability,
(iii)
the
(A) costs and expenses paid by the Company or a Company Subsidiary from the
date hereof through and including the Closing Date: (1) on the development of travel centers on Owned Property or Leased
Property located at Cordele, GA,
Green River, WY, Fairfield, VA and Hermiston, OR, and (2) in connection
with the projects listed on
Schedule 2.03(a)(iii)
, shall, in each case,
be added to current assets, or (B) to the extent the costs and expenses
described in subsection (A) are incurred by the Company or a Company Subsidiary
on or prior to the Closing Date but not paid by the Company or a Company
Subsidiary on or prior to the Closing Date, such costs and expenses shall be
excluded from current liabilities,
(iv)
any
Reimbursable Costs to the extent (A) paid by the Company or a Company
Subsidiary on or prior to the Closing Date shall be added to current assets or
(B) incurred by the Company or a Company Subsidiary on or prior to the Closing
Date and not paid on or prior to the Closing Date, shall be excluded from
current liabilities,
(v)
HPT
Reimbursable Costs and Debt Restructuring Costs to the extent not paid by the
Company or a Company Subsidiary on or prior to the Closing Date shall be
included in current liabilities whether or not then due,
(vi)
50%
(but not in excess of $190,000) of the costs of obtaining tail or runoff
insurance policies pursuant to Section 6.07(c) shall be (A) added to current
assets to the extent paid by the Company or a Company Subsidiary on or prior to
the Closing Date or (B) excluded from current liabilities to the extent not
paid by the Company or a Company Subsidiary on or prior to the Closing Date (it
being understood that any cost of obtaining such policies to the extent not
paid on or prior to the Closing Date in excess of the amount excluded pursuant
to this clause (B) shall be accrued as a current liability),
(vii)
100%
of all Transaction Bonuses (other than Post-Closing Transaction Bonuses) not
paid on or prior to the Closing Date and $2,438,437.92 of the Post-Closing
Transaction Bonuses shall be accrued as a current liability (it being
understood that the other $ 2,373,437.91 of the Post-Closing Transaction
Bonuses shall be excluded from current liabilities),
11
(viii)
any
deferred tax assets or deferred tax liabilities established to reflect timing differences
between book and tax income shall be excluded,
(ix)
the
Split Dollar Receivable, but only to the extent otherwise includable in current
assets, shall be excluded from current assets,
(x)
to
the extent a municipal or mechanics lien identified on
Schedule 2.03(a)(x)
remains outstanding as of the Closing Date, unless bonded by a Person other
than the Company or a Company Subsidiary, the amount set forth in
Schedule
2.03(a)(x)
as the Current Liability Amount for such mechanics lien on
Schedule
2.03(a)(x)
shall be included as a current liability, and
(xi)
Taxes
resulting from any election pursuant to Section 338 of the Code made by
Purchaser shall be excluded.
(b)
Estimated
Net Working Capital/Estimated Purchase Price
. At least three (3) Business Days prior to the
Closing Date, the Company shall deliver to Purchaser its good faith estimate of
Net Working Capital (the
Estimated
Net
Working Capital
) and its
calculation of the Estimated Purchase Price together with the principal
financial information and work papers used by the Company in calculating the
Estimated Net Working Capital and Estimated Purchase Price. Absent manifest error, the Companys
calculation of the Estimated Purchase Price shall be binding on Purchaser.
(c)
Actual Balance Sheet
and Working Capital Statement
.
Within forty-five (45) days following the Closing Date, Purchaser
shall deliver to the Sellers Representative a consolidated balance sheet of the
Company and the Company Subsidiaries as of the Closing prepared in accordance
with GAAP applied on a basis consistent with the Company Balance Sheet (the
Actual
Balance Sheet
). The Actual Balance
Sheet shall be accompanied by a statement, certified by the Chief Financial
Officer of Purchaser (the
Working Capital Statement
), that sets forth
in reasonable detail the Actual Net Working Capital, and Purchasers
calculation of the Aggregate Purchase Price.
The
Actual Net Working Capital
shall mean the Net Working
Capital based on the Actual Balance Sheet.
Purchaser shall give the Sellers Representative reasonable access to the
Companys and the Company Subsidiaries books, records, work papers to the
extent in its possession or control, (including, to the extent applicable,
accountants work papers, subject to such confidentiality restrictions as the
accountants engaged by the Operating Company shall reasonably request) and
employees in connection with the review by the Sellers Representative of the
Actual Balance Sheet and the Working Capital Statement. In the course of preparing the Actual Balance
Sheet and the Working Capital Statement, Purchaser may consult with the Sellers
Representative in order to resolve any issues that otherwise might become the
subject of a dispute under Section 2.03(d). For purposes of determining the Actual Net
Working Capital, neither Purchaser nor the Accounting Firm will recharacterize
any obligations existing on or prior to the Balance Sheet Date as capitalized
or synthetic lease obligations if not characterized as such in the Company
Balance Sheet.
12
(d)
Dispute Resolution
. The Sellers Representative may dispute the
calculation of the Actual Net Working Capital or the calculation of the
Aggregate Purchase Price set forth in the Working Capital Statement by
delivering a written notice (a
Notice of Disagreement
) to
Purchaser within forty-five (45) days following the delivery of the
Working Capital Statement to the Sellers Representative. Any Notice of Disagreement delivered pursuant
to this Section 2.03(d) shall specify in reasonable detail the nature
and dollar amount of any disagreement so asserted. If the Sellers Representative fails to
deliver a timely Notice of Disagreement, Purchasers calculation of the
Aggregate Purchase Price as reflected in the Working Capital Statement shall be
deemed to be the final Aggregate Purchase Price. During the thirty (30) days following
the delivery of a Notice of Disagreement, Purchaser and the Sellers
Representative shall seek in good faith to resolve in writing any differences
which they may have with respect to the matters specified in the Notice of
Disagreement and agree upon the final Aggregate Purchase Price. If at the end of such 30-day period, the
parties are unable to resolve such dispute, the parties shall submit the
dispute to Deloitte & Touche LLP (
D&T
) or, if D&T is
unavailable, another mutually satisfactory (to Purchaser and the Sellers
Representative) independent accounting firm (and if the parties are unable to
mutually agree on the selection of another accounting firm, Grant Thornton LLP)
(the
Accounting Firm
) for its review and resolution of all
matters (but only such matters) which remain in dispute and which were
properly included in the Notice of Disagreement, and the Accounting Firm shall
make final determinations of the Actual Net Working Capital and the Aggregate
Purchase Price in accordance with the guidelines and procedures set forth in
this Agreement. The parties will
cooperate with the Accounting Firm during the term of its engagement. In resolving any matters in dispute with
respect to any assets or liabilities as to which both the Sellers
Representative and Purchaser has assigned values, the Accounting Firm may not
assign a value to any item in dispute greater than the greatest value for such
item assigned by the Sellers Representative or by Purchaser, or less than the
smallest value for such item assigned by the Sellers Representative or by
Purchaser. The Accounting Firm shall be
directed to make its determination within thirty (30) days following the
submission of the disputed matters to it.
The determination of the Actual Net Working Capital and the Aggregate
Purchase Price by the Accounting Firm shall be final and binding on the
parties. The fees and expenses of the
Accounting Firm shall be allocated to Sellers in the same proportion that the
aggregate dollar amount of such disputed items so submitted to the Accounting
Firm that are unsuccessfully disputed by the Sellers Representative (as finally
determined by the Accounting Firm) bears to the total dollar amount of such disputed
items so submitted, and the balance shall be paid by Purchaser. Fees and expenses of the Accounting Firm
payable by Sellers or Purchaser shall be first paid from amounts payable to
Sellers or Purchaser, as applicable, from amounts required to be paid to them
from the Escrow Fund.
(e)
Payment of Adjustment to Estimated
Purchase Price
.
(i)
Excess Payment
. If the Aggregate Purchase Price is less than
the Estimated Purchase Price (an
Excess Payment
), then within five (5)
Business Days of the final determination of the Aggregate Purchase Price,
Sellers shall pay the Excess Payment to Purchaser.
13
(ii)
Payment Shortfall
. If the final Aggregate Purchase Price exceeds
the Estimated Purchase Price (a
Payment Shortfall
), then within five
(5) Business Days of the final determination of the Aggregate Purchase Price,
Purchaser shall pay the Payment Shortfall to Sellers.
Section 2.04
Escrow Agreement and Escrow Fund
.
At or prior to the
Closing, Purchaser, HPT, the Sellers Representative and The Bank of New York (the
Escrow Agent
) shall enter into an Escrow Agreement substantially in
the form of
Exhibit B
or in such other form consistent with the terms of
this Agreement or as may be acceptable to the parties thereto (the
Escrow
Agreement
). The Escrow Agreement
shall provide for the creation of an escrow fund (the
Escrow Fund
)
consisting of (a) Ten Million Dollars ($10,000,000) (the
Escrow Amount
)
to be applied, in part, to the satisfaction of Sellers liabilities for
indemnification pursuant to Article IX and to the Company Partners liabilities
for indemnification under the HPT Purchase Agreement.
Section 2.05
Tax Withholding
.
Except to the extent such withholding is required as a result of a
change after the date of this Agreement in any Law (or the judicial or
administrative interpretation thereof) relating to withholding, Purchaser will
be entitled to deduct and withhold from the Option Cancellation Fee, the EPAC
Payment Amount and the Aggregate Purchase Price otherwise payable pursuant to
this Agreement to any Person with respect to the transfer of Operating Company Interests only to the
extent permitted under Section 6.19 hereof.
To the extent that amounts are so withheld, such withheld amounts will
be treated for all purposes hereof as having been paid to such Person in
respect of which such deduction and withholding was made. Each Seller agrees, severally, to indemnify,
reimburse and hold harmless Purchaser, the Company, the Operating Company and
their respective Affiliates with respect to any liability for failure to
withhold any amount as a result of this Section 2.05 (whether or not Purchaser
was entitled to withhold under this Section 2.05), including any Taxes,
interest and penalties imposed on or payable by such Persons in respect of any
failure to withhold as a result of the application of this Section 2.05.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
AND OPERATING COMPANY
Except
as set forth in the corresponding sections or subsections of the disclosure
letter (the
Company Disclosure Letter
) delivered by Sellers to
Purchaser concurrently with the execution of this Agreement (it being
understood that any matter disclosed in any section of the Company Disclosure
Letter will be deemed to be disclosed in any other section of the Company
Disclosure Letter to the extent that it is readily apparent on the face of such
disclosure that such disclosure is applicable to such other section), or as and
to the extent set forth in the SEC Reports filed prior to the date of this
Agreement, the Company and the Operating Company, jointly and severally,
represent and warrant to Purchaser as follows:
14
Section 3.01
Organization; Business of the Company
.
(a)
The Company and each Company Subsidiary is a
limited partnership or other entity duly organized, validly existing and (to
the extent the concept of good standing is applicable to such entity) in good
standing under the laws of the jurisdiction of its incorporation or
organization and has full partnership (or other entity) power and authority to
conduct its business as it is now being conducted and to own, operate or lease
the properties and assets it currently owns, operates or leases. The Company and each Company Subsidiary is
duly qualified or licensed to do business and is in good standing as a foreign
entity in each jurisdiction where such qualification or licensing is necessary,
except where the failure to so qualify or be so licensed would not,
individually or in the aggregate, have or reasonably be expected to have, a
Company Material Adverse Effect.
(b)
Purchaser has been provided complete and correct copies of
the currently effective Organizational Documents of the Company and each
Company Subsidiary.
(c)
Except for the ownership of its equity interests
in the Operating Company, the REIT Subsidiary, Petro Holdings Financial
Corporation (
Petro Financial
) and Petro GP, or as set forth in
Section
3.01(c) of the Company Disclosure Letter
, the Company conducts no material
business and does not own, lease or license any material properties or material
assets and has never had any employees.
Except as set forth in
Section 3.01(c) of the Company Disclosure
Letter
, neither Petro Financial nor Petro GP conducts any business or owns,
leases or licenses any material properties or material assets and neither has
ever had any employees. Each Special
Purpose Subsidiary has been formed solely for the purpose of acquiring
Transferred Assets pursuant to Sections 6.13 and 6.14(c), and other than
acquiring such Transferred Assets, and in the case of the REIT Subsidiary, the
ownership of its equity interest in the LLC Subsidiary, neither Special Purpose
Subsidiary has ever conducted any business, owned or leased any properties or
assets, had any employees or been a party to or bound by any contract (other
than their Organizational Documents).
Section 3.02
Subsidiaries
.
Section
3.02 of the Company Disclosure Letter
sets forth a list, as of the date hereof, of (a) all Company
Subsidiaries, (b) all other entities in which the Company or any Company
Subsidiary has an equity interest and (c) the correct legal name, form and
jurisdiction of organization and the type and percentage of each Persons
equity interest therein.
Section 3.03
Capitalization
.
(a)
The classes of Operating Company Interests are as set forth in
Section
3.03(a) of the Company Disclosure Letter
and all Operating Company
Interests are owned by Sellers as set forth in
Section 3.03(a) of the
Company Disclosure Letter
, and except as set forth in
Section 3.03(a) of
the Company Disclosure Letter
, such Operating Company Interests are free
and clear of any Liens (other than Permitted Liens) or any other limitations or
restrictions on such Operating Company Interests (including any limitation or
restriction on the right to vote, pledge, sell or otherwise dispose of such
Operating Company Interests). Upon
consummation of the transactions contemplated by this Agreement, at the Closing
Purchaser will acquire all of the
15
Operating
Company Interests, free and clear of all Liens other than Permitted Liens
securing the Operating Company Notes and those created by Purchaser. There are no authorized or outstanding
options, warrants, convertible securities, calls, rights, commitments,
preemptive rights or agreements or instruments or understandings of any
character, to which the Operating Company is a party or by which the Operating
Company is bound, obligating the Operating Company to issue, deliver or sell,
or cause to be issued, delivered or sold, contingently or otherwise, additional
equity interests or any securities or obligations convertible into or
exchangeable for additional equity interests or to grant, extend or enter into
any such option, warrant, convertible security, call, right, commitment,
preemptive right or agreement.
(b)
All of the equity
interests of any Company Subsidiary other than the Operating Company are owned
as set forth in
Section 3.03(b) of the Company Disclosure Letter
. All equity interests of the REIT Subsidiary
are owned by the Company and all of the equity interests of the LLC Subsidiary
are owned by the REIT Subsidiary. Except
as set forth in
Section 3.03(b) of the Company Disclosure Letter
, all
equity interests in any Company Subsidiary, in either Special Purpose
Subsidiary or, to the extent owned by the Company or a Company Subsidiary, in any
other entity identified in
Section 3.02 of the Company Disclosure Letter
are owned free and clear of any Liens
(other than Permitted Liens) or any other limitations or restrictions on such
equity interests (including any limitation or restriction the right to vote,
pledge, sell or otherwise dispose of such equity interests). There are no authorized or outstanding
options, warrants, convertible securities, calls, rights, commitments,
preemptive rights or agreements or instruments or understandings of any
character, to which any such Company Subsidiary is a party or bound, or to the
Companys knowledge, to which either Special Purpose Subsidiary or any other
entity identified in
Section 3.02 of the Company Disclosure Letter
is a
party or bound, obligating such Company Subsidiary, Special Purpose Subsidiary
or other entity to issue, deliver or sell, or cause to be issued, delivered or
sold, contingently or otherwise, additional equity interests or any securities
or obligations convertible into or exchangeable for additional equity interests
or to grant, extend or enter into any such option, warrant, convertible
security, call, right, commitment, preemptive right or agreement.
(c)
All outstanding Operating Company Interests and all shares of stock or
other equity interests of any Company Subsidiary have been duly authorized and
validly issued and are fully paid and non-assessable. Except as set forth in
Section 3.03(c) of
the Company Disclosure Letter
, there are no agreements or instruments or
understandings of any character, obligating the Company or any Company
Subsidiary to make any loans or capital contributions to or to guaranty or pay
or provide credit support for the liabilities of any Person, whether on account
of its ownership of equity interests in such Person or otherwise.
Section 3.04
Authorization
.
The Operating Company, each Company Partner and each Seller has full
power and authority or capacity (including all partnership or other entity
power and authority) to execute and deliver into this Agreement and to perform
its obligations hereunder. The execution
and delivery of this Agreement by the Operating Company, each Company Partner
and each Seller and the consummation by them of the transactions contemplated
hereby have been duly and validly authorized by all necessary action by each
Company Partner, each Seller and the
16
Operating
Company and no other proceedings on the part of the Operating Company, the
Company Partners or Sellers are necessary to authorize this Agreement and the
transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company, the
Operating Company, each Company Partner and each Seller, and assuming due
authorization, execution and delivery by each other party hereto, constitutes a
legal, valid and binding obligation of Operating Company, such Company Partner
and such Seller, enforceable against the Operating Company, each Company
Partner and each Seller in accordance with its terms, except as such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors
rights generally, (ii) general principles of equity (whether applied in a
proceeding at law or in equity) and (iii) any implied covenant of good faith
and fair dealing.
Section 3.05
No Violation
.
Except as set forth in
Section 3.05 of the Company
Disclosure Letter
, the execution and delivery of this Agreement by the
Operating Company, each Seller and each Company Partner do not, and the consummation
of the transactions contemplated by this Agreement will not, (i) conflict
with, or result in any violation of or default under, any provision of any
Company Subsidiarys, any Sellers or any Company Partners Organizational
Documents; (ii) assuming the consents, approvals, orders and
authorizations contemplated by Section 3.06 have been obtained or made,
conflict with or result in any violation of or default under, any Law or
Judgment applicable to any Company Subsidiary, any Seller or any Company Partner
or to which any of their property is subject; or (iii) conflict with, or,
with or without notice or the lapse of time, result in a breach, termination
(or right of termination) or violation of or default under the terms of any
agreement, contract, indenture or other instrument to which any Company
Subsidiary, any Seller or any Company Partner is a party or subject or to which
any of their property is subject, except with respect to clauses (ii) and
(iii), where the conflict, violation, default, breach, termination or right of
termination would not have or reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
Section 3.06
Approvals
.
Except
as set forth in
Section 3.06 the Company Disclosure Letter
, the execution
and delivery of this Agreement by Sellers, the Operating Company, and the
Company Partners and the consummation by them of the transactions contemplated
by this Agreement do not require any consent, approval, order or authorization
of any Person under any Material Contract or any Law or Judgment and, to the
Companys knowledge, no declaration, filing or registration with any
Governmental Entity is required by the Company or any Company Subsidiary in
connection with the execution and delivery of this Agreement and the
consummation of transactions contemplated by this Agreement, except for (a) SEC
filings required to be made by the Operating Company pursuant to the Exchange
Act or (b) those consents, approvals, orders, authorizations, declarations, filings
or registrations the
failure of which to be obtained or made
individually or in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect; provided further, however, that the Company
and the Operating Company make no representations or warranties with respect to
any consents, approvals, orders, authorizations, declarations, filings or
registrations that may be required with respect to Permits.
17
Section 3.07
Financial Statements
.
(a)
Purchaser has been provided with copies of the following
consolidated financial statements of the Company and the Company Subsidiaries
(collectively, the
Financial Statements
): (i) the audited consolidated balance sheet of
the Company and the Company Subsidiaries as of December 31, 2006 and December
31, 2005 and the related statements of income and cash flows for each of the
three years in the period ending December 31, 2006 (together with the notes
thereto); and (ii) the unaudited consolidated balance sheet (the
Company
Balance Sheet
) of the Company and the Company Subsidiaries as of March 31,
2007 (the
Balance Sheet Date
) and the related unaudited statements of
income and cash flows for the three (3) month period ending on the Balance
Sheet Date. The Financial Statements (i)
present fairly in all material respects the consolidated financial condition
and results of operations of the Company and the Company Subsidiaries as of the
dates thereof or for the periods covered thereby, except as otherwise
noted therein (subject, in the case of the unaudited Financial Statements, to
the absence of notes and normal year-end adjustments and to any other
adjustments described therein) and (ii)
have been prepared in all material respects in accordance with GAAP applied on
a consistent basis for the periods involved (except as may be indicated in the
notes thereto or as described in
Section 3.07 of the Company Disclosure
Letter
).
(b)
Except as set forth in
Section
3.07 of the Company Disclosure Letter
, neither the Company nor any Company
Subsidiary has any Liabilities, other than Liabilities (i) that have been
specifically disclosed or accrued or reserved against in the Company Balance
Sheet, (ii) that have been incurred in the ordinary course of business and
consistent with past practices since the date of the Company Balance Sheet,
(iii) of the type that are not required by GAAP to be included in or in
the notes to a consolidated balance sheet of the Company and the Company
Subsidiaries prepared in accordance with GAAP, (iv) relating to operating leases
incurred in accordance with the terms of such operating leases in the ordinary
course of business, (v) Liabilities incurred under this Agreement or in
connection with the transactions contemplated by this Agreement, (vi)
Liabilities that have been or will be discharged or paid in full prior to the
Closing, and (vii) for future performance under any contracts, agreements,
commitments, leases, sales contracts and other agreements to which the Company
or any Company Subsidiary is a party or bound that were entered into in the
ordinary course of business, and which with respect to clauses (ii), (iii),
(iv), (vi) and (vii), as have not been, and would not reasonably be expected to
be, individually or in the aggregate, materially adverse to the Company and the
Company Subsidiaries, taken as a whole.
Section 3.08
Absence of Certain Transactions
.
(a)
Except as set forth in
Section
3.08 of the Company Disclosure Letter
and except for the transactions
expressly contemplated hereby, since the Balance Sheet Date, the Company and
the Company Subsidiaries have conducted their respective businesses in the
ordinary course consistent with past practices.
Since the Balance Sheet Date, there have not been any events, changes,
effects or developments which have had or would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
18
(b)
Without limiting the
foregoing, except as set forth in
Section
3.08 of the Company Disclosure Letter
and except for actions following the
date of this Agreement undertaken in accordance with this Agreement, since the
Balance Sheet Date to the date of this Agreement (i) neither the Company nor
any Company Subsidiary has taken any action which would be prohibited by
Section 6.01 if taken after the date hereof and (ii) there has not been
any material loss, damage or destruction to, or any material interruption in
the use of, any of the Companys or any Company Subsidiarys assets (whether or
not covered by insurance).
Section 3.09
Taxes
.
(a)
Except as disclosed in
Section 3.09(a) of the
Company Disclosure Letter
,
(i)
each
of the Company and the Operating Company, is, and since its formation has,
qualified as a partnership for federal, state and local income Tax purposes and
is not, and has never been, a publicly traded partnership for purposes of
Section 7704 of the Code or under any comparable provision of state or local
Law;
(ii)
no
Person has made an election for the Company, the Operating Company or any
Special Purpose Subsidiary to be treated as an association taxable as a
corporation for federal, state or local income Tax purposes;
(iii)
all
material Tax Returns that are required to be filed (taking into account all
extensions) on behalf of or with respect to the Company or any Company
Subsidiary have been timely filed with the applicable Governmental Entity and
all such Tax Returns are correct and complete in all material respects and were
prepared in accordance with all applicable Tax Laws;
(iv)
neither
the Company nor any Company Subsidiary owns ten percent (10%) or more, by vote
or value, of the stock, equity or other securities of any one issuer, except
for stock, equity or other securities in entities that are wholly owned
(directly or indirectly) by the Company;
(v)
each
of the Company and each Company Subsidiary has paid when due all material Taxes
due and payable whether or not shown on any Tax Return;
(vi)
the
unpaid Taxes of the Company and each Company Subsidiary did not, as of the
Balance Sheet Date, exceed the reserve for Tax liability (excluding any reserve
for deferred Taxes established to reflect timing differences between book and
Tax income and without regard to items set forth in the Company Disclosure
Letter) set forth on the face of the Company Balance Sheet (disregarding any
notes thereto) and will not exceed, as of the Closing Date, such reserve for
Tax liability (excluding any reserve for deferred Taxes established to reflect
timing differences between book and Tax income and without regard to items set
forth in the Company Disclosure Letter) as adjusted for the passage of time
through the Closing Date;
19
(vii)
neither
the Company nor any Company Subsidiary has incurred any Tax Liability since the
date of the Company Balance Sheet, other than a Tax liability in the ordinary
course of business;
(viii)
neither
the Company nor any Company Subsidiary has been notified in writing by any
Governmental Entity of its intent to assess any additional Taxes for any
period;
(ix)
none
of the Tax Returns of the Company or any Company Subsidiary are now under audit
or examination by any Governmental Entity;
(x)
no
claim which currently remains unresolved has been made in writing by a
Governmental Entity in a jurisdiction where the Company or any Company
Subsidiary does not file Tax Returns or pay Tax that the Company or such
Company Subsidiary currently is or may be subject to taxation by that
jurisdiction and neither the Company nor any Company Subsidiary has a permanent
establishment in any foreign country or operates or conducts a business through
a branch in any foreign country;
(xi)
there
are no material Liens for Taxes upon any asset of the Company, any Company
Subsidiary or any Special Purpose Subsidiary other than with respect to Taxes
not yet due and payable;
(xii)
there
are no outstanding agreements or waivers extending the statutory period of
limitations applicable to the Tax Returns of the Company or any Company
Subsidiary, and neither the Company nor any Company Subsidiary has requested or
received any extension of time within which to file any Tax Return, which Tax
Return has not yet been filed;
(xiii)
each
of the Company and each Company Subsidiary has, within the time and manner
prescribed by Law, withheld, paid over and reported all Taxes required to have
been withheld, paid and reported in connection with the amounts paid or owing
to any employee, independent contractor, creditor, partner, stockholder,
member, foreign Person or other third party;
(xiv)
neither
the Company nor any Company Subsidiary is a party to, is bound by or has any
obligation under any Tax sharing agreement or similar arrangement;
(xv)
neither
the Company nor any Company Subsidiary (i) is, or has been, a member of an
affiliated group filing a consolidated federal income Tax Return, or (ii) has
any liability for the Taxes of any entity under Treas. Reg. § 1.1502-6 (or
any similar provision of Law), or as a transferee or successor, by contract or
otherwise;
(xvi)
neither
the Company nor any Company Subsidiary has agreed to make any adjustment
pursuant to Section 481(a) of the Code (or any predecessor provision) or
pursuant to any similar provision of Law, and neither the IRS nor any other
taxing authority has proposed any such adjustment or change in accounting
method;
20
(xvii)
neither
the Company nor any Company Subsidiary has constituted either a distributing
corporation or a controlled corporation (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under Section 355 or Section 356 of the Code in (A) the five (5)
years prior to the date of this Agreement or (B) a distribution which could
otherwise constitute part of a plan or series of related transactions
(within the meaning of Section 355(e) of the Code) in conjunction with the
transactions contemplated by this Agreement;
(xviii)
neither
the Company nor any Company Subsidiary has ever entered into, or taken any
deduction or received any Tax benefit arising with respect to, any reportable
transaction as defined in Section 6707A(c) of the Code (or any comparable
provision of state, local or foreign Tax Law);
(xix)
each
current partner of the Company or the
Operating Company is, and each former partner (while such former partner was a
partner) of the Company or the Operating Company was, a United States Person
as defined in Section 7701(a)(30) of the Code at all times while such Person is
or was a partner of the Company or the Operating Company, as applicable;
(xx)
Purchaser
has been provided complete and correct copies of all federal income Tax Returns
and descriptions of all federal, state, local and foreign examination reports
and statements of deficiencies assessed against or agreed to by the Company or
any Company Subsidiary filed or received in respect of their 2003 through 2005
Taxable years; and
(xxi)
Petro
GP is, and since its formation has, and will remain through the Closing Date,
qualified as a disregarded entity under Treasury Regulation Section 301.7701-2
and -3 (and any comparable provision of state or local law) and Petro GPs sole
asset, other than cash and cash equivalents, is, and since its formation has
been, and will remain a partnership interest in the Operating Company.
(b)
Section 3.09(b) of
the Company Disclosure Letter
contains a list of all jurisdictions in which
the Company or any Company Subsidiary currently files Income Tax, sales and
use, real property and fuel excise Tax Returns or pays Taxes (specifying such
jurisdiction and the types of such Income Tax Returns or Taxes paid in such
jurisdiction).
(c)
For purposes of this
Section 3.9, any reference to the Company or any Company Subsidiary shall be
deemed to include any entity that merged or was liquidated into such Person.
Section 3.10
Litigation
.
Except
as set forth in
Section 3.10 of the Company Disclosure Letter
and except
as would not reasonably be expected, individually or in the aggregate, to have
a Company Material Adverse Effect; (i) there are no Proceedings pending, or to
the Companys knowledge, threatened against the Company or any Company
Subsidiary by or before any arbitrator or Governmental Entity; and (ii) neither
the Company nor any Company Subsidiary is a party to, or,
21
to the Companys knowledge, bound by any Judgments.
Section 3.11
Environmental Matters
.
(a)
Except as set forth in
Section
3.11(a) of the Company Disclosure Letter
or as would not have, or
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect:
(i)
the
Company and each Company Subsidiary have been, and are, in compliance with all
applicable Environmental Laws, including requirements of Environmental Permits,
(ii)
the
Company and each Company Subsidiary have all Environmental Permits and all such
Environmental Permits are in full force and effect and there is no proceeding or investigation pending, or to the Companys
knowledge, threatened which would reasonably be expected to lead to the
revocation, amendment, failure to renew, or suspension of any such
Environmental Permit. The Company and
each Company Subsidiary has filed when due all documents required to be filed
with any Governmental Entity in connection with such Environmental Permits and
at the time of filing thereof all such filings were accurate and complete,
(iii)
there
are no outstanding or, to the Companys knowledge, threatened claims against the
Company or any Company Subsidiary (i) for damages or penalties relating to
the presence, generation, transportation, treatment, storage or disposal of
Hazardous Materials in, under or from any Owned Property, any Leased Property,
or any property formerly owned, leased or operated by the Company or any
Company Subsidiary, or (ii) otherwise arising under Environmental Law; and
neither the Company nor any Company Subsidiary has received any written request
for information from any Governmental Entity regarding the disposal or release
of Hazardous Materials, except for such requests which have been resolved, and
(iv)
to
the Companys knowledge, neither the Company, any Company Subsidiary, nor any
other Person has disposed of, spilled, or otherwise released any Hazardous
Materials at any Owned Property, any Leased Property or any property formerly
owned, leased or operated by the Company or any Company Subsidiary, other than
in compliance with Environmental Laws and none of the Company and the Company
Subsidiaries has released Hazardous Materials at any other location which would
reasonably be expected to result in liability under Environmental Law.
(b)
Except as set forth in
Section
3.11(b) of the Company Disclosure Letter
, to the Companys knowledge, all
Hazardous Materials generated by the Company or any Company Subsidiary have
been stored, transported, treated and disposed of by transporters and/or
treatment, storage and disposal facilities authorized under applicable
Environmental Laws or maintaining valid Environmental Permits, and neither the
Company nor any Company Subsidiary has disposed of, transported, or arranged
for the disposal or transportation of any Hazardous Materials at or to any
location at which there is or has been a release of Hazardous Materials which
would reasonably be expected to result in liability to the Company or any
22
Company Subsidiary under Environmental Law
that would, individually or in the aggregate have, or reasonably be expected to
have, a Company Material Adverse Effect.
(c)
None of the Owned
Property or Leased Property is listed or, to the Companys knowledge, proposed
for listing on the National Priorities List promulgated under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or on
any analogous list maintained by any Governmental Entity.
(d)
Purchaser has been
provided correct and complete copies of all reports, studies, and analyses that
are material and in the possession, custody or control of the Company or any
Company Subsidiary and relate to compliance by the Company or any Company
Subsidiary with Environmental Law or the presence of Hazardous Materials on any
Owned Property or Leased Property.
(e)
Other than contracts
for services related to environmental compliance and environmental terms of
commercial contracts entered into in the ordinary course of business, neither
the Company nor any Company Subsidiary has retained or assumed by contract any
liability or responsibility for any environmental claims or conditions.
Section 3.12
Title to Property
.
(a)
Section 3.12(a) of
the Company Disclosure Letter
identifies (by fee owner as of the date
hereof (but with respect to the Owned Property being transferred pursuant to
Section 6.13, immediately prior to the transfers contemplated under Section
6.13) and street address or freeway interchange), all real estate owned by the
Company or any Company Subsidiary (
Owned Property
). Except as set forth in
Section 3.12(a) of
the Company Disclosure Letter
, as of the date of this Agreement (but with
respect to the Owned Property being transferred pursuant to Section 6.13,
immediately prior to the transfers contemplated under Section 6.13) the Company
or a Company Subsidiary has good and valid, insurable fee title to all of the
Owned Property subject only to Permitted Liens.
Except as set forth in
Section 3.12(a) of the Company Disclosure
Letter
, there are no outstanding options or rights of first refusal or
first offer to purchase any of the Owned Property or any interest therein.
(b)
Section 3.12(b) of
the Company Disclosure Letter
identifies (by leasehold owner as of the date
hereof (but with respect to the Leased Property being transferred pursuant to
Section 6.13, immediately prior to the transfers contemplated by Section 6.13),
lease and street address or freeway interchange) all material real estate
leased as tenant by the Company or any Company Subsidiary (the
Leased
Property
). Except as set forth in
Section
3.12(b) of the Company Disclosure Letter
, as of the date of this Agreement
(but with respect to the Leased Property being transferred pursuant to Section
6.13, immediately prior to the transfers contemplated by Section 6.13) the
Company or a Company Subsidiary has good and valid, leasehold title to all the
Leased Property, subject only to Permitted Liens. Except as set forth in
Section 3.12(b) of
the Company Disclosure Letter
, there are no outstanding options or rights
of first refusal or first offer to acquire any interest in any of the Leased
Property from the Company or a Company Subsidiary.
Section 3.12(b)(ii) of the Company
Disclosure Letter
identifies all material real estate leases under which
the Company or any Company Subsidiary is a landlord.
23
(c)
Except as set forth in
Section
3.12(c) of the Company Disclosure Letter
, neither the Company nor any
Company Subsidiary, nor to the knowledge of Sellers any third party, is in
default under any material term of any lease under which the Company or any
Company Subsidiary leases any of the Leased Property (each a
Lease
) or
any material term of any other lease, agreement, declaration, restriction, or
covenant relating to the Leased Property or Owned Property (each a
Real
Property Agreement
), nor, to the Companys knowledge do any state of facts
exist which with the passage of time would constitute a default of the Company
or any Company Subsidiary, or of any third party, under any material term of
any Lease or Real Property Agreement;
provided
,
however
, neither
the Company nor the Operating Company make any representation as to whether or
not the failure to obtain consent from a landlord under any Lease for the
transactions contemplated under Section 6.13 will constitute a default under
any Lease.
(d)
Complete and correct
copies of all title policies of the Company in the possession of the Company
and the Company Subsidiaries as of the date hereof relating to the Owned
Property and the Leased Property have been provided to Purchaser or Purchasers
counsel.
(e)
To the Companys
knowledge, complete and correct copies of all Leases and all Real Property
Agreements have been delivered to Purchaser or Purchasers counsel prior to the
date hereof (excluding any documents recorded in the land records of the
jurisdictions in which the applicable Owned Property or Leased Property is
located).
(f)
Section 3.12(f) of
the Company Disclosure Letter
lists (by address and name of franchisee) all
real estate operated by a franchisee of the Company or a Company Subsidiary.
(g)
Copies of surveys of
all the Owned Property and the Leased Property in the possession of the Company
or a Company Subsidiary as of the date have been provided to Purchaser or
Purchasers counsel. Except as shown on
such surveys and as would not, individually or in the aggregate, detract or
impair in any material respect from the value or the continued use in the
ordinary course of business as currently conducted or contemplated of the Owned
Property or the Leased Property, to the Companys knowledge, no material
portion of such buildings or structures on the Owned Property or Leased
Property substantially encroaches upon real property of another Person and, to
the Companys knowledge, no structure of any other Person substantially
encroaches upon any of the Owned Property or Leased Property.
(h)
Except as set forth in
Section
3.12(h) of the Company Disclosure Letter
, and as would not, individually or
in the aggregate, detract or impair in any material respect from the value or
the continued use in the ordinary course of business as currently conducted or
contemplated of the Owned Property or the Leased Property, to the Companys
knowledge, the buildings and structures located on each Owned Property and
Leased Property currently have valid legal access to (i) public roads or valid
easements over private streets or private property for such ingress to and
egress from all such buildings and structures, and (ii) water supply, storm and
sanitary sewer facilities, telephone, gas and electric connections, fire
protection, drainage
24
and other utilities, in each case as is
necessary for the operation of such Owned Property or Leased Property as
heretofore conducted.
(i)
Section 3.12(i) of
the Company Disclosure Letter
is a complete list of all non-disturbance
agreements with any ground or underlying lessee or mortgagee in the possession
of the Company or a Company Subsidiary relating to the Leased Properties to
which the Company or any Company Subsidiary is a party as of the date of this
Agreement.
Section 3.13
Personal Property
.
(a)
The Company or a
Company Subsidiary has adequate title to or leasehold interest in all
machinery, equipment and other personal property used in the business of the
Company or the Company Subsidiaries as currently conducted free and clear of
all Liens other than Permitted Liens, except where the failure to have such title
or leasehold interest has not been, and would not, individually or in the
aggregate, reasonably be expected to be, materially adverse to the Company and
the Company Subsidiaries, taken as a whole.
(b)
All buildings,
machinery, equipment and other tangible assets that are material to the
business and are currently owned or being used by the Company or any Company
Subsidiary are in good operating condition, maintenance and repair, ordinary
wear and tear excepted, are usable in the ordinary course of business and are
reasonably adequate and suitable for the uses to which they are being put,
except as has not been, and would not, individually or in the aggregate,
reasonably be expected to be, materially adverse to the Company and the Company
Subsidiaries, taken as a whole.
Section 3.14
Contracts
.
(a)
Section 3.14(a) of the Company Disclosure Letter
is a complete list of all written contracts,
agreements, commitments, leases, sales contracts and other agreements to which
the Company or any Company Subsidiary is a party as of the date of this
Agreement (collectively,
Material Contracts
):
(i)
which provide for the receipt or expenditure by
the Company or any Company Subsidiary after the date of this Agreement, of more
than $1,000,000 (or its equivalent in non-cash consideration) per year (other
than contracts, agreements, commitments, leases, sales contracts and other
agreements (i) providing for acquisition or disposition of supplies or other
inventory in the ordinary course of business or (ii) that may be canceled
without any penalty or other liability to the Company or any Company Subsidiary
upon notice of 90 days or less (contracts described in clause (ii), regardless
of the amount of receipts or expenditures thereunder,
Excluded Contracts
));
(ii)
which are for the acquisition or disposition of any interest in real
estate (other than those under which neither the Company nor any Company
Subsidiary has any continuing obligations or rights);
25
(iii)
which provide for the acquisition, issuance or transfer of any securities
of the Company or any Company Subsidiary (other than as contemplated by this
Agreement);
(iv)
which create or represent Indebtedness or Liens (other than Permitted
Liens (other than clause (ii) of the definition of Permitted Liens) on assets of
the Company or any Company Subsidiary as security for Indebtedness);
(v)
under which the Company or any Company Subsidiary is currently a
franchisee or franchisor;
(vi)
which establish or govern the terms of any partnership or joint venture
agreement;
(vii)
which expressly limits the freedom of the Company
or any Company Subsidiary to compete in any line of business with any Person or
in any geographical area;
(viii)
which
is a material broker, distributor, dealer, manufacturers representative,
agency, sales promotion, market research, marketing, consulting and advertising
agreement (other than Excluded Contracts);
(ix)
which
provide for the provision of gaming, gambling or arcade facilities or arcade
services;
(x)
which
are material agreements with a credit card or debit card company;
(xi)
which
are employment agreements with any director or officer of the Company or a
Company Subsidiary or with any other employee of the Company or a Company
Subsidiary; and
(xii)
which
are collective bargaining agreements, contracts or other agreements or
understandings with a labor union or labor organization.
(b)
Complete and correct
copies of all Material Contracts as of the date hereof have been provided to
Purchaser or its counsel. Each of the
Material Contracts is a valid and binding obligation of the Company or the
Company Subsidiary party thereto, and to the Companys knowledge, the other
parties thereto.
(c)
Except as set forth in
Section
3.14(c) of the Company Disclosure Letter
, neither the Company nor any
Company Subsidiary is, nor to the knowledge of Sellers is any other party, in
default under any material term of any Material Contract.
(d)
Except as set forth in
Section
3.14(d) of the Company Disclosure Letter
, all Indebtedness of the Company
and the Company Subsidiaries is prepayable without premium or penalty.
26
Section 3.15
Employee and Labor Matters and Plans
.
(a)
Section 3.15(a) of the Company Disclosure
Letter
lists each of the following plans, policies, arrangements and
contracts which are sponsored, maintained or contributed to by the Company or
any Company Subsidiary, or, in the case of any employee pension plan (as
defined in Section 3(2) of ERISA), an ERISA Affiliate, or for the benefit of
any current or former employee, director or officer: (i) any employee
benefit plan, as such term is defined in Section 3(3) of ERISA, whether or not
subject to the provisions of ERISA; and (ii) any other employment,
consulting, collective bargaining, stock option, stock bonus, stock purchase,
phantom stock, incentive, bonus, deferred compensation, retirement, severance,
change-in-control, fringe, insurance, disability, post-employment (including
compensation, pension, health, medical or life insurance or other benefits),
vacation, medical or dental contract, policy or arrangement which is not an
employee benefit plan as defined in Section 3(3) of ERISA (each such plan,
contract, policy and arrangement being herein referred to as an
Employee
Plan
).
(b)
Complete and correct copies (including
amendments) of each contract, plan document and summary plan description (including
any related trust agreement or insurance company contract) relating to each
Employee Plan or, if there are no such written materials, a summary description
of the Employee Plan, plus a copy of the most recent determination letter, if
applicable, and a copy of the most recent Form 5500 and financial
statements of such Employee Plan (if any) have been provided to Purchaser or
its representatives. Except as set forth
in
Section 3.15(b) of the Company Disclosure Letter
, there have been no
amendments to, written interpretations of or announcements by the Company or
any Company Subsidiary published to employees relating to, or any changes in
employee participation or coverage under, any Employee Plan that would increase
materially the expense of maintaining such Employee Plan above the level of
expense incurred in respect thereof for the most recent fiscal year ended prior
to the date hereof, for which financial statements have been provided.
(c)
Each Employee Plan has been maintained in
compliance in all respects with its terms and the requirements prescribed by
any and all applicable statutes, orders, rules and regulations, including, but
not limited to, ERISA and the Code except where the failure to be in compliance
therewith would not, individually or in the aggregate, have, or reasonably be
expected to have, a Company Material Adverse Effect. Except as set forth in
Section 3.15(c) of
the Company Disclosure Letter
, with respect to each Employee Plan, (1) no
actions, suits or claims (other than routine claims for benefits in the
ordinary course) are pending, or to the Companys knowledge, threatened, and
(2) to the Companys knowledge, there are no facts or circumstances that would
reasonably be expected to form the basis of any such actions, suits or claims,
and (3) no administrative investigation, audit or other administrative
proceeding by the Department of Labor, the Pension Benefit Guaranty
Corporation, the Internal Revenue Service or other Governmental Entities are in
progress or pending, or to the Companys knowledge, threatened. With respect to each Employee Plan which is
an employee benefit plan within the meaning of Section 3(3) of ERISA or which
is a plan within the meaning of Section 4975(e) of the Code, there has
occurred no transaction which is prohibited by Section 406 of ERISA or which
constitutes a prohibited transaction under Section 4975(c) of the Code and
with respect to which a prohibited transaction exemption has not been granted
and is not currently in effect,
27
except where such prohibited transaction would not, individually or
in the aggregate, have, or reasonably be expected to have, a Company Material
Adverse Effect.
(d)
Section 3.15(d) of the Company Disclosure
Letter
identifies each funded Employee Plan which is an employee pension
plan within the meaning of Section 3(2) of ERISA (including a multi-employer
plan within the meaning of Section 3(37) of ERISA). With respect to each such Employee Plan,
(i) the Employee Plan is a qualified plan under Section 401(a) or 403(a)
of the Code, and its related trust is exempt from federal income taxation under
Section 501(a) of the Code; (ii) a favorable IRS determination letter has
been received and, since the date of such IRS submission, the Employee Plan has
not been amended or operated in a manner which would be reasonably be expected
to have a Company Material Adverse Effect, nor would there result any material
cost or liability to remedy any such defect; (iii) there has been no
termination or partial termination within the meaning of Section 411(d)(3) of
the Code; (iv) no Employee Plan is covered by Section 412 of the Code; and
(v) no such Employee Plan is covered by Title IV of ERISA. Neither the Company nor any ERISA Affiliate
has sponsored any pension plan subject to Title IV of ERISA. No event has occurred and no condition
exists, with respect to any Employee Plan that would reasonably be expected to
subject the Company to any Tax, fine, Lien (other than Permitted Liens),
penalty or other Liability imposed by ERISA, the Code or any other applicable
Laws, which, individually or in the aggregate, would reasonably be expected to
have a Company Material Adverse Effect.
(e)
Except as set forth in
Section 3.15(e) of
the Company Disclosure Letter
and other than pursuant to the provisions of
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (
COBRA
),
or any equivalent state statute, neither the Company nor any ERISA Affiliate
maintains any Employee Plan that provides benefits described in Section 3(1) of
ERISA to any former employees or retirees of the Company or any of its ERISA
Affiliates.
(f)
Except as set forth in
Section 3.15(f)
of the Company Disclosure Letter
, neither the Company nor any Company
Subsidiary maintains any nonqualified deferred compensation plan subject to
Section 409A of the Code.
(g)
Except as set forth in
Section 3.15(g) of
the Company Disclosure Letter
, the consummation of the transactions
contemplated by this Agreement will not entitle any employee, officer, director
or consultant to receive severance or other compensation or benefits from the
Company or any Company Subsidiary which would not otherwise be payable absent
the consummation of the transactions contemplated by this Agreement or cause
the acceleration of the time of payment or vesting of any award or entitlement
under any Employee Plan, whether or not such occurrence would constitute a
parachute payment within the meaning of Code Section 280G, and whether or
not another subsequent action or event (or lack thereof) in addition to the transactions
contemplated hereby would be required to trigger such occurrence.
(h)
To the Companys knowledge, since December
31, 2005, there have been no governmental audits of the equal employment
opportunity practices of the Company or any Company Subsidiary. Except as set forth in
Section 3.15(h) of
the Company Disclosure Letter
, there are no actions, suits, claims, labor
disputes or grievances pending or, to the Companys
28
knowledge, threatened or reasonably anticipated relating to any labor,
safety or discrimination matters involving any Company or Company Subsidiary
employee, including, without limitation, charges of unfair labor practices or
discrimination complaints that would reasonably be expected to be, individually
or in the aggregate, materially adverse to the Company and the Company
Subsidiaries, taken as a whole. There
are no strikes, disputes, slowdowns or stoppages pending or, to the Companys
knowledge, threatened against or involving the Company or a Company Subsidiary
that would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(i)
Except as set forth in
Section 3.15(i)
of the Company Disclosure Letter
(i) neither the Company nor any Company
Subsidiary is a party to or bound by, any collective bargaining agreement with
a labor union or labor organization; (ii) there is no labor practice or labor
arbitration proceeding pending, or to the Companys knowledge, threatened
against the Company or any Company Subsidiary; and (iii) to the Companys
knowledge there are no organizational efforts with respect to the formation of
a collective bargaining unit presently being made.
(j)
Purchaser or its representatives have been
provided, with respect to each current employee of the Company and each Company
Subsidiary (including any employee of the Company or a Company Subsidiary who
is on a leave of absence or on layoff status):
(i)
the name of such
employee and the date as of which such employee was originally hired by the
Company or a Company Subsidiary;
(ii)
such employees title,
department and primary work location;
(iii)
the aggregate dollar
amount of the compensation (including wages, salary, commissions, directors
fees, fringe benefits (if the aggregate value of such fringe benefits exceeds
$10,000), bonuses, profit-sharing payments and other payments or benefits
of any type) earned or received by such employee from the Company or the
Company Subsidiary with respect to services performed in 2006;
(iv)
such employees
annualized base salary and target bonus as of the date of this Agreement;
(v)
each Employee Plan that
provides for severance, termination, retention, change in control or tax gross
up compensation or benefit in which such employee participates or is eligible
to participate; and
(vi)
any Permit required in
connection with such employees employment with the Company or a Company
Subsidiary.
(k)
Section 3.15(k) of the Company Disclosure
Letter
identifies each former employee, consultant and director of the
Company or a Company Subsidiary who is receiving or is scheduled to receive (or
whose spouse or other dependent is receiving or is scheduled to receive) any
payments or benefits (whether from the Company or any Company Subsidiary)
pursuant to a Employee Plan and describes such payments and benefits.
29
(l)
Except as set forth in
Section 3.15(l)
of the Company Disclosure Letter
, the employment of each employee of the
Company or a Company Subsidiary is terminable at will and the service of each
independent contractor is terminable on not more than 30 days notice and
without further obligation or liability to the Company or any Company
Subsidiary. To the extent material to
the Company or the Operating Company, complete and correct copies of all
employee manuals and handbooks, disclosure materials, policy statements and
other materials relating to the employment of the current employees of the
Company and the Company Subsidiaries have been provided to Purchaser or its
representatives.
Section 3.16
Insurance Policies
.
Section
3.16 of the Company Disclosure Letter
contains a summary description of all material insurance policies of the
Company and the Company Subsidiaries (the
Insurance Policies
) and each
such policy is in full force and effect.
The Insurance Policies are customary and adequate in all material
respects for companies of similar size in the industry and locales in which the
Company and the Company Subsidiaries operate.
All premiums with respect to the Insurance Policies which are due and
payable prior to the Closing have been paid, or will be paid prior to the
Closing, and no written notice of cancellation or termination has been received
by the Company with respect to any such policy.
Except as set forth in
Section 3.16 of the Company Disclosure Letter
,
to the Companys knowledge, there are no pending claims against the Insurance
Policies by the Company or any Company Subsidiary (a) as to which the insurers
have denied coverage or otherwise reserved rights in writing or (b) which are,
individually or in the aggregate, reasonably likely to exceed the maximum
amount of coverage provided by such insurance.
Section 3.17
Intellectual Property
.
(a)
Section 3.17(a) of the Company Disclosure
Letter
contains a list of all U.S. and foreign patents, registrations and
applications for Intellectual Property owned by the Company or a Company
Subsidiary. No office actions have been
issued by the U.S. Patent and Trademark Office with respect to any Registered
Intellectual Property which are pending as of the date hereof.
(b)
Section 3.17(b) of the Company Disclosure
Letter
contains a list of all material trademarks and service marks
(whether registered or unregistered) used by the Company or a Company
Subsidiary in its business (collectively, the
Petro Stopping Marks
). Except as set forth in
Section 3.17(b) of
the Company Disclosure Letter
, to the knowledge of the Company, the Petro
Stopping Marks are owned exclusively by the Company or a Company
Subsidiary. To the Companys knowledge,
the Petro Stopping Marks are valid and enforceable.
(c)
(i) the Company and the Company Subsidiaries
own or have a valid license to use all Intellectual Property necessary for the
conduct of their businesses as currently conducted; (ii) neither the Company
nor any Company Subsidiary has received written notice of infringement or
challenge to the right to use any material Intellectual Property; (iii) to the
Companys knowledge, neither the Company nor any Company Subsidiary is
infringing or violating the Intellectual Property of any other Person and their
material Intellectual Property is
30
not being infringed or violated by any other Person; and (iv) the
Company and the Company Subsidiaries take reasonable steps to protect and
maintain their material Intellectual Property.
(d)
For the purposes of this Section 3.17,
Intellectual
Property
shall mean all United States, state and foreign intellectual
property, including patents, inventions, discoveries, technology, and
know-how, copyrights and copyrightable works (including software and software
code in any form, including source code and executable or object
code), trademarks, service marks, trade names, brand names, corporate
names, domain names, URLs, web sites, logos, trade dress and other source
indicators, trade secrets and other confidential information.
Section 3.18
Permits
.
Except
as set forth in
Section 3.18 of the Company Disclosure Letter
, the
Company and the Company Subsidiaries have all Permits (other than Environmental
Permits which are addressed in Section 3.11) necessary for the Company and each
Company Subsidiary to carry on their respective businesses as currently
conducted except for those Permits that the failure to have would not,
individually or in the aggregate, have or be reasonably expected to have, a
Company Material Adverse Effect. Except
as set forth in
Section 3.18 of the Company Disclosure Letter
, all of
the Permits are in full force and effect except where such failure to be in
effect would not, individually or in the aggregate, have or be reasonably
expected to have, a Company Material Adverse Effect and there is no proceeding
or investigation pending, or to the Companys knowledge, threatened which would
reasonably be expected to lead to the revocation, amendment, failure to renew,
or suspension of any such Permit. Except
as set forth in
Section 3.18 of the Company Disclosure Letter
, the
Company and each Company Subsidiary has filed when due all documents required
to be filed with any Governmental Entity in connection with such Permits except
where the failure to file such documents
would not, individually or in
the aggregate, have or be reasonably expected to have, a Company Material Adverse Effect, and, at the time of the filing thereof, all such
filings were accurate and complete in all material respects.
Section 3.19
Compliance with Laws
.
Except
as set forth in
Section 3.19 of the Company Disclosure Letter
, neither
the Company nor any Company Subsidiary is in violation of, or has since January
1, 2006 violated or failed to comply with any Law (other than Environmental
Laws, ERISA and Laws with respect to Taxes which are addressed elsewhere in
Article III) applicable to its business, operations and assets, except for
violations and failures to comply that would not, individually or in the
aggregate, have, or be reasonably expected to have, a Company Material Adverse
Effect.
Section 3.20
Related Party Transactions
.
Except as set forth in
Section 3.20 of the Company Disclosure Letter
,
to the Companys knowledge, there are no material transactions, or series of
related transactions, agreements, arrangements or understandings, nor are there
any currently proposed material transactions, or series of related
transactions, between the Company or any of the Company Subsidiaries, on the
one hand, and the Company, a Company Subsidiary, any current or former
31
director,
officer, partner, employee or Affiliate of the Company or any of the Company
Subsidiaries, on the other hand, that would be required to be disclosed under
Item 404 of Regulation S-K promulgated under the Securities Act.
Section 3.21
Brokerage Fees
.
None
of Sellers, the Company or any Company Subsidiary has retained any financial
advisor, broker, agent or finder or agreed to pay a financial advisor, broker,
agent or finder on account of this Agreement or any transaction contemplated
hereby or any transaction of like nature except for Banc of America Securities
LLC, the fees of which will be paid by the Operating Company.
Section 3.22
Certain Payments
.
During the past
five years, none of the Company or any Company Subsidiary has made any contribution,
gift, bribe, payoff, influence payment, kickback or other similar payment to
any Person, private or public, regardless of form, whether in money, property
or services in violation of any applicable United States or foreign Law (a) to
obtain favorable treatment in securing business, (b) to pay for favorable
treatment for business secured, or (c) to obtain special concessions, in each
case for or in respect of the Company or any Company Subsidiary or their
franchisees.
Section 3.23
No Other Representations or Warranties
.
Except
for the representations and warranties contained in this Article III and in
Article IV,
Purchaser acknowledges
that none of Sellers, the Operating Company, the Company Partners or any other
Person on their behalf makes any other express or implied representation or
warranty with respect to Sellers, any Company Subsidiary or the Company
Partners and none of Sellers, the Operating Company, the Company Partners or
any other Person on their behalf shall have any liability to Purchaser with respect to any other information provided
to Purchaser (including projections,
forecasts or management presentations) in connection with the transactions
contemplated hereunder, and Purchaser
has not relied on any other representation or warranty. No Company Subsidiary, Seller, or Company
Partner nor any of their Affiliates have any liability to Purchaser or any other Person as a result of the
distribution to or use by Purchaser
of any such information.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Each Seller
hereby, individually and not jointly, represents and warrants to Purchaser:
Section 4.01
Organization; Business of the Company
.
Such Seller is a natural person, or if a corporation or other entity, it
is duly organized, validly existing and (to the extent the concept of good
standing is applicable to such
32
entity)
in good standing under the laws of the jurisdiction of its incorporation or
organization and has full corporate (or other entity) power and authority to
conduct its business as it is now being conducted and to own, operate or lease
the properties and assets it currently owns, operates or leases.
Section 4.02
Ownership of Interest
.
Except as set
forth in
Section 3.03(a) of the Company Disclosure Letter
, such Seller
has legal and beneficial ownership of the Operating Company Interests identified in
Section 3.03(a) of the
Company Disclosure Letter
as being owned by it, free and clear of any Liens
(other than Permitted Liens) or any other limitations or restrictions on such
Operating Company Interests (including any limitation or restriction on the
right to vote, pledge, sell or otherwise dispose of such Interests). Upon consummation of the transactions
contemplated by this Agreement, Purchaser will acquire such Operating Company
Interests, free and clear of all Liens other than Liens securing the Operating
Company Notes and those created by Purchaser.
Section 4.03
Authorization
.
Such Seller has full power and authority or capacity (including all
corporate or other entity power and authority) to execute and deliver into this
Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement
by such Seller and the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all necessary action by such Seller,
and no other proceedings on the part of such Seller is necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Seller, and assuming due authorization,
execution and delivery by each other party hereto, constitutes a legal, valid
and binding obligation of such Seller, enforceable against such Seller in
accordance with its terms, except as such enforcement may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to creditors rights generally,
(ii) general principles of equity (whether applied in a proceeding at law
or in equity) and (iii) any implied covenant of good faith and fair dealing.
Section 4.04
No Violation
.
Except as set forth in
Section 4.04 of the Company
Disclosure Letter
, the execution and delivery of this Agreement by such
Seller does not, and the consummation by it of the transactions contemplated by
this Agreement will not, (i) conflict with, or result in any violation of
or default under, any provision of the Sellers Organizational Documents;
(ii) assuming the consents, approvals, orders and authorizations
contemplated by Section 4.05 have been obtained or made, conflict with or
result in any violation of or default under, any Law or Judgment applicable to
such Seller is a party or to which any of its property is subject; or
(iii) conflict with, or, with or without notice or the lapse of time,
result in a breach, termination (or right of termination) or violation of or
default under the terms of any agreement, contract, indenture or other
instrument to which or such Seller is a party or subject or to which any of its
property is subject, except with respect to clauses (ii) and (iii), where
the conflict, violation,
33
default, breach, termination or right of termination would not reasonably
be expected to prevent or materially delay the consummation of the transactions
contemplated hereby.
Section 4.05
Approvals
.
The execution and delivery of this Agreement by such Seller, and the
consummation by it of the transactions contemplated by this Agreement do not
require any consent, approval, order or authorization of any Person under any
agreement, contract, indenture or other instrument or Law or Judgment to which
such Seller is a party or subject or any of its property is subject, and to
such Sellers knowledge, other as contemplated by Section 3.06, no declaration,
filing or registration with any Governmental Entity is required by such Seller
in connection with the execution and delivery of this Agreement and the
consummation of transactions contemplated by this Agreement, except for those
consents, approvals, orders, authorizations, declarations, filings or
registrations the
failure of which to be obtained or made individually
or in the aggregate would not reasonably be expected to have a Company Material
Adverse Effect.
Section 4.06
U.S. Person
.
Such Seller is a United States person within the meaning
of Section 7701(a)(30) of the Code.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants to Sellers as follows:
Section 5.01
Organization
.
Purchaser
is duly organized, validly existing and in good standing under the laws of the
state of its formation and has full corporate power and authority to conduct
its business as it is now being conducted and to own, operate or lease the
properties and assets it currently owns, operates or leases.
Section 5.02
Authorization
.
Purchaser
has all requisite limited liability company power and authority to enter into
this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement
by Purchaser and the consummation by Purchaser of the transactions contemplated
hereby have been duly approved by all necessary limited liability company
action by Purchaser, and no other limited liability company proceedings on the
part of Purchaser are necessary to authorize this Agreement, to perform its
obligations hereunder or to consummate the transactions contemplated
hereby. This Agreement has been duly and
validly executed and delivered by Purchaser and, assuming due authorization,
execution and delivery by each of the other parties, constitutes the legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as such enforcement may be subject to
(i) bankruptcy,
34
insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to creditors rights generally, (ii) general principles of equity (whether
applied in a proceeding at law or in equity) and (iii) any implied covenant of
good faith and fair dealing.
Section 5.03
No Violation
.
The
execution and delivery of this Agreement by Purchaser does not, and the
consummation by Purchaser of the transactions contemplated by this Agreement
will not, (i) conflict with, or result in any violation of or default
under, any provision of Purchasers Organizational Documents;
(ii) assuming the consents, approvals, orders and authorizations
contemplated by Section 5.04 have been obtained or made, conflict with or
result in any violation of or default under, any Law or Judgment applicable to
Purchaser or to which any of its properties are subject; or (iii) conflict
with, or, with or without notice or the lapse of time, result in a breach, termination (or right of
termination) or violation of or default under the terms of any agreement,
contract, indenture or other instrument to which Purchaser is a party or
subject or any of its property is subject except with respect to clauses (ii)
and (iii) hereof, where the conflict, violation, default, termination or right
of termination would not, or would not reasonably be expected to, prevent or
materially delay the consummation of the transactions contemplated hereby.
Section 5.04
Approvals
.
The
execution and delivery of this Agreement by Purchaser and the consummation by
it of the transactions contemplated by this Agreement do not require the
consent, approval, order, or authorization of any Person under any agreement,
contract, indenture or other instrument or Law or Judgment to which Purchaser
is a party or subject or any of its property is subject, and, to
Purchasers knowledge, no declaration, filing or registration
with any Governmental Entity is required by Purchaser in connection with the
execution and delivery of this Agreement and the consummation by it of the
transactions contemplated by this Agreement, except for (i) filings required of
Purchaser under securities laws; and (ii) those the failure of which to
obtain or make would not reasonably be expected to prevent or materially delay
the consummation of the transactions contemplated hereby.
Section 5.05
Litigation
.
There
are no Proceedings pending or, to the knowledge of Purchaser, threatened
against Purchaser or any of its Affiliates by or before any arbitrator or
Governmental Entity and
neither
Purchaser nor any of its Affiliates is bound by any Judgment which, in either
case, would reasonably be expected, individually or in the aggregate, to
prevent or materially delay the consummation of the transactions contemplated
hereby.
Section 5.06
Available Funds
.
Purchaser has
sufficient funds for the payment of the Aggregate Purchase Price and to perform
its obligations under this Agreement.
35
Section 5.07
Brokerage Fees
.
Purchaser
has not retained any financial advisor, broker, agent or finder or agreed to
pay any financial advisor, broker, agent or finder on account of this Agreement
or any transaction contemplated hereby or any transaction of like nature.
Section 5.08
No Other Representations or Warranties
.
Except
for the representations and warranties contained in this Article V, Sellers the
Operating Company and the Company Partners acknowledge that neither Purchaser
nor any other Person on behalf of Purchaser makes any other express or implied
representation or warranty with respect to Purchaser or with respect to any
other information provided to Sellers, the Operating Company or the Company
Partners in connection with the transactions contemplated by this Agreement.
ARTICLE
VI
COVENANTS
Section 6.01
Interim Operations of the Company
.
(a)
From the
date of this Agreement to the earlier of the Closing or termination of this
Agreement, except as (
w
) required
by Law, (
x
) specifically
permitted or required by this Agreement or as set forth on
Schedule 6.01
,
(
y
) required by any contracts,
agreements, commitments, leases, sales contracts and other agreements to which
the Company or a Company Subsidiary is a party as of the date of this Agreement
to the extent copies of which have been provided to Purchaser or (
z
) otherwise consented to in writing by Purchaser (not to be unreasonably withheld or delayed)
(collectively, the
Permitted Operations
), the Company and each Company
Subsidiary will conduct their respective businesses in all material respects in
the ordinary course consistent with past practice and use commercially
reasonable efforts to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees, (iii) preserve its relationships with clients, suppliers,
customers, distributors and others having significant business dealings with
it, (iv) renew any Lease up for renewal, (v) maintain all material licenses and
material Permits required for the operation of its business in the ordinary
course, (vi) maintain all material assets in good repair and condition
other than those disposed of in the ordinary course of business consistent with
past practices, (vii) maintain all Insurance Policies, and
(viii) maintain its books of account and records in the usual, regular and
ordinary manner; and (ix) continue in all material respects the advertising and
promotional activities and pricing and purchasing policies of the Company and
the Company Subsidiaries.
(b)
Except with respect to the Permitted
Operations, notwithstanding Section 6.01(a), neither the Company nor any
Company Subsidiary shall from the date of
this Agreement to the earlier of the Closing or termination of this Agreement
pursuant to and in accordance with Section 8.02:
(i)
amend its
Organizational Documents;
36
(ii)
merge or consolidate
with, or acquire all or substantially all of the assets, or business of, any
Person or other business organization or division thereof;
(iii)
redeem, repurchase,
split, combine or reclassify its outstanding equity interests or declare, set
aside, make or pay any dividend or other distribution in respect of its equity
interests other than (A) dividends paid by the Companys wholly-owned
Subsidiaries to the Company or its wholly-owned Subsidiaries or (B) the
cancellation of Company Options as contemplated by Section 7.02(d) or (C) Tax
distributions made in accordance with its Organizational Documents;
(iv)
issue or sell (or agree
to issue or sell) any of its equity interests, or any options, warrants,
conversion or other rights to purchase any of its equity interests or
securities convertible into or exchangeable for such equity interests (other
than upon the exercise or conversion of options, warrants or convertible
securities outstanding on the date hereof), or grant, or agree to grant, any
such options or modify or alter the terms of any of the above; provided,
however, the Company may amend the terms of the Company Options to the extent
necessary to satisfy its obligation pursuant to Section 7.02(d);
(v)
(A) incur any
Indebtedness other than under the Credit Facility as in effect on the date
hereof, (B) issue or sell any debt securities, (C) vary the material terms
of any contract, agreement, commitment or arrangement with respect to
Indebtedness or any debt securities, or (D) other than in the ordinary
course of business and except for the Transaction Bonus Agreements, enter into,
modify in any material respect or terminate any Lease, any Real Property
Agreement or any Material Contract;
(vi)
take any steps to
mortgage or pledge to secure any obligation, or subject to any Lien (other than
Permitted Liens), any of its properties other than pursuant to the terms of the
Indebtedness set forth in
Schedule 1.01(c)
as in effect on the date
hereof;
(vii)
grant to any present or
former director, officer, consultant or employee any increase in compensation
or benefits in any form, or any severance or termination pay, or make any loan
to or enter into any employment agreement, collective bargaining agreement or
arrangement with any such Person, except in each case as may be required by Law
or the terms of any existing Employee Plan or arrangement or, with respect to
any employee not an executive officer or director of the Company or a Company
Subsidiary, in the ordinary course of business and consistent with past
practices or the Transaction Bonuses pursuant to the Transaction Bonus
Agreements;
(viii)
adopt, enter into, amend,
announce to participants any intention to adopt or terminate, any Employee Plan
or other employee benefit plan, program or arrangement that would be an
Employee Plan if it were in effect on the date hereof, except (A) as required
by applicable Law, (B) disclosed on in any section of
Section 3.15 of the
Company Disclosure Letter
, (C) as contemplated pursuant to Section 7.02(d),
(D) the Transaction Bonus Agreements or (E) with respect to the Companys and
the
37
Company Subsidiaries health and medical
plans, in the ordinary course of business consistent with past practices
provided such action does not materially increase the benefits payable under
such Employee Plans;
(ix)
commence any voluntary
petition, proceeding or action under any bankruptcy, insolvency or other
similar Laws;
(x)
make or institute any
material change in its accounting procedures or practices from those in effect
as of December 31, 2006 unless mandated by GAAP;
(xi)
make, revoke or change
any material Tax election (other than elections with respect to the Company or
the Operating Company (A) that are with respect to Income Taxes reported on the
Partnership Tax Returns of the Company or the Operating Company, (B) have no
effect with respect to Tax matters of the Company or any Company Subsidiary after
the Closing Date and (C) that do not relate to any Company Subsidiary that is
treated as a corporation for purposes of any Income Tax) or settle or
compromise any material Tax Liability of the Company or any Company Subsidiary;
(xii)
other than the sales of
goods and inventory purchased for resale in the ordinary course of business
consistent with past practice (A) sell, lease, transfer or otherwise
dispose of any of its assets having a book or market value in excess of
$500,000 individually or $2,000,000 in the aggregate, or (B) enter into,
or consent to the entering into of, any agreement granting a preferential right
to sell, lease or otherwise dispose of any of such assets;
(xiii)
(A) incur or commit to
incur any capital expenditures other than capital expenditures in the ordinary
course of business that do not exceed $1,000,000 individually or $4,000,000 in
the aggregate during each three month period following the date hereof and
prior to the Closing, or (B) other than the acquisition of goods and inventory
for resale in the ordinary course of business consistent with past practice,
acquire or agree to acquire any assets or make any individual lease commitments
involving payments in excess of $1,000,000 the aggregate during each three
month period following the date hereof and prior to the Closing;
(xiv)
compromise or settle any
material litigation;
(xv)
compromise or settle any
material claim;
(xvi)
enter into, or consent to
the entering into of, any agreement with any Governmental Authority relating to
the actual or threatened condemnation of any Owned Property or Leased Property;
(xvii)
take or knowingly omit to
take, or knowingly permit to be taken, any action that would cause the
representations and warranties of the Company and the Operating Company set
forth in the second sentence of Section 3.12(a) or the second sentence of
Section 3.12(b) to be untrue as if such representations or warranties were
38
made as of the Closing, other than actions
taken pursuant to Sections 6.13 and 6.14(c) hereof; or
(xviii)
authorize or agree to take
any of the actions set forth in the foregoing subparagraphs (i) through (xvii).
Notwithstanding any provision contained in this Agreement, any action
taken by the Company and the Company Subsidiaries which is permitted under this
Section 6.01 shall not constitute a misrepresentation or breach of any
representation, warranty or covenant.
Section 6.02
Access to Information
.
From the date of this Agreement to the earlier of
the Closing or the termination of this Agreement, the Company and each Company
Subsidiary shall upon reasonable notice, (a) afford to the officers, employees,
accountants, counsel and other representatives of
Purchaser
reasonable access, during normal business hours, to all of the properties,
books, contracts, commitments and records of the Company and each Company
Subsidiary and to their agents, accountants and counsel;
provided
that nothing herein shall require the provision of such access to the extent it
would interfere unreasonably with the normal business or operations of the
Company or the Company Subsidiaries and (b) furnish to the officers, employees,
agents, accountants, counsel, financing sources and representatives of
Purchaser such additional financial and operating data and other information regarding
the assets, properties, liabilities and goodwill of the Company and the Company
Subsidiaries as Purchaser may from time to time reasonably request in
connection with the transactions contemplated by this Agreement, any Financing
or the issuance of any Purchaser Securities (to the extent relating to a
Financing).
Prior to Closing, Purchaser will hold and treat and will cause
its officers, employees, auditors and other authorized representatives to hold
and treat in confidence all documents and information concerning the Company
and the Company Subsidiaries provided to
Purchaser in connection with the transactions contemplated by this
Agreement in accordance with the provisions
of the existing confidentiality agreements between the Company and Purchaser dated as of February 28, 2007 (collectively the
Confidentiality
Agreement
),
provided
public disclosure which is reasonably believed
by Purchaser to be necessary in connection with any Financing or the issuance
of Purchaser Securities or which Purchaser or any of its Affiliates are advised
by counsel is required by Law or the rules of any national securities exchange
or automated quotation system to be disclosed by Purchaser or any of its
Affiliates shall not be deemed a violation of Purchasers obligations under
this Section 6.02 or under the Confidentiality Agreement. Notwithstanding the foregoing, nothing
contained herein shall require the Company or the Company Subsidiaries to
disclose or otherwise provide any information if such disclosure would (i) jeopardize
any attorney-client or other legal privilege, or (ii) contravene any applicable
Law or any binding agreement entered into by the Company or the Company
Subsidiaries (including any confidentiality agreement to which the Company or
any Company Subsidiary is a party).
39
Section 6.03
Consents and Approvals
.
(a)
Subject to the terms and conditions of this
Agreement, each Seller, the Operating Company, each Company Partner and Purchaser shall use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, (i) to comply promptly with all legal requirements which
may be imposed on it with respect to this Agreement and the transactions
contemplated by this Agreement by any Governmental Entity (which actions shall
include furnishing all information required by applicable Law in connection
with approvals of or filings with any Governmental Entity), (ii) to obtain any
other Requisite Regulatory Approvals in connection with the transactions
contemplated by this Agreement or the taking of any action contemplated by this
Agreement, and (iii) to take any action necessary to defend vigorously, lift,
mitigate or rescind the effect of any litigation or administrative proceeding
involving any Governmental Entity adversely affecting this Agreement or the
transactions contemplated by this Agreement, including promptly appealing any
adverse court or administrative decision.
(b)
Without limiting the generality of the
undertakings and subsection (a) of this Section 6.03 and subject to appropriate
confidentiality protections, each party shall furnish to the other parties such
necessary information and reasonable assistance as the other party may request
in connection with the foregoing
Section 6.04
Employment Matters
.
(a)
After the Closing, the Operating Company
shall either (i) continue the existing Employee Plans of the Operating
Company as disclosed in
Items 9, 10,
and 11 of Section 3.15(a) of the Company Disclosure Letter
, or
(ii) provide substitutes for some or all of such Employee Plans that
provide compensation or benefits to employees of the Operating Company that are
comparable in the aggregate to those provided to similarly situated employees
of Purchaser from time to time in effect;
provided
,
however
, that
in no event shall the Operating Company be obligated to continue, provide or
otherwise take into account Employee Plans that relate to stock or other equity
options, restricted stock or other equity, stock rights or any other
equity-based arrangements; and
provided
further
that nothing
herein shall be construed to mean that Purchaser or the Operating Company
cannot amend or terminate any particular Employee Plan or Plans or substituted
plans provided that the Operating Company maintains compliance with subsection
(ii) above. For purposes of any
substitute benefit plans, (A) the Operating Company shall grant all
employees of the Operating Company and its Subsidiaries after the Closing
credit for purposes of eligibility and vesting for all service with the
Operating Company and the Company Subsidiaries prior to the Closing for which
such service was recognized by the Operating Company; (B) any limitations
on pre-existing conditions shall be waived (but only to the extent such
conditions were covered prior to the Closing unless required by Law); and
(C) expenses incurred with respect to the plan year in which the Closing
occurs on or before the Closing shall be taken into account for purposes of
establishing satisfaction of any applicable deductible, coinsurance and maximum
out-of-pocket provisions to the same extent taken into account prior to the
Closing.
(b)
Nothing in this Agreement shall be construed
as granting any Person any rights of continuing employment.
40
(c)
Prior to the Closing, the Amended Split
Dollar Life Insurance Agreement, dated May 1, 1995, by and among the Operating
Company, James A. Cardwell, Jr., (as trustee of the James A. and Evonne
Cardwell Trust Number Two), and James A. Cardwell, Jr., (as trustee of the
James A. Cardwell Trust Number 3) shall be terminated effective as of the
Closing and any related accounts receivable of the Company or the Operating
Company (the
Split Dollar Receivable
) shall be distributed at the
direction of the Cardwell Group effective as of the Closing.
(d)
From and after the Closing, the Operating
Company shall honor the Transaction Bonus Agreements.
Section 6.05
Publicity
.
Prior
to the Closing, none of the Operating Company, Sellers, the Company Partners or
Purchaser or any of their agents or
representatives shall issue or cause the publication of any press release or
other public statement or announcement with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of Sellers
and Purchaser (such consent not to
be unreasonably withheld or delayed), except as may be required by Law,
pursuant to the terms of the Operating Company Indenture, or by the rules of
any national securities exchange or automated quotation system to which the
Operating Company, Purchaser or any Affiliate of Purchaser is or becomes
subject
p
rovided
, that Purchaser has provided a draft to
the Company and a reasonably opportunity to review and comment (not to be
unreasonably delayed), Purchaser may issue such press releases or other public
statements or announcements as it reasonably determines necessary and advisable
in connection with its investor relations program, conducted in the normal
course, without the prior approval of the Company.
Section 6.06
Notification of Certain Matters
.
From
the date of this Agreement until the earlier of the Closing or termination of
this Agreement:
(a)
each party shall give prompt notice to the other
parties of the occurrence or non-occurrence of any event or events the occurrence
or non-occurrence of which, individually or in the aggregate, would make the
timely satisfaction of any of the conditions set forth in Article VII
impossible or unlikely; and
(b)
If prior to the Closing, the Company or the
Operating Company has knowledge of any event, condition, fact or circumstance
that existed on the date hereof and was required to be disclosed on the Company
Disclosure Letter as of the date hereof and was omitted from the Company
Disclosure Letter, then the Company shall promptly deliver to Purchaser an
update to the Company Disclosure Letter specifying such change. No such update shall be deemed to supplement
or amend the Company Disclosure Letter for the purpose of determining whether
any of the conditions set forth in Section 6.02 have been satisfied. This
Section 6.06 shall not constitute a covenant or agreement for the purposes of
Sections 7.02(b) or 7.03(b).
41
Section 6.07
Directors and Officers Indemnification
.
(a)
From and after the Closing, the Operating
Company will indemnify and hold harmless each present and former director or
officer of the Operating Company (individually a
Covered Party
and
collectively the
Covered Parties
), with respect to any Proceedings
and/or damages, penalties, Judgments, assessments, losses, costs and expenses
(including, but not limited to, attorneys fees) based in whole or in part on,
or arising in whole or in part out of any matter arising out of or pertaining
to matters existing or occurring at or prior to the Closing, whether asserted
or claimed prior to, at or after the Closing, to the fullest extent that the
Operating Company is permitted under applicable Law. In the event of any such Proceeding, (i) each
Covered Party will be entitled to advancement of expenses incurred in the defense
of any Proceeding from the Operating Company within ten Business Days of
receipt by Purchaser from the Indemnified Party of a request therefor, (ii)
neither Purchaser nor the Operating Company or any of its Subsidiaries shall
settle, compromise or consent to the entry of any Judgment in any existing or
threatened Proceeding with respect to which indemnification has been sought by
such Covered Party hereunder, unless such settlement, compromise or consent
includes an unconditional release of such Covered Party from all Liability
arising out of such Proceeding or such Covered Party otherwise consents, and
(iii) Purchaser, the Operating Company and its Subsidiaries shall cooperate in
the defense of any such matter.
(b)
The Organizational Documents of the Operating
Company shall contain provisions no less favorable with respect to
indemnification and exculpation of Covered Persons than are presently set forth
in the Operating Companys Organizational Documents, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Closing in any manner that would adversely affect the rights thereunder of any
Covered Person.
(c)
At or prior to the Closing, the Operating
Company shall obtain one or more single premium tail or runoff insurance
policies with a claims period of six years from the Closing with respect to
directors and officers liability insurance for the Companys and the
Operating Companys present and former officers and directors, in an amount and
scope at least as favorable as the Companys and Operating Companys existing
policies for directors and officers liability insurance from an insurance
carrier with the same or better credit rating as their current insurance
carrier.
(d)
If the Operating Company or any of its
successors or assigns (i) shall consolidate with or merge into any other Person
and shall not be the continuing or surviving company of such consolidation or
merger, or (ii) shall transfer all or substantially all of its assets to any
Person, then, and in each such case, proper provisions shall be made so that
the successors and assigns of the Operating Company shall assume all of the
obligations of the Operating Company set forth in this Section 6.07.
(e)
The provisions of this Section 6.07 are
intended to be in addition to the rights otherwise available to the current and
former officers and directors of the Operating Company by Law, or under any
Employee Plan or other agreement, and shall operate for the benefit of, and
shall be enforceable by, each of the Covered Parties and their heirs and legal
representatives.
42
Section 6.08
Additional Agreements
.
Subject to the terms and
conditions of this Agreement, each party hereto agrees to execute such further
instruments or documents as the other parties hereto may from time to time
reasonably request in order to confirm or carry out the transactions
contemplated by this Agreement; provided that no such instrument or document
shall expand a partys liability beyond that contemplated in this Agreement.
Section 6.09
No Solicitation or Negotiation
.
The Operating Company,
Sellers and the Company Partners agree that from the date of this Agreement to
the earlier of the Closing or the termination of this Agreement, none of
Sellers, the Operating Company or the Company Partners shall, and each shall
use commercially reasonable efforts to cause their respective directors,
officers, employees and representatives not to, directly or indirectly (i)
solicit, initiate, consider, encourage or accept any other proposals or offers
from any Person relating to (A) any acquisition or purchase of all or any
material portion of the Companys or any Company Subsidiarys business or
assets or any Interests or other equity interests of any Company Subsidiary or
(B) any merger, consideration or other business combination with any of the
Company or any Company Subsidiary, (ii) participate in any discussions,
negotiations and other communications, regarding or furnish to any other Person
any information with respect to, or otherwise cooperate in any way, assist or
participate in, facilitate or encourage any effort or attempt by any other
Person to seek to do any of the foregoing or (iii) consider, entertain or
accept any proposal from any Person to do any of the foregoing; provided that
notwithstanding anything herein to the contrary, any actions taken by the
Company or a Company Subsidiary in accordance with or otherwise permitted by
Section 6.01 shall not be deemed to be a violation of this Section 6.09.
Section 6.10
Repayment/Repurchase of Outstanding Indebtedness
.
(a)
Provided HPT loans (the
2014 Prepayment
Loan
) to the Company in immediately available funds an amount sufficient
to do so, the Company shall, prior to any of the transfers contemplated by
Section 6.13, take or cause to be taken all action necessary under the 2014
Indenture to cause all of the 2014 Notes to be redeemed not later than 45 days
following the Closing and to satisfy and discharge the 2014 Indenture and all
of the 2014 Notes in accordance with the 2014 Indenture (including Section 9.1
of the 2014 Indenture (with any opinion of counsel required to be delivered in
connection with such discharge to be issued by the Companys counsel)) on the
Closing Date.
(b)
From the date of this Agreement to the
earlier of the Closing or termination of this Agreement, the Operating Company
will use commercially reasonable efforts (including the payment of any waiver
fees requested by the Credit Facility Agent, which waiver fees shall be
included in the Debt Restructuring Costs) to obtain the consent of the Credit
Facility Agent (and the Credit Facility Lenders, to the extent required) to a
waiver (a
Credit Facility Notice Waiver
) of the provisions of the
Credit Facility to permit the Operating Company to provide a conditional notice
of its intention to prepay all outstanding indebtedness under the Credit
Facility and terminate the commitments of the Credit Facility Lenders as of the
Closing,
43
which notice would be conditioned on (
x
)
the Closing and (
y
) such other
conditions as may be agreed to between the Operating Company and
Purchaser. If the Operating Company
obtains the Credit Facility Notice Waiver, provided Purchaser loans (the
Letters
of Credit Loan
)
to the Operating Company in immediately available
funds an amount sufficient to cash collateralize any letters of credit that
will remain outstanding under the Credit Facility and HPT loans (the
Credit
Facility Loan
) to the Operating Company in immediately available funds any
additional amounts necessary to do so, the Operating Company will, immediately
prior to any of the transfers contemplated by Section 6.13, repay in full all
outstanding indebtedness under the Credit Facility (including any breakage
costs, fees, expenses, costs, commitment fees, penalties, and other amounts
payable to the Credit Facility Agent or the Credit Facility Lenders under the
Credit Facility, and otherwise pay to the Credit Facility Agent the amount
necessary to terminate the commitments and agreements evidencing the Credit
Facility and obtain the release of all liens and guaranties securing such
obligations.
(c)
Provided HPT loans (the
Covenant
Defeasance Loan
) to the Operating Company an amount in immediately
available funds sufficient to do so, the Operating Company shall, prior to the
transfers contemplated by Section 6.13, take or cause to be taken all action
necessary under the Operating Company Indenture to cause all of the Operating
Company Notes to be called for redemption not later than
February 15, 2008 and effect a covenant defeasance of the Operating
Company Indenture pursuant to Article IX of the Operating Company Indenture
(with any opinion of counsel required to be delivered in connection with such
covenant defeasance to be issued by Purchasers counsel, subject to the Company
and Company Subsidiaries providing Purchasers counsel with officers and
secretarys certificates in customary form and otherwise sufficient for
Purchasers counsel to render such opinion).
(d)
At or prior to the Closing all Intercompany
Indebtedness (other than Intercompany Indebtedness solely between the Operating
Company and its Subsidiaries and the REIT Note) shall be repaid in full.
(e)
Purchasers obligation to make the Letters
of Credit Loan is conditioned on HPT making the Credit Facility Loan. The Letters of Credit Loan, if made, shall
bear interest, in arrears, at the annual rate of 6% and shall be payable on
demand on or after the first Business Day following the Closing Date or
termination of this Agreement.
Section 6.11
No Control of Other Partys Business
.
Nothing contained in this
Agreement shall give Purchaser,
directly or indirectly, the right to control or direct the Companys or any
Company Subsidiarys operations prior to the Closing, and nothing contained in
this Agreement shall give the Company, directly or indirectly, the right to
control or direct Purchasers or any
of its Subsidiarys operations prior to the Closing. Prior to the Closing, the Company and Purchaser shall exercise, consistent with
the terms and conditions of this Agreement, complete control and supervision
over its and its Subsidiaries respective operations.
44
Section 6.12
Additional Financial Statements
.
If required by the
Securities Act, so long as the out-of-pocket costs and expenses of the Company
in connection therewith are included in Reimbursable Costs, promptly upon
request of Purchaser at any time prior to
the earlier of the Closing and termination of this Agreement, (a) the
Company shall request that KPMG LLP (
KPMG
), its independent
accountants, prepare consolidated balance sheets and statements of income, cash
flows and results of operations (the
Additional Financial Statements
)
for the Company (and any and all documents and consents related thereto) which
comply with Regulation S-X under the Securities Act, for inclusion in any
registration statement or other public filing of Purchaser or any Affiliate of Purchaser under the Securities Act
or the Exchange Act, and any other offering circular or document used by
Purchaser or any Affiliate of Purchaser in
any other offering of securities, whether public or private, (b) the Company
shall use its commercially reasonable efforts to cause KPMG to cooperate with Purchaser in connection with the foregoing
(including, without limitation, using commercially reasonable efforts to cause
KPMG to deliver so-called comfort letters, written consents and
representation letters relating to the foregoing). Without limiting the generality of the
foregoing, the Company agrees that, upon reasonable notice from Purchaser at any time prior to the earlier of
the Closing and termination of this Agreement, it will (y) consent to
the use of such Additional Financial Statements in any such registration
statement, document or circular and (z) execute and deliver, and cause its
officers to execute and deliver (if required), such representation letters as
are customarily delivered in connection with audits and as KPMG and Purchasers independent accountants may
reasonably request under the circumstances.
Purchaser shall indemnify and hold harmless the Company, the Company
Subsidiaries and their respective officers, employees, representatives and
advisors, including legal and accounting, from and against any and all losses,
damages, claims, costs or expenses suffered or incurred by any of them in
connection with compliance with this Section 6.12 and any information utilized
in connection therewith; provided, however, the foregoing shall not be deemed
to limit any rights to indemnification any of the parties hereto may have
pursuant to Article IX herein.
Section 6.13
Transfers of Assets
.
Immediately following the
consummation of the transactions contemplated by Section 6.10, but prior to the
Closing, (a) the Company Sellers shall contribute to the Operating Company all
of their assets (other than assets that would be Transferred Assets if owned by
the Operating Company), including the Companys equity interests in Petro
Financial but excluding the Companys equity interests in Petro GP and the REIT
Subsidiary and (b) the Operating Company and each other Company Subsidiary
(other than a Special Purpose Subsidiary) shall cause the transfer or
assignment to the Company, or, if requested by HPT, to a Special Purpose
Subsidiary, the following properties and assets (the
Transferred Assets
)
to the extent then owned by it:
(i)
the Owned Property
identified on
Schedule 6.13(a)
(by special warranty deed);
(ii)
the Leases identified
on
Schedule 6.13(b)
(the Owned Property described on
Schedule 6.13(a)
,
the real property subject to the Leases described on
Schedule 6.13(b)
,
and the property described on
Schedule 6.14(c)
, the
Transferred
45
Property
); provided
to the extent a required consent of any landlord under any of the Leases
identified on
Schedule 6.13(b)
has not been obtained prior to the
Closing then, at the option of Purchaser, such Lease shall not be required to
be transferred to the Company pursuant to this Section 6.13 and the real
property subject to such Lease shall not constitute Transferred Property under
this Section 6.13;
(iii)
all buildings,
structures and other improvements of every kind including, but not limited to,
underground storage tanks, alleyways and connecting tunnels, sidewalks, utility
pipes, conduits and lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings and structures presently situated upon the
Transferred Property (collectively, the
Improvements
);
(iv)
all easements, rights
and appurtenances relating to the Transferred Property and the Improvements;
(v)
all equipment,
machinery and fixtures integral to the operation of the Improvements, and other
items of property now or hereafter permanently affixed or integral to or
incorporated into the Improvements, including, without limitation, all retail
fuel pumps and piping connecting fuel storage tanks to such pumps, furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and apparatus, sprinkler
systems and fire and theft protection equipment, all of which, to the maximum
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto,
but
specifically
excluding
all motor vehicles, inventory and supplies,
furniture, furnishings, partitions, movable walls and any other equipment,
machinery or tangible personal property not permanently affixed to or
incorporated into the Improvements and which would customarily be considered
operating assets;
(vi)
all transferable or
assignable agreements, service contracts, equipment leases and other
arrangements or agreements affecting the ownership of the Transferred
Properties, the Improvements and other Transferred Assets; all books, records
and files relating to the leasing or ownership of the Transferred Assets, or
any portion thereof; all transferable or assignable permits, certificates of
occupancy, operating permits, sign permits, development rights and approvals,
certificates, licenses, warranties and guarantees, rights to deposits and
telephone exchange numbers identified with the ownership of the Transferred
Assets; and all other transferable intangible property, miscellaneous rights,
benefits and privileges of any kind or character with respect to the ownership
of the Transferred Assets; and
(vii)
any and all Real Property
Agreements relating to the Transferred Properties, other than Real Property
Agreements relating solely to the operations (as opposed to the ownership) of
the Transferred Property (including, without limitation, the billboard
agreements and service contracts).
The transfer of assets
from the Company Sellers to the Operating Company shall
46
be made subject to
the assumption by the Operating Company of all liabilities associated with such
assets. The transfer of the Transferred
Assets shall be made to the Company subject to the assumption by the Company of
all obligations of the Operating Company to repay the Credit Facility Loan and
the Covenant Defeasance Loan and all liabilities and obligations of the
Operating Company and its Subsidiaries to third parties under or with respect
to the Transferred Assets. Sellers agree
to cooperate with Purchaser and Purchasers counsel in order to effectuate the
transactions contemplated by this Section 6.13.
Purchaser shall cause its counsel to prepare the documents effecting the
transfers contemplated by this Section 6.13 in cooperation with the New York offices
of LandAmerica and to provide copies of such documents to Sellers counsel for
its review and approval (which approval shall not be unreasonably withheld or
delayed).
Section 6.14
Termination/Amendment of Contracts
.
Prior to the Closing:
(a)
each of the agreements listed on
Schedule
6.14(a)
, shall have been amended and restated on the terms outlined on
Schedule
6.14(a)
;
(b)
each of the agreements listed on
Schedule
6.14(b)
shall have been terminated and all obligations of the Company and
the Company Subsidiaries shall have been deemed satisfied by each of the other
parties thereto for no further consideration other than the payment of the
Aggregate Purchase Price;
(c)
the fee title to Leased Property subject to
the Lease Agreement with TSP Holdings, LLC identified on
Schedule 6.14(c)
and any other assets subject to the option to buy under such lease which, if
owned by a Company Subsidiary, would be a Transferred Asset, shall have been
conveyed, subject only to Permitted Liens, to the Company or, if requested by
HPT, to a Special Purpose Subsidiary for an amount payable to TSP Holdings, LLC
(
TSP
) at the HPT Closing equal to (i) $5.6 million (the
TSP Option
Fee
) plus (ii) $11.4 million (the
TSP Reduction Amount
, and
together with the TSP Option Fee, the
TSP Payment Amount
) and all other
assets subject to the option to buy under such lease shall have been conveyed,
subject only to Permitted Liens, to the Operating Company for no additional
consideration;
(d)
all tangible assets of El Paso Vending and
Amusement Company (
EPAC
) used at any Owned Property or Leased Property
shall have been purchased, free and clear of all Liens, (other than Permitted
Liens), by the Operating Company from EPAC for aggregate consideration of an
amount equal to (i) $1,606,078 (the
EPAC Fee
), plus (ii) $4 million
(the
EPAC Additional Purchase Price
and together with EPAC Fee, the
EPAC
Payment Amount
);
(e)
the Lease Agreement with J.A. Cardwell,
Trustee identified on
Schedule 6.14(e)
shall have been amended to
provide that such lease may be terminated at any time by the lessee thereunder
upon thirty (30) days prior written notice to the lessor thereunder, which
notice shall be accompanied by the payment to such lessor of amount equal to
fifty percent (50%) of the base rent payable thereunder for the then unexpired
portion of the term; and
47
(f)
Xpert Transportation, Inc. shall have
entered into a fuel transportation agreement (the
Fuel Transportation
Agreement
with the Operating Company in the form of
Exhibit E
.
Notwithstanding the foregoing, the actions required pursuant to this
Section 6.14 shall not become effective and unconditional until the Closing.
Section 6.15
Return of Post-Closing Transaction Bonuses
.
In the event that
following the Closing any portion of the Post-Closing Transaction Bonuses is
forfeited by an employee to the Operating Company or its successors or assigns
pursuant to the terms of the Transaction Bonus Agreements or otherwise
(including as a result of any employee identified on
Schedule 1.01(d)
not executing a Transaction Bonus Agreement or not being offered the
opportunity to do so, in each case with respect to the portion of the
Post-Closing Transaction Bonus allocated to such employee on
Schedule
1.01(d)
) the Operating Company shall promptly, and in any event, within ten
(10) Business Days following the end of the fiscal quarter in which such
forfeiture occurs, remit 50% of the forfeited amount in cash to Sellers (unless
such forfeited amount is with respect to an employee identified in
Schedule
6.15
, in which case (i) 100% of the amount identified under the Petro
column set forth in
Schedule 6.15
shall be remitted to Sellers and
(ii) 50% of the amount identified under the 50/50 column set forth in
Schedule
6.15
shall be remitted to Sellers).
Following the Closing, the Sellers Representative shall have the right
to request the Operating Company to provide in writing the aggregate amount of
the Post-Closing Transaction Bonuses paid by the Operating Company.
Section 6.16
Estoppel Certificates
.
At the Closing, Sellers
shall provide Purchaser with an estoppel certificate regarding the Leases in
form reasonably satisfactory to Sellers and Purchaser.
Section 6.17
Real Property Matters
.
Prior to the Closing, the
Company and the Company Subsidiaries shall reasonably cooperate with Purchaser
in connection with Purchasers procurement of surveys and/or title insurance
policies insuring title to the Owned Properties (including the property
identified on
Schedule 6.14(c)
) and leasehold title to the Leased
Properties (excluding the property identified on
Schedule 6.14(c)
, the
costs and expenses of which shall be included in the HPT Reimbursable Costs to
the extent related to the Transferred Assets or in Reimbursable Costs if
related to the other Owned Properties or Leased Properties, including without
limitation, executing, or causing the Company, any Company Subsidiary and any
member of the Cardwell Group to execute, any reasonable and customary
certificates, affidavits or other documents (such as non-imputation affidavits)
required by title companies issuing such policies.
Section 6.18
Conduct of Business of Purchaser
.
Purchaser agrees that,
between the date of this Agreement and the earlier of the Closing and
termination of this Agreement, it shall not, directly or indirectly, take any
action (i)
48
to cause its
representations and warranties set forth in Article V to be untrue in any
material respect; or (ii) that would, or would reasonably be expected to,
individually or in the aggregate, prevent, materially delay or materially
impede the ability of Purchaser to consummate the transactions contemplated by
this Agreement.
Section 6.19
Section 1445 Certifications and IRS Form W-9
.
Each Seller shall, and
Cardwell shall cause EPAC and any other Person receiving a payment described in
Section 2.05 hereof to, prior to the Closing, deliver or cause to be delivered
to Purchaser (i) a certification, in a form reasonably satisfactory to
Purchaser, that such Person is not a foreign person in accordance with the
Treasury Regulations under Section 1445 of the Code and (ii) a valid IRS Form
W-9 indicating that no back-up withholding is required. If any such Person has not provided such
certifications and IRS Form W-9 to Purchaser on or before the Closing Date,
Purchaser shall be permitted to deduct and withhold from the dollar amount
payable to such Person under this Agreement an amount equal to any required
withholding Tax under Section 1445 of the Code or any applicable back-up
withholding, which withheld amounts shall be promptly paid over to the relevant
Governmental Entity and will be treated for all purposes hereof as having been
paid to such Person in respect of which such deduction and withholding was
made.
Section 6.20
Tax Sharing Agreements
.
All Tax sharing
agreements or similar agreements (including without limitation any obligation
to make tax distributions) with respect to or involving the Company, or any
Company Subsidiary shall be terminated as of the Closing Date and, after the
Closing Date, no such Person shall be bound thereby or have any liability
thereunder.
Section 6.21
Petro Travel Plaza
.
Section 7.3 of the
Limited Liability Company Operating Agreement of Petro Travel Plaza, L.L.C.
(the
Tejon Travel Plaza
), dated as of December 5, 1997, among the
Operating Company, Tejon Development Corporation and Tejon Ranch Company (as
amended, the
Operating Agreement
) sets forth certain obligations of
the members in Tejon Travel Plaza. To
the extent the transactions contemplated by this Agreement are subject to such
Section 7.3, the portion of the Aggregate Purchase Price allocable to the
acquisition of the Operating Companys membership interest in Tejon Travel
Plaza is an amount equal to $16,000,000 (the
Tejon Purchase Price
). The Tejon Purchase Price is based on December
31, 2006 Financial Statements of Tejon Travel Plaza (the
Tejon Financial
Statements
) and will be subject to adjustment if operations between the
date of this Agreement and the Closing Date are not conducted in the ordinary
course consistent with past practice and if Indebtedness of Tejon Travel Plaza
as of the Closing is in excess of that described on the Tejon Financial
Statements.
Section 6.22
Transaction Bonus Agreements
.
At the Closing,
the Operating Company shall provide Purchaser with a copy of each Transaction
Bonus Agreement that has been delivered to any employee as of the Closing. Promptly following the Closing, the Operating
Company shall provide each employee listed on
49
Schedule 1.01(d)
who has not received a Transaction Bonus Agreement as of the Closing the
opportunity to enter into a Transaction Bonus Agreement in the form of
Schedule
6.22
and providing for a Post-Closing Transaction Bonus in the amount set
forth opposite such employees name on
Schedule 1.01(d)
with
Post-Closing Transaction Bonuses to be paid to employees identified as Type 1
and 2 employees if still employed 120 days after the Closing, Type 3 employees
if still employed 180 days after the Closing and Type 4 employees if still
employed 360 days after the Closing.
ARTICLE
VII
CONDITIONS
Section 7.01
Conditions to the Obligations of All Parties
.
The
respective obligations of each Seller and Purchaser to consummate the
transactions contemplated by this Agreement are subject to the satisfaction
(or, if permissible, waiver by the party for whose benefit such conditions
exist) at or prior to the Closing of the following condition:
there shall not be any Judgment or Law
restraining, enjoining or prohibiting the consummation of the transactions
contemplated by this Agreement;
provided
,
however
, that no party
hereto may invoke this condition unless and until such party has complied with
its obligations under Section 6.03.
Section 7.02
Conditions to the Obligations of Purchaser
.
The
obligation of Purchaser to consummate the purchase of the Operating Company
Interests is subject to the satisfaction (or waiver by
Purchaser, as applicable) at or prior to the Closing of
the following further conditions:
(a)
the representations and warranties of the
Company and the Operating Company contained in Article III and of each Seller
contained in Article IV shall be true and correct when made and at and as of
the Closing as if made at and as of the Closing (except for those
representations and warranties that address matters only as of a particular
date or only with respect to a specific period of time which need only be true
and correct as of such date or with respect to such period), except where the
failure of such representations or warranties to be true and correct (without
giving effect to any materiality or Company Material Adverse Effect)
qualifiers set forth in such representations and warranties) does not have and
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect;
provided
,
however
, that
notwithstanding the foregoing, the representations and warranties set forth in
Section 3.03, 3.04, 4.02 and 4.03 and the representations and the warranties
set forth in the second sentence of Section 3.08(a) shall be true and correct
in all respects at and as of the Closing as if made at and as of the Closing;
(b)
Sellers, the Company and the Company
Subsidiaries shall have performed in all material respects all obligations
hereunder required to be performed by them at or prior to the Closing;
50
(c)
the Company and the Operating Company shall
have delivered to Purchaser a certificate dated as of the Closing Date as to
their compliance with the conditions set forth in paragraphs (a) (with respect
to their representations contained in Article III) and (b) of this Section 7.02
and each Seller shall have delivered to Purchaser a certificate (dated as of
the Closing Date) as to their compliance with the conditions set forth in
paragraphs (a) (with respect to its representations contained in Article IV)
and (b) of this Section 7.02;
(d)
no Company Option shall have been exercised
after the date of this Agreement and all Company Options shall have been
cancelled by the Company as of the Closing;
(e)
the Operating Company Indenture shall have
been covenant defeased pursuant to Article IX of the Operating Company
Indenture in accordance with Section 6.10 (unless the failure to satisfy this
condition is as a result of the failure by HPT to make the Covenant Defeasance
Loan, unless HPT is not otherwise then required to make such loan under the HPT
Purchase Agreement);
(f)
the trustee under the 2014 Indenture shall
have acknowledged in writing the satisfaction and discharge of the Issuers (as
defined in the 2014 Indenture) obligations under the 2014 Notes and the 2014
Indenture, except as provided in the last paragraph of Section 9.1 of the 2014
Indenture (unless the failure to satisfy this condition is as a result of the
failure by HPT to make the 2014 Prepayment Loan, unless HPT is not otherwise
then required to make such loan under the HPT Purchase Agreement);
(g)
the Credit Facility shall have been prepaid
in full and all commitments thereunder terminated (unless failure to meet this
condition is as a result of the failure by HPT to make the Credit Facility Loan
or Purchaser to make the Letters of Credit Loan, unless HPT is not otherwise
then required to make the Credit Facility Loan under the HPT Purchase
Agreement);
(h)
the officers and directors of the Operating
Company and each of its Subsidiaries shall have resigned in their capacity as
such (provided except with respect to a member of the Cardwell Group, such
resignation shall not affect any rights a Person has as an employee (including
under any Transaction Bonus Agreement or Employee Plan as then in effect)) and
all employment agreements with any member of the Cardwell Group shall have been
terminated;
(i)
each Seller shall have delivered an
Assignment of Interest in the form of
Exhibit C
to Purchaser and each
general partner of the Operating Company shall have withdrawn as a general partner
and a Person designated by Purchaser shall have been admitted to the Operating
Company as its sole general partner;
(j)
each member of the Cardwell Group shall
have executed and delivered a Non-Competition Agreement in the form of
Exhibit
D
, each party to the Transition Services Agreement other than Purchaser
shall have executed and delivered the Transition Services Agreement and Xpert
Transportation, Inc. shall have executed and delivered the Fuel Transportation
Agreement;
51
(k)
the Sellers Representative shall have
executed and delivered the Escrow Agreement; and
(l)
each condition to the HPT Closing under the
HPT Purchase Agreement (other than the condition that the transactions
contemplated by this Agreement shall have closed or any conditions that by
their terms cannot be satisfied until the closing of such transactions) have
been satisfied or waived by the party entitled thereto and the HPT Closing will
occur on the same day as the Closing.
Section 7.03
Conditions to the Obligations of Sellers
.
The
obligations of Sellers to consummate the sale of the Interests are subject to
the satisfaction (or waiver by Sellers) at or prior to the Closing of the
following further conditions:
(a)
the representations and warranties of Purchaser
contained in Article V which are qualified as to materiality shall be true and
correct and all such representations and warranties that are not qualified as
to materiality shall be true and correct in all material respects, in each case
when made and at and as of the Closing Date as if made at and as of the Closing
Date (except for those representations and warranties that address matters only
as of a particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such period);
(b)
Purchaser shall have paid the Estimated
Purchase Price and otherwise performed in all material respects all obligations
hereunder required to be performed by it at or prior to the Closing;
(c)
Purchaser shall have executed and delivered
the Transition Services Agreement to the Cardwell Group;
(d)
Purchaser shall have delivered to Sellers a
certificate (dated as of the Closing Date) as to compliance with the conditions
set forth in paragraphs (a) and (b) of this Section 7.03;
(e)
each condition to the HPT Closing under the
HPT Purchase Agreement (other than the conditions that the transactions
contemplated by this Agreement shall have closed or any condition that by its
terms cannot be satisfied until the closing of such transaction) have been
satisfied or waived by the party entitled thereto and the HPT Closing will
occur on the same day as the Closing; and
(f)
Purchaser shall have executed and delivered
the Escrow Agreement.
52
ARTICLE
VIII
CLOSING;
TERMINATION
Section 8.01
Closing
.
(a)
Unless this Agreement shall have been terminated
the closing of the transactions contemplated hereby (the
Closing
, and the actual date of
the Closing, the
Closing Date
) shall take place at the offices of
Sullivan & Worcester LLP located at One Post Office Square, Boston, MA
02109, on the Business Day on which all of
the conditions set forth in Article VII have been satisfied or waived
(excluding conditions that, by their terms, cannot be satisfied until the
Closing, but subject to the satisfaction or wavier of such conditions at the
Closing) or at such other place and on such other date as shall be mutually
agreed to by Purchaser and Sellers;
provided, however, that in no event shall the Closing occur later than the date
that is thirty (30) days after the date hereof (the
End Date
). At the Closing, the parties shall exchange
the documents referred to in Article VII.
(b)
Anything in this Section 8.01 to the
contrary notwithstanding, no extension of the date for Closing shall be
effective unless the date for the HPT Closing shall have been similarly
extended.
Section 8.02
Termination
.
Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated:
(a)
by mutual written consent of Purchaser and the Sellers Representative;
(b)
by the
Sellers Representative or Purchaser,
if the Closing shall not have occurred on or prior to the End Date; provided,
however, that the right to terminate this Agreement shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing occur on or prior to
the End Date; or
(c)
by the Sellers Representative or Purchaser if any court of competent jurisdiction or
other Governmental Entity located or having jurisdiction within the United
States shall have issued a final Judgment or taken any other final action
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such Judgment or other action is or shall have become
final and nonappealable.
This Agreement shall
automatically terminate if the HPT Purchase Agreement is terminated, without
further action by the parties.
Section
8.03
Assumption and Assignment to Company Partners on
Closing
.
Immediately upon and
subject to the Closing:
(a)
the Company Partners, severally and not
jointly, hereby assume each Company Sellers (i) indemnity obligations under
Section 2.05 and Article IX, (ii) obligation to refund its share of any Excess
Payment, (iii) obligation to pay fees and expenses of the Accounting Firm, and
(iv) obligations under Article XI, with each such obligation assumed subject to
the terms, conditions and limitations applicable to such obligation set forth
in this Agreement. Such obligations
shall be allocated among the Company Partners on a pro rata basis
53
based on the percentages set forth in
Annex 1
. Purchaser acknowledges such assumption and
after the Closing agrees to look solely to the Company Partners for the
performance of such obligations;
(b)
the Company
Sellers hereby assign to the Company Partners, severally and not jointly, all
of the rights of the Company Sellers under the Escrow Agreement or under this
Agreement which survive the Closing, including without limitation each Company
Sellers (i) right to indemnification under Article IX, (ii) right to
receive its share of any Payment Shortfall, and (iii) right under Section
6.15 to receive payments in respect of forfeited Post-Closing Transaction
Bonuses, with each such right assigned subject to the terms, conditions and
limitations applicable to such right set forth in the Escrow Agreement and this
Agreement. Such rights shall be allocated among the Company Partners on a pro
rata basis based on the percentages set forth in
Annex 1
with any
payments otherwise to be made to a Company Partner as a result of such
assignment to be made to it in accordance with the wire transfer instructions
set forth for such Company Partner in
Annex
1.
Section 8.04
Effect of Termination
.
In the event of
the termination of this Agreement as provided in Section 8.02, written notice
thereof shall forthwith be given to the other parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part of
any of the parties hereto except (i) for fraud or for willful breach of this
Agreement, and (ii) the confidentiality provisions of Section 6.02, Section
8.03 and Article XII (other than Sections 12.03 and 12.09) will survive any
termination of this Agreement and Purchaser shall reimburse the Company and the
Company Subsidiaries for any Reimbursable Costs then incurred by the Company or
any Company Subsidiary (but only to the extent not previously paid by
Purchaser).
ARTICLE
IX
INDEMNIFICATION
Section 9.01
Survival
.
(a)
All covenants and agreements contained in
this Agreement (including the Schedules, Annexes and Exhibits attached hereto
and the certificates and affidavits delivered pursuant hereto) that contemplate
performance thereof following the Closing Date will survive the Closing Date in
accordance with their terms.
(b)
All the representations and warranties of
Sellers and the Operating Company contained in this Agreement (including the
Schedules, Annexes and Exhibits attached hereto and the certificates and
affidavits delivered pursuant hereto) will survive the Closing Date (i)
indefinitely in the case of representations and warranties set forth in Section
3.03, 3.04, 4.02 and 4.03, (ii) until the expiration of the applicable statute
of limitations plus 30 days in the case of the representations and warranties
set forth in Section 3.09 but only to the extent such representations and
warranties relate to Income Taxes, and (iii)
until the 12-month anniversary of the Closing Date in the case of any
other representations or warranties, at which point such
54
representations and warranties and any claim for indemnification on
account thereof will terminate except with respect to any Purchaser Claim for
which a Purchaser Claims Notice has been delivered to the Sellers
Representative by Purchaser pursuant to this Article IX prior to the
termination date.
(c)
All representations and warranties of
Purchaser contained in this Agreement (including the Schedules, Annexes and
Exhibits attached hereto and the certificates and affidavits delivered pursuant
hereto) will survive the Closing Date (i) indefinitely in the case of Section
5.02 and (ii) until the 12-month anniversary of the Closing Date in the case of
any other representations or warranties, at which point such representations
and warranties and any claim for indemnification on account thereof will
terminate except with respect to any Seller Claim for which a Seller Claims
Notice has been delivered to Purchaser prior to the termination date.
Section 9.02
Indemnification by Purchaser
.
Subject to the
terms and conditions of this Article IX, from and after the Closing, Purchaser
will indemnify and hold harmless Sellers and their respective successors and permitted
assigns and officers and directors and their heirs and personal representatives
(collectively, the
Seller Indemnitees
) from and against, and will pay
to the Seller Indemnitees the amount of, any and all losses, liabilities,
claims, damages, penalties, fines, judgments, awards, settlements, taxes,
costs, fees (including, but not limited to, reasonable investigation fees),
expenses (including, but not limited to, reasonable attorneys fees) and
disbursements (collectively,
Losses
) actually incurred by any of the
Seller Indemnitees based upon (a) any breach of or inaccuracy in the
representations and warranties of Purchaser contained in Article V of this
Agreement (including the certificate delivered pursuant to Section 7.03(c)) as
of the date of this Agreement and as of the Closing Date, and (b) any breach of
the covenants or agreements of Purchaser contained in this Agreement (including
the certificate delivered pursuant to Section 7.03(c)) and required to be
performed by it pursuant to this Agreement.
Section 9.03
Indemnification by Sellers
.
Subject to the terms and
conditions of this Article IX, from and after the Closing, each Seller,
severally and not jointly, will indemnify and hold harmless Purchaser and the
Operating Company and their respective successors and permitted assigns and
officers and directors and their heirs and personal representatives
(collectively, the
Purchaser
Indemnitees
) from and against any and all Losses actually incurred
by any of the Purchaser Indemnitees based upon (a) any breach of or inaccuracy
in the representations and warranties contained in Article III or Article IV of
this Agreement (including the certificate delivered pursuant to Section
7.02(c)) as of the date of this Agreement and as of the Closing Date, and (b)
any breach of the covenants or agreements of any Seller, any Company Partner or
any Company Subsidiary contained in this Agreement (including the certificate
delivered pursuant to Section 7.02(c)) and required to be performed by them
pursuant to this Agreement.
Section 9.04
Exclusive Remedy
.
Other than for breaches
of Sections 2.03(e), 2.05 and 6.15 and Article XI, the
55
parties agree that
from and after the Closing Date, the exclusive remedies of any Seller
Indemnitee or Purchaser Indemnitee for any Losses based upon, arising out of or
otherwise in respect of the matters set forth in this Agreement or the
transactions contemplated hereby are the indemnification or reimbursement
obligations of the parties set forth in this Article IX. The parties further agree that, except with
respect to a breach of the representations contained in Sections 4.02 and 4.03
for which each Seller shall severally and not jointly be subject to a claim for
personal liability in an amount not to exceed the aggregate amount received by
such Seller pursuant to Article II, no Seller shall have any personal liability
under this Agreement or for any indemnification of any Purchaser Indemnitee and
the Purchaser Indemnitees shall be entitled to only look to the Escrow Fund for
the satisfaction of any indemnity to which they are entitled. The provisions of this Section 9.04 shall
not, however, prevent or limit a partys right to seek specific performance or
injunctive relief in connection with another partys breach of this Agreement.
Section 9.05
Limitations on Indemnification Payments to Seller
Indemnitees
.
Notwithstanding anything
in this Agreement to the contrary,
(a)
the Seller Indemnitees shall be entitled to
indemnification pursuant to Section 9.02 from Purchaser only to the extent the
aggregate amount of all Losses of the Seller Indemnities as a result of any
breach or inaccuracy by Purchaser exceeds $3,500,000 (the
Sellers
Deductible Amount
), provided that Losses of Seller Indemnitees (each
defined in the HPT Purchase Agreement) under the HPT Purchase Agreement shall
be aggregated with Losses under this Agreement in determining the Sellers
Deductible Amount, it being understood and agreed that once the Sellers
Deductible Amount is exceeded the Seller Indemnitees shall only be entitled to
indemnification pursuant to Section 9.02 for Losses in excess of the Sellers
Deductible Amount;
(b)
the aggregate amount of all Losses to which
the Seller Indemnitees shall be entitled to indemnification from Purchaser
shall not exceed the Escrow Amount;
(c)
the Seller Indemnities will not be entitled
to indemnification pursuant to Section 9.02 for punitive damages or for lost
profits, consequential, exemplary or special damages; and
(d)
no Seller Indemnitee is entitled to receive
payment pursuant to this Article IX for the same Loss relating to an
indemnification claim more than once.
Section 9.06
Limitations on Indemnification Payments to Purchaser
Indemnitees
.
Notwithstanding anything
herein to the contrary:
(a)
the Purchaser Indemnitees shall be entitled
to indemnification pursuant to Section 9.03(a) and (b) only to the extent the
aggregate amount of all Losses of the Purchaser Indemnitees as a result of any
breach or inaccuracy by a Seller, a Company Partner or a
56
Company Subsidiary exceeds $3,500,000 (the
Purchasers Deductible
Amount
), provided that Losses of the Purchaser Indemnitees (each
defined in the HPT Purchase Agreement) shall be aggregated with Losses under
this Agreement in determining the Purchasers Deductible Amount, it being
understood and agreed that once the Purchasers Deductible Amount is exceeded
the Purchaser Indemnitees shall only be entitled to indemnification pursuant to
Section 9.03 for Losses in excess of the Purchasers Deductible Amount;
provided, however, that the limitation set forth in this Section 9.06(a) shall
not apply to Losses incurred by any Purchaser Indemnitee based upon breach or
inaccuracy of the representations set forth in Sections 3.03, 3.04, 3.09 (but
only to the extent such representations relate to Income Taxes), 4.02 or 4.03;
(b)
the Purchaser Indemnitees will not be
entitled to indemnification pursuant to Section 9.03 for punitive damages or
for lost profits, consequential, exemplary or special damages; and
(c)
no Purchaser Indemnitee is entitled to
receive payment pursuant to this Article IX for the same Loss relating to an
indemnification claim more than once.
Section 9.07
Procedures
.
(a)
Notice of Losses by Seller Indemnitee
.
As soon as reasonably practicable after a Seller Indemnitee becomes aware of
any claim that it has that may result in a Loss (a
Seller Claim
), the Seller Indemnitee shall give notice
thereof (a
Seller Claims Notice
)
to the applicable Purchaser (the
Purchaser Indemnitor
). A Seller
Claims Notice must describe the Seller Claim in reasonable detail, and indicate
the amount (estimated, as necessary) of the Loss that has been or may be
suffered by the applicable Seller Indemnitee. No delay in or failure to give a
Seller Claims Notice by the Seller Indemnitee to the Purchaser Indemnitor
pursuant to this Section 9.07(a) will adversely affect any of the other rights
or remedies that a Seller Indemnitee has under this Agreement, or alter or
relieve the Purchaser Indemnitor of its obligation to indemnify the applicable
Seller Indemnitee, except to the extent that the Purchaser Indemnitor is
prejudiced thereby.
(b)
Notice of Losses by
Purchaser Indemnitee
. As soon as reasonably practicable after a Purchaser
Indemnitee becomes aware of any claim that it has that may result in a Loss (a
Purchaser Claim
), such
Purchaser Indemnitee shall give Notice thereof (a
Purchaser Claims Notice
) to the Sellers Representative. A
Purchaser Claims Notice must describe the Purchaser Claim in reasonable detail,
and indicate the amount (estimated, as necessary) of the Loss that has been or
may be suffered by the applicable Purchaser Indemnitee. No delay in or failure
to give a Purchaser Claims Notice by a Purchaser Indemnitee to the Sellers
Representative pursuant to this Section 9.07(b) will adversely affect any of
the other rights or remedies that the Purchaser Indemnitee has under this
Agreement, or alter or relieve the Purchaser Indemnitee of its right to
indemnification except to the extent that Sellers are prejudiced thereby.
Section 9.08
Opportunity to Defend Third Party Claims
.
In the event of any claim
by a third party against a Purchaser Indemnitee or Seller
57
Indemnitee (each
an
Indemnitee
) for which indemnification is available hereunder from
Purchaser or Sellers, as applicable (each an
Indemnifying Party
), the Indemnifying Party has the right,
exercisable by notice to the Indemnitee
as applicable, within 120 days of receipt of a written notice from the
Indemnitee of such claim, to assume and conduct the defense of such claim, with
counsel selected by the Indemnifying Party and reasonably satisfactory to the
Indemnitee. If the Indemnifying Party
has assumed such defense as provided in this Section 9.08, the Indemnifying
Party will not be liable for any legal expenses incurred by any Indemnitee in
connection with the defense of such claim unless the Indemnitee determines in
good faith and upon the written advice of counsel that joint representation by
the Indemnifying Partys counsel constitutes a conflict of interest. If the
Indemnifying Party does not assume the defense of any third party claim in
accordance with this Section 9.08, the Indemnitee may defend such claim at the
sole cost of the Indemnifying Party (subject to the limitations set forth in
this Article IX), and the Indemnifying Party may still participate in, but not
control, the defense of such third party claim at the Indemnifying Partys sole
cost and expense. For so long as the Indemnifying Party is defending such claim
in good faith, the Indemnitee will not consent to a settlement of, or the entry
of any judgment arising from, any such claim, without the prior written consent
of the Indemnifying Party (such consent not to be unreasonably withheld or
delayed). Except with the prior written consent of the Indemnitee (such consent
not to be unreasonably withheld or delayed), no Indemnifying Party, in the
defense of any such claim, will consent to the entry of any judgment or enter
into any settlement that (i) provides for injunctive or other non-monetary
relief affecting the Indemnitee, (ii) provides for an admission of violation of
any Law or the rights of any Indemnitee, or (iii) does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
Indemnitee of a release from all liability with respect to such claim or
litigation. In any such third party claim, the party responsible for the
defense of such claim shall, to the extent reasonably requested by the other
party, keep such other party informed as to the status of such claim, including,
without limitation, all settlement negotiations and offers; provided, however,
that neither the Indemnitee nor the Indemnifying Party shall be required to
disclose any privileged information or any attorney work product in connection
with the defense of any such asserted claim.
Section 9.09
Exercise
of Remedies by Indemnitees
.
No Purchaser Indemnitee
shall be permitted to assert any indemnification claim or exercise any other
remedy under this Agreement unless Purchaser (or any successor thereto or
assign thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.
No Seller Indemnitee shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless the Sellers
Representative shall have consented to the assertion of such Indemnification
claim or the exercise of such other remedy.
Section 9.10
Adjustment to Purchase Price
.
All
indemnification, purchase price adjustments, reimbursement payments and other
payments made pursuant to this Agreement subsequent to the date of this
Agreement, as applicable, will be treated as an adjustment to the Aggregate
Purchase Price unless otherwise required by Law.
58
ARTICLE
X
RELEASES
Section 10.01
Releases by Purchaser and the Company
.
(a)
For good and valuable consideration, the
receipt and adequacy of which hereby are acknowledged, Purchaser, and the
Operating Company and its Subsidiaries effective as of the Closing, for
themselves and their successors and assigns (collectively, the
Purchaser/Company
Releasors
), do absolutely and irrevocably release and discharge forever
Sellers and the Company Partners and each of their present and former
representatives, stockholders, principals, officers, directors, employees,
benefit plans, agents, attorneys and their successors and assignees
(collectively, the
Purchaser/Company Releasees
), from any and all
claims, debts, actions, damages, obligations, liabilities, agreements or
promises of any nature whatsoever which the Purchaser/Company Releasors (or any
of them) ever had, now has or hereinafter may have against the
Purchaser/Company Releasees (or any of them) from the beginning of the world to
the Closing Date (collectively, the
Purchaser/Company
Released Claims
),
provided
,
however
, that the
Purchaser/Company Released Claims shall not include any rights under or
pursuant to this Agreement or any agreement or instrument executed in
connection with the transactions contemplated hereby, including, without
limitation, the indemnification provisions hereof, the Transition Services
Agreement and the Escrow Agreement.
Nothing herein shall be deemed to release any rights any
Purchaser/Company Releasor may have to make any claims under any insurance policy
or policies maintained for Purchaser/Company Releasors benefit by any
Purchaser/Company Releasee at any time on or prior to the Closing Date,
including, without limitation, general liability, directors and officers,
errors and omissions or malpractice insurance.
(b)
Purchaser has read and understands all of
the terms and conditions set forth in this Section 10.01 and their legal
consequences, and has had the benefit of advice of legal counsel of its own
choice. Purchaser acknowledges that
there is a risk that subsequent to this general release, it may discover, incur
or suffer matters that were unknown to and/or unanticipated by Purchaser or the
Company or a Company Subsidiary at the date hereof. Purchaser agrees that this general release
applies to, and forever releases, all such matters described in the immediately
preceding sentence.
Section 10.02
Releases by Sellers
.
(a)
For good and valuable consideration, the
receipt and adequacy of which hereby are acknowledged, Sellers and the Company
Partners effective as of the Closing, for themselves and their respective
successors and assigns (collectively, the
Seller Releasors
), do
absolutely and irrevocably release and discharge forever Purchaser, the
Operating Company and their respective Subsidiaries and each of their present
and former representatives, stockholders, principals, officers, directors,
employees, benefit plans, agents, attorneys and each of their successors and
assignees (collectively, the
Seller Releasees
), from any and all
claims, debts, actions, damages, obligations, liabilities, agreements or
promises of any nature whatsoever which the Seller Releasors (or any of them)
ever had, now has or hereinafter may have against
59
the Seller Releasees (or any of them) from the beginning of the world
to the Closing Date (collectively, the
Seller Released Claims
),
provided
,
however
, that the Seller Released Claims shall not include any of the
following: (i) any rights under or pursuant to this Agreement or any agreement
or instrument executed in connection with the transactions contemplated hereby,
including, without limitation, the indemnification provisions hereof, the
Transition Services Agreement and the Escrow Agreement, or (ii) any right of a
Seller Releasor to indemnification pursuant to the Organizational Documents of
the Operating Company or any Employee Plan or any other agreement, in each
case, as in effect on the date hereof.
Nothing herein shall be deemed to release any rights any Seller Releasor
may have to make any claims under any insurance policy or policies maintained
for such Seller Releasors benefit by any Seller Releasee at any time on or
prior to the Closing Date, including, without limitation, general liability,
directors and officers, errors and omissions or malpractice insurance.
(b)
Sellers have fully read and understand all
of the terms and conditions set forth in this Section 10.02 and their legal
consequences, and have had the benefit of advice of legal counsel of their own
choice. Sellers acknowledge that there
is a risk that subsequent to this general release, they may discover, incur or
suffer matters that were unknown to and/or unanticipated by Sellers at the date
hereof. Each Seller agrees that this
general release applies to, and forever releases, all such matters described in
the immediately preceding sentence.
ARTICLE
XI
TAX
MATTERS
Section 11.01
Tax Treatment
.
The parties shall
treat the transactions contemplated by this Agreement and the HPT Purchase
Agreement in accordance with Revenue Ruling 99-6, 1999-1 C.B. 432 (Situation 2)
as follows (i) (A) as a sale of 100% of the Operating Company Interests by the
partners of the Operating Company and (B) thereafter as a sale of 100% of the
Company Interests by the Company Partners, and (ii) (A) as a purchase by
Purchaser of all of the assets of the Operating Company and assumption by
Purchaser of all of the Operating Companys liabilities and (B) thereafter, as
a purchase by HPT of all of the assets of the Company and assumption by HPT of
all of the Companys liabilities. The parties shall (x) treat each such transaction
as occurring after all other transactions, including those contemplated by Section 6.13 and 6.14 hereof, on the Closing Date
and (y) treat the transactions described in Sections 11.01(i)(A) and
11.01(ii)(A) as occurring prior to the transactions described in Sections
11.01(i)(B) and 11.01(ii)(B).
Section 11.02
Tax Returns
.
(a)
Partnership
Tax Returns
. After the Closing Date, the Sellers Representative, at its own
cost and expense, shall be responsible for preparing and timely filing all
Partnership Tax Returns, for each of the Operating Company and any of its
Subsidiaries as of the Closing Date that is treated as a partnership or
disregarded entity for federal Income Tax purposes, for all Tax periods ending
on or before the Closing Date. Such Partnership
Tax Returns will report the operations of the Operating Company and its
Subsidiaries, as applicable,
60
in accordance with applicable Law.
To the extent permitted by applicable Law, the Sellers Representative
shall cause such Partnership Tax Returns to be filed and signed by a
pre-Closing partner of the Operating Company (other than the Company).
The
Sellers Representative shall pay or cause Sellers to pay any Taxes that are due
(i) with respect to any Partnership Tax Returns that are the responsibility of
the Sellers Representative pursuant to this Section 11.02(a), including any
applicable state or local Tax withholding on the income reported on such
Partnership Tax Returns and (ii) any applicable federal, state or local
withholding Taxes with respect to distributions from the Company or the
Operating Company to their respective partners, except to the extent such Taxes
are specifically reflected as a current liability in the Actual Net Working
Capital as finally determined pursuant to Section 2.03. If, and to the extent, Purchaser or its
Affiliate is required under applicable Law to sign, authorize a Seller to sign
and/or participate in any Partnership Tax Return for any period ending on or
prior to the Closing Date, the Sellers Representative shall provide Purchaser a
copy of such Partnership Tax Return at least ten (10) days prior to its due
date, and Purchaser shall cooperate with respect to the filing of such
Partnership Tax Return pursuant to Section 11.06 hereof. For the avoidance of doubt, a Partnership Tax
Returns use of a purchase price allocation in accordance with Section 1060 of
the Code, even if different than Purchasers allocation, shall not be
considered unreasonable.
(b)
Other Tax Returns
. Except as set forth in Section 11.02(a) or
Section 11.05, Purchaser shall, at it own cost and expense, be responsible for
preparing and filing all Tax Returns of the Operating Company or any of its
Subsidiaries that are due following the Closing Date, subject to Purchasers
right to indemnification under Article IX hereof.
Section 11.03
Intentionally Omitted
.
Section 11.04
Post-Closing Audits
.
(a)
Purchaser shall notify the Sellers
Representative in writing within 20 days after receipt by Purchaser or the
Operating Company or its Subsidiaries of written notice of the commencement of
any official inquiry, examination, audit or other administrative or judicial
proceeding (
Audit
) regarding any Tax Return or Taxes for any
Pre-Closing Tax Period; provided, that the failure to provide such notice shall
not relieve Sellers of their obligations pursuant to Article IX or this Article
XI, except to the extent Sellers are actually prejudiced thereby. The Sellers
Representative shall notify Purchaser in writing within 20 days after receipt
by the Sellers Representative or any Seller of written notice of the
commencement of any Audit regarding any Tax Return (other than with respect to
any matter pertaining to a Partnership Tax Return which could not reasonably be
expected to involve any potential liability on the part of the Company, the
Operating Company, Purchaser or any of their post-Closing Affiliates) or Taxes
of the Operating Company or any of its Subsidiaries.
(b)
Provided that Sellers may be responsible
under Article IX or XI for any Taxes that might result, the Sellers
Representative shall have the right, exercised by written notice given to
Purchaser within 20 days after delivery or receipt by the Sellers
Representative of a notice pursuant to Section 11.04(a), on behalf of Sellers
and at the expense of Sellers, to control the handling, disposition and/or
settlement of any Audit regarding any Pre-Closing Tax Period; provided, that
the Sellers Representative shall defend such Audit diligently and in good
61
faith, and shall keep Purchaser reasonably informed as to the status of
and material developments in such Audit and provide Purchaser with copies of
any written materials relating to such Audit received from or submitted to any
Governmental Entity; provided further that if such Audit could have an adverse
impact on Purchaser or any of its Affiliates or Subsidiaries (1) the Sellers
Representative shall consult with Purchaser before taking any significant
action in connection with such Audit; (2) the Sellers Representative shall
offer Purchaser a reasonable opportunity to comment before submitting to any
Governmental Entity any written materials prepared or furnished in connection
with such Audit; (3) Purchaser (or an Affiliate of Purchaser) shall be entitled
to participate, at its own expense, in such Audit, including by attending
meetings with the relevant Governmental Entity; and (4) the Sellers
Representative shall not settle, compromise or abandon the Audit without
obtaining prior written consent of Purchaser, which consent shall not be
unreasonably withheld, conditioned or delayed.
If the Sellers Representative fails to exercise its right to control the
conduct of any Audit described in this Section 11.04(b), Purchaser may, to the
extent such Audit relates to Purchaser or the Operating Company or the Operating
Companys Subsidiaries, conduct, defend and settle the Audit in such manner as
it deems appropriate in its sole discretion, and Sellers shall, jointly and
severally, promptly pay or reimburse Purchaser, as applicable, for any costs or
expenses incurred in connection with the conduct, defense or settlement of such
Audit. Notwithstanding the foregoing and
except with respect to any matter pertaining to a Partnership Tax Return which
could not reasonably be expected to involve any potential liability on the part
of the Company, the Operating Company, Purchaser or any of their post-Closing
Affiliates, the provisions of this Section 11.04(b) shall not apply to any
Partnership Tax Returns for any Pre-Closing Tax Period.
(c)
Purchaser
shall have the right, at its own expense, to exercise control over the
handling, disposition and/or settlement of any Audit regarding any Tax Return
other than as described in Section 11.04(b) above (including the right to
settle or otherwise terminate any contest with respect thereto); provided, that
in the case of any Tax Return for a period beginning before the Closing Date,
Purchaser shall not settle any issue that would result in a required
indemnification payment by Sellers under Article IX or Article XI without the prior
consent of the Sellers Representative, which consent shall not be unreasonably
withheld, conditioned or delayed.
(d)
(i) The
Sellers Representative shall notify Purchaser if, in the course of any Audit,
Sellers purchase price allocation under Section 1060 of the Code is challenged
by the IRS or any other Governmental Entity, and (ii) Purchaser shall notify
the Sellers Representative if, in the course of any Audit, Purchasers purchase
price allocation under Section 1060 of the Code is challenged by the IRS or any
other Governmental Entity.
Section 11.05
Transfer Taxes
.
Except for any Transfer
Taxes (as defined below) which result from the actions taken pursuant to
Section 6.13 and Section 6.14(c) (which Transfer Taxes shall be HPT Reimbursable Costs), all transfer,
real estate transfer, excise, sales, use, documentary, stamp Taxes and all
conveyance fees, recording charges and other similar Taxes (including interest,
penalties and additions to any such Taxes) in each case including any such
Taxes or fees levied upon the transfer of stock or other equity interests in an
entity on account of such entitys direct
62
or indirect
ownership of real estate (
Transfer Taxes
) incurred in connection with
the transactions contemplated by this Agreement shall be paid one-half by
Purchaser and one-half by Sellers.
Purchaser and Sellers agree to use commercially reasonable efforts to
cooperate with respect to minimizing any such Transfer Taxes. Purchaser shall prepare and file all
necessary Tax Returns and other documentation with respect to such Transfer
Taxes. Sellers shall reimburse Purchaser
one-half of the cost and expense of preparing and filing such Tax Returns. In addition, Purchaser shall provide any Tax
forms or other information reasonably requested by the Sellers Representative
for the purpose of reducing fuel excise Taxes.
Section 11.06
Tax Cooperation
.
From and after the
Closing Date, each of Purchaser, the Sellers Representative and Sellers shall,
at the cost of the requesting party, cooperate, as reasonably requested, in
connection with the preparation and filing of any Tax Returns of the Operating
Company or any of its Subsidiaries and in connection with any Audits with
respect to Taxes or Tax Returns. Such
cooperation shall include the retention and (upon the other partys request, at
the requesting partys cost and expense) the provision of records and
information which are reasonably relevant to any such Audit. Purchaser and Sellers shall, upon request,
use their commercially reasonable efforts to obtain any certificate or other
document from any Governmental Entity or any other Person as may be necessary
to mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby). Purchaser and Sellers agree that Purchaser
may, at Purchasers sole option, discretion and cost, which shall include all
Tax liabilities resulting from such elections, make an election under Section
338 of the Code (and any corresponding election under state, local, or foreign
Tax Law) with respect to deemed purchase of the stock of any Company Subsidiary
hereunder and each Seller agrees to cooperate with respect to any such
election. Purchaser, Sellers Representative
and each Seller each agree to (i) treat each Special Purpose Subsidiary as a
disregarded entity under Treasury Regulation Section 301.7701-2 and -3 (and as
a disregarded entity for state and local Tax purposes to the maximum extent
possible) for any Pre-Closing Tax Period and any Tax period that includes the
Closing Date, (ii) not make any affirmative election (such as on IRS Form 8832)
contrary to such disregarded entity status and (iii) take steps at Purchasers
request and expense to minimize any SPS Income Taxes (as defined in the HPT Purchase
Agreement).
Section 11.07
Conflicts
.
In the event of a
conflict between the provisions of this Article XI and Article IX, this Article
XI shall exclusively govern any matters relating to Taxes.
ARTICLE
XII
GENERAL
PROVISIONS
Section 12.01
Costs and Expenses
.
Except as otherwise
specifically provided herein, each party shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby.
63
Section 12.02
Notices
.
All
notices or other communications required or permitted by this Agreement shall
be effective upon receipt and shall be in writing and delivered personally or
by overnight courier (with proof of delivery), or sent by facsimile, as follows:
|
(i)
|
if to
Purchaser, to:
|
|
|
|
Travel Centers of America LLC
|
|
24601 Center Ridge Road, Suite 200
|
|
Westlake, OH 44145
|
|
Attn.: President
|
|
Facsimile: (440) 808-3301
|
|
|
|
with a copy to (which shall
not constitute notice):
|
|
|
|
Sullivan & Worcester
LLP
|
|
One Post Office Square
|
|
23
rd
Floor
|
|
Boston, MA 02109
|
|
Attn.: Richard Teller
|
|
Facsimile: (617) 338-2880
|
|
|
|
(ii)
|
if to the Company or the
Operating Company, to:
|
|
|
|
Petro Stopping Centers Holdings,
L.P.
|
|
Petro Stopping Centers, L.P.
|
|
6080 Surety Drive
|
|
El Paso, TX 79905
|
|
Attention: Edward Escudero
|
|
Facsimile: (915) 773-7366
|
|
|
|
with a copy to (which shall
not constitute notice):
|
|
|
|
Willkie Farr & Gallagher
LLP
|
|
787 Seventh Avenue
|
|
New York, NY 10019
|
|
Attention:
|
Thomas M. Cerabino
|
|
|
Richard L. Reinhold
|
|
Facsimile: (212) 728-8111
|
|
|
|
(iii)
|
if to the Sellers
Representative, to:
|
|
|
|
Edward Escudero
|
|
3820 Hillcrest
|
|
El Paso, TX 79902
|
|
Facsimile: (915) 774-7336
|
|
|
|
|
64
|
with a copy to (which shall not constitute notice):
|
|
|
|
Willkie Farr & Gallagher
LLP
|
|
787 Seventh Avenue
|
|
New York, NY 10019
|
|
Attention:
|
Thomas M. Cerabino
|
|
|
Richard L. Reinhold
|
|
Facsimile: (212) 728-8111
|
|
|
|
(iv)
|
if to Volvo Petro Holdings,
LLC, to:
|
|
|
|
CT Corporation System
|
|
1209 Orange Street
|
|
Wilmington, DE 19801
|
|
Attention: Michele Aacione
|
|
Facsimile: (302) 655-2480
|
|
|
|
(v)
|
if to Mobil Long Haul, Inc.
to:
|
|
|
|
ExxonMobil Fuels Marketing
Company, Global Planning
|
|
3225 Gallows Road, Room 5D0211
|
|
Fairfax, VA 22037
|
|
Attention: Peter A. Tunnard
|
|
Facsimile: (262) 313-
|
|
|
|
(vi)
|
if to a Seller or a Company
Partner (other than set forth in (iv) or (v) above), to:
|
|
|
|
J.A. Cardwell, Sr.
|
|
817 Rosinante
|
|
El Paso, TX 79922
|
|
Facsimile: (915) 581-7481
|
|
|
|
and
|
|
|
|
James A. Cardwell, Jr.
|
|
5772 Diamond Point
|
|
El Paso, TX 79912
|
|
Facsimile: (915) 581-7481
|
|
|
|
with a copy to (which shall not constitute notice):
|
|
|
|
Willkie Farr & Gallagher
LLP
|
|
787 Seventh Avenue
|
|
New York, NY 10019
|
|
Attention:
|
Thomas M. Cerabino
|
|
|
Richard L. Reinhold
|
|
|
|
|
65
Facsimile: (212) 728-8111
or to such other address as
hereafter shall be furnished as provided in this Section 12.02 by any of the
parties hereto to the other parties hereto.
Each such communication will be effective (a) if delivered personally or
overnight courier (with proof of delivery), when such delivery is made at the
address specified in this Section 12.02, or (b) if delivered by facsimile, when
such facsimile is transmitted to the facsimile number specified in this Section
12.02 and appropriate confirmation is received (provided that if notice is
given by facsimile, a copy of such notice, request, instruction or other
communication shall also be followed-up within one (1) Business Day of such
facsimile by one of the other methods described herein; notwithstanding such
follow-up, however, facsimile notice shall be deemed to be given at the time
set forth in this Section 12.02); provided, however, that any notice received
by facsimile transmission or otherwise at the addressees location on any
Business Day after 5:00 p.m. (addressees local time) shall be deemed to have
been received at 9:00 a.m. (addressees local time) on the next Business Day.
Section 12.03
Sellers Representative
.
(a)
Edward Escudero shall be constituted and
appointed as the
Sellers Representative
under this Agreement and under
the Escrow Agreement. No bond shall be
required of the Sellers Representative.
The Sellers Representative shall be indemnified and held harmless by
Cardwell and the Company Partners from and against any and all claims,
expenses, demands, judgments, amounts paid in settlement and other losses (
including
,
without limitation
, reasonable attorneys fees) asserted against or
incurred by the Sellers Representative based on acts or omissions taken or
omitted by the Sellers Representative in his capacity as Sellers
Representative.
(b)
The Sellers Representative has a duty to
serve in good faith the interests of Sellers but shall not be liable to Sellers
for any act done or omitted under this Agreement or under the Escrow Agreement
as Sellers Representative while acting in good faith and in the exercise of
reasonable judgment and any act done or omitted on the advice of counsel shall,
as between the Sellers Representative and Sellers shall be conclusive evidence
of such good faith.
(c)
Purchaser shall be entitled to deal
exclusively with the Sellers Representative on all matters relating to Article
II, Article VIII, Article IX and Article XI and shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any document
executed or purported to be executed on behalf of any Seller or any Company
Partner by the Sellers Representative, and on any other action taken or purported
to be taken on behalf of any Seller by the Sellers Representative, as fully
binding upon such Seller or Company Partner.
(d)
The Reserve Fund (defined in the HPT
Purchase Agreement) shall be used by the Sellers Representative to pay (i) any
costs or expenses the Sellers Representative may incur from time to time in
performing his duties hereunder (including, without limitation, pursuant to
Section 2.03 and Article XI) or under the Escrow Agreement, (ii) any Transfer Taxes payable by Sellers
pursuant to this Agreement as provided in the HPT Purchase Agreement or (iii)
any costs or expenses incurred by Sellers pursuant to any indemnity or similar
66
obligation given by Sellers under this Agreement or any other agreement
or document executed pursuant thereto or in connection therewith relating to
any Liens or encumbrances affecting any of the Owned Properties or Leased
Properties.
Section 12.04
Counterparts
.
This
Agreement may be executed and delivered (including by facsimile transmission)
in any number of counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute a single instrument.
Section 12.05
Entire Agreement
.
This Agreement (including
the Exhibits, Annexes, Schedules and the Company Disclosure Letter referred to
herein) and the Confidentiality Agreement set 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, among the parties, of any and every
nature with respect thereto.
Section 12.06
Governing Law; Exclusive
Jurisdiction
.
This
Agreement shall be governed in all respects, by the laws of the State of
Delaware including validity, interpretation and effect, without regard to
principles of conflicts of law. The
parties hereto irrevocably and unconditionally consent to submit to the
exclusive jurisdiction of the courts of the State of Delaware for any lawsuits,
actions or other proceedings arising out of or related to this Agreement and
agree not to commence any lawsuit, action or other proceeding except in such
courts. The parties hereto further agree
that service of process, summons, notice or document by mail to their addresses
set forth above shall be effective service of process for any lawsuit, action
or other proceeding brought against them in any such court. The parties hereto irrevocably and
unconditionally waive any objection to the laying of venue of any lawsuit,
action or other proceeding arising out of or related to this Agreement in the
courts of the State of Delaware, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that
any such lawsuit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
Section 12.07
Third Party Rights;
Assignment
.
Except
as specified in Section 6.07, 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. This Agreement and the
obligations of the Company, the Company Subsidiaries and Sellers shall not be
assignable without the prior written consent of
Purchaser. The
rights of Purchaser under this Agreement may be assigned, in whole or in part,
to any third party provided Purchaser shall remain liable for all obligations
of Purchaser hereunder.
67
Section 12.08
Waivers and Amendments
.
(a)
This Agreement may be amended only in writing by
each of the parties hereto. No
modification of or amendment to this Agreement shall be valid unless in a
writing signed by the parties hereto referring specifically to this Agreement
and stating the parties intention to modify or amend the same.
(b)
Any party hereto may (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) subject
to the requirements of applicable Law, waive compliance with any of the
agreements or conditions contained herein.
Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby and
referring specifically to the term or condition to be waived. The failure of any party to assert any rights
or remedies shall not constitute a waiver of such rights or remedies.
Section 12.09
Schedules
.
Disclosure
of any fact or item in any Schedule or in any Section of the Company
Disclosure Letter shall not be deemed to constitute an admission that such item
or fact is material for the purposes of this Agreement. The fact that any item of information is
disclosed in any Company Disclosure Letter shall not be construed to mean that
such information is required to be disclosed by this Agreement.
Section 12.10
Bulk Transfer Laws
.
Purchaser acknowledges that the Company
Subsidiaries and Sellers have not taken, and do not intend to take, any action
required to comply with any applicable bulk sale or bulk transfer Laws or
similar Laws and Purchaser hereby waives compliance by the Company Subsidiaries
and Sellers and their respective Affiliates with any bulk sale or bulk transfer
Laws or similar Laws that may be applicable to the transactions contemplated
hereby.
Section 12.11
Enforcement
.
The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof and costs of
enforcement (including attorneys fees); this being in addition to any other
remedy to which such parties are entitled at law or in equity.
Section 12.12
Headings; Interpretation
.
The descriptive headings
contained in this Agreement are included for convenience of reference only and
shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made in
this Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated.
Whenever the words include, includes or including are used in this
Agreement, they shall be deemed to be followed by the words without
limitation. The words hereof, herein,
hereby and hereunder and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The word or
shall not be exclusive. This
68
Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
[
signature page follows
]
69
IN WITNESS WHEREOF
, this Agreement has been executed and delivered
as of the date first written above.
|
TRAVELCENTERS OF AMERICA LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Thomas M. OBrien
|
|
|
Name:
Thomas M. OBrien
|
|
|
Title: President & Chief
Executive Officer
|
|
|
|
|
|
|
|
PETRO STOPPING CENTERS,
L.P.
|
|
|
|
|
|
|
|
By:
|
/s/ J. A. Cardwell
|
|
|
Name: J. A. Cardwell
|
|
|
Title: CEO
|
|
|
|
|
|
|
|
PETRO STOPPING CENTERS
HOLDINGS,
|
|
L.P.
|
|
|
|
|
By:
|
/s/ J. A. Cardwell
|
|
|
Name: J. A. Cardwell
|
|
|
Title: CEO
|
|
|
|
|
|
|
|
PETRO, INC.
|
|
|
|
|
|
By:
|
/s/ J. A. Cardwell
|
|
|
Name: J. A. Cardwell
|
|
|
Title: President
|
|
|
|
|
|
|
|
PETRO HOLDINGS G.P., LLC
|
|
|
|
|
|
|
By:
|
/s/ J. A. Cardwell
|
|
|
Name: J. A. Cardwell
|
|
|
Title:
|
CEO of Petro Stopping Centers
Holdings, L.P.,
Sole Member
|
Signature
Page to Purchase Agreement
|
/s/ J. A. Cardwell, Sr.
|
|
J. A. Cardwell, Sr.
|
|
|
|
|
|
/s/ J. A. Cardwell, Jr.
|
|
James A. Cardwell, Jr.
|
|
|
|
|
|
JAJCO II, INC.
|
|
|
|
|
|
By:
|
/s/ J. A. Cardwell, Jr.
|
|
|
Name: J. A. Cardwell, Jr.
|
|
|
Title: President
|
|
|
|
|
|
|
|
PETRO WARRANT HOLDINGS CORP.
|
|
|
|
|
|
By:
|
/s/ J. A. Cardwell
|
|
|
Name: J. A. Cardwell
|
|
|
Title: President
|
|
|
|
|
|
|
|
MOBIL LONG HAUL, INC.
|
|
|
|
|
|
By:
|
/s/ J. M. E. Mixter
|
|
|
Name: J. M. E. Mixter
|
|
|
Title: President
|
|
|
|
|
|
|
|
VOLVO PETRO HOLDINGS, LLC
|
|
|
|
|
|
By:
|
/s/ Eddie H. Brailsford
|
|
|
Name: Eddie H. Brailsford
|
|
|
Title: Chief Financial
Controller
|
Signature Page to Purchase Agreement
Exhibit 10.1
LEASE AGREEMENT,
dated as of May 30, 2007,
by and among
HPT PSC PROPERTIES TRUST and HPT PSC
PROPERTIES LLC
AS LANDLORD,
AND
PETRO STOPPING CENTERS, L.P.
,
AS TENANT
Table of Contents
|
|
Page
|
ARTICLE 1 DEFINITIONS
|
|
1
|
1.1 Additional
Charges
|
|
1
|
1.2 Additional
Rent
|
|
1
|
1.3 Affiliated
Person
|
|
2
|
1.4 Agreement
|
|
2
|
1.5 Applicable
Laws
|
|
2
|
1.6 Award
|
|
2
|
1.7 Base Fuel
Gross Revenues
|
|
3
|
1.8 Base Non-Fuel
Gross Revenues
|
|
3
|
1.9 Base Year
|
|
3
|
1.10 Business
Day
|
|
3
|
1.11 Capital
Addition
|
|
3
|
1.12 Capital
Expenditure
|
|
3
|
1.13 Capital
Replacements Budget
|
|
3
|
1.14 Change in
Control
|
|
3
|
1.15 Claim
|
|
4
|
1.16 Code
|
|
4
|
1.17
Commencement Date
|
|
4
|
1.18
Condemnation
|
|
4
|
1.19 Condemnor
|
|
4
|
1.20
Consolidated Financials
|
|
4
|
1.21 Date of
Taking
|
|
4
|
1.22 Default
|
|
5
|
1.23
Disbursement Rate
|
|
5
|
1.24
Distribution
|
|
5
|
1.25 Easement
Agreement
|
|
5
|
1.26 Encumbrance
|
|
5
|
1.27 Entity
|
|
5
|
1.28 Environment
|
|
5
|
1.29
Environmental Obligation
|
|
5
|
1.30
Environmental Notice
|
|
6
|
1.31
Environmental Report
|
|
6
|
1.32 Event of
Default
|
|
6
|
1.33 Excess Fuel
Gross Revenues
|
|
6
|
1.34 Excess
Non-Fuel Gross Revenues
|
|
6
|
1.35 Extended
Term
|
|
6
|
1.36 Fair Market
Value
|
|
6
|
1.37 Fair Market
Value Rent
|
|
6
|
1.38 Financial
Officers Certificate
|
|
6
|
1.39 Fiscal Year
|
|
7
|
1.40 Fixed Term
|
|
7
|
1.41 Fixtures
|
|
7
|
1.42 Fuel Sales
Cap
|
|
7
|
1.43 GAAP
|
|
7
|
1.44 Government
Agencies
|
|
7
|
1.45 Gross Fuel
Revenues
|
|
7
|
1.46 Gross
Non-Fuel Revenues
|
|
8
|
i
1.47 Ground Leases
|
|
8
|
1.48 Guarantor
|
|
9
|
1.49 Guaranty
|
|
9
|
1.50 Hazardous
Substances
|
|
9
|
1.51 Immediate
Family
|
|
10
|
1.52 Impositions
|
|
10
|
1.53
Indebtedness
|
|
11
|
1.54 Index
|
|
11
|
1.55 Insurance
Requirements
|
|
11
|
1.56 Interest
Rate
|
|
12
|
1.57 Land
|
|
12
|
1.58 Landlord
|
|
12
|
1.59 Landlord
Default
|
|
12
|
1.60 Landlord
Liens
|
|
12
|
1.61 Lease Year
|
|
12
|
1.62 Leased
Improvements
|
|
12
|
1.63 Leased
Intangible Property
|
|
12
|
1.64 Leased
Property
|
|
13
|
1.65 Legal
Requirements
|
|
13
|
1.66 Lien
|
|
13
|
1.67 Minimum
Rent
|
|
13
|
1.68 Notice
|
|
13
|
1.69 Officers
Certificate
|
|
13
|
1.70 Overdue
Rate
|
|
13
|
1.71 Parent
|
|
14
|
1.72 Permitted
Encumbrances
|
|
14
|
1.73 Permitted
Liens
|
|
14
|
1.74 Permitted
Use
|
|
14
|
1.75 Person
|
|
14
|
1.76 Property
|
|
14
|
1.77 Property
Mortgage
|
|
14
|
1.78 Property
Mortgagee
|
|
14
|
1.79 Rent
|
|
14
|
1.80 SARA
|
|
14
|
1.81 SEC
|
|
15
|
1.82 State
|
|
15
|
1.83
Subordinated Creditor
|
|
15
|
1.84
Subordination Agreement
|
|
15
|
1.85 Subsidiary
|
|
15
|
1.86 Successor
Landlord
|
|
15
|
1.87 Superior
Landlord
|
|
15
|
1.88 Superior
Lease
|
|
15
|
1.89 Superior
Mortgage
|
|
15
|
1.90 Superior
Mortgagee
|
|
15
|
1.91 TA
|
|
15
|
1.92 Tenant
|
|
15
|
1.93 Tenants
Personal Property
|
|
16
|
1.94 Term
|
|
16
|
ii
1.95 Travel Center
|
|
16
|
1.96 Unsuitable
for Its Permitted Use
|
|
16
|
1.97 Work
|
|
16
|
ARTICLE 2 LEASED PROPERTY AND TERM
|
|
16
|
2.1 Leased
Property.
|
|
16
|
2.2 Condition of
Leased Property.
|
|
17
|
2.3 Fixed Term.
|
|
18
|
2.4 Extended
Terms.
|
|
18
|
ARTICLE 3 RENT
|
|
19
|
3.1 Rent.
|
|
19
|
3.2 Late Payment
of Rent, Etc.
|
|
24
|
3.3 Net Lease,
Etc.
|
|
25
|
3.4 No
Termination, Abatement, Etc.
|
|
25
|
ARTICLE 4 USE OF THE LEASED PROPERTY
|
|
26
|
4.1 Permitted
Use.
|
|
26
|
4.2 Compliance
with Legal/Insurance Requirements, Etc.
|
|
28
|
4.3
Environmental Matters.
|
|
29
|
4.4 Ground
Leases.
|
|
31
|
ARTICLE 5 MAINTENANCE AND REPAIRS
|
|
31
|
5.1 Maintenance
and Repair.
|
|
31
|
5.2 Tenants
Personal Property.
|
|
34
|
5.3 Yield Up.
|
|
34
|
ARTICLE 6 IMPROVEMENTS, ETC.
|
|
35
|
6.1 Improvements
to the Leased Property.
|
|
35
|
6.2 Salvage.
|
|
36
|
ARTICLE 7 LIENS
|
|
36
|
ARTICLE 8 PERMITTED CONTESTS
|
|
36
|
ARTICLE 9 INSURANCE AND INDEMNIFICATION
|
|
37
|
9.1 General
Insurance Requirements.
|
|
37
|
9.2 Waiver of
Subrogation.
|
|
38
|
9.3 Form
Satisfactory, Etc.
|
|
38
|
9.4 No Separate
Insurance; Self-Insurance.
|
|
39
|
9.5
Indemnification of Landlord.
|
|
39
|
ARTICLE 10 CASUALTY
|
|
40
|
10.1 Insurance
Proceeds.
|
|
40
|
10.2 Damage or Destruction.
|
|
41
|
10.3 Damage Near
End of Term.
|
|
43
|
10.4 Tenants
Personal Property.
|
|
43
|
10.5 Restoration
of Tenants Personal Property.
|
|
43
|
10.6 No
Abatement of Rent.
|
|
43
|
10.7 Waiver.
|
|
44
|
ARTICLE 11 CONDEMNATION
|
|
44
|
11.1 Total
Condemnation, Etc.
|
|
44
|
11.2 Partial
Condemnation.
|
|
44
|
11.3 Abatement
of Rent.
|
|
46
|
iii
11.4 Temporary Condemnation.
|
|
46
|
11.5 Allocation
of Award.
|
|
46
|
ARTICLE 12 DEFAULTS AND REMEDIES
|
|
47
|
12.1 Events of
Default.
|
|
47
|
12.2 Remedies.
|
|
49
|
12.3 Tenants Waiver.
|
|
51
|
12.4 Application
of Funds.
|
|
51
|
12.5 Landlords
Right to Cure Tenants Default.
|
|
51
|
ARTICLE 13 HOLDING OVER
|
|
51
|
ARTICLE 14 LANDLORD DEFAULT
|
|
52
|
ARTICLE 15 PURCHASE OF TENANTS PERSONAL PROPERTY
|
|
53
|
ARTICLE 16 SUBLETTING AND ASSIGNMENT
|
|
53
|
16.1 Subletting
and Assignment.
|
|
53
|
16.2 Required
Sublease Provisions.
|
|
54
|
16.3 Permitted
Sublease.
|
|
55
|
16.4 Sublease
Limitation.
|
|
56
|
ARTICLE 17 ESTOPPEL CERTIFICATES AND FINANCIAL
STATEMENTS
|
|
56
|
17.1 Estoppel
Certificates.
|
|
56
|
17.2 Financial
Statements.
|
|
57
|
ARTICLE 18 LANDLORDS RIGHT TO INSPECT
|
|
58
|
ARTICLE 19 EASEMENTS
|
|
58
|
19.1 Grant of
Easements.
|
|
58
|
19.2 Exercise of
Rights by Tenant.
|
|
59
|
19.3 Permitted
Encumbrances.
|
|
59
|
ARTICLE 20 PROPERTY MORTGAGES
|
|
59
|
20.1 Landlord
May Grant Liens.
|
|
59
|
20.2
Subordination of Lease.
|
|
59
|
20.3 Notice to
Mortgagee and Superior Landlord.
|
|
61
|
ARTICLE 21 ADDITIONAL COVENANTS OF LANDLORD AND
TENANT
|
|
61
|
21.1 Prompt
Payment of Indebtedness.
|
|
61
|
21.2 Conduct of
Business.
|
|
62
|
21.3 Maintenance
of Accounts and Records.
|
|
62
|
21.4 Notice of
Litigation, Etc.
|
|
62
|
21.5
Indebtedness of Tenant.
|
|
63
|
21.6
Distributions, Payments to Affiliated Persons, Etc.
|
|
64
|
21.7 Prohibited
Transactions.
|
|
64
|
21.8 Liens and
Encumbrances.
|
|
64
|
21.9 Merger;
Sale of Assets; Etc.
|
|
65
|
21.10 Bankruptcy
Remote Entities.
|
|
65
|
21.11 Trade Area
Restriction.
|
|
65
|
ARTICLE 22 ARBITRATION
|
|
66
|
ARTICLE 23 MISCELLANEOUS
|
|
67
|
23.1 Limitation
on Payment of Rent.
|
|
67
|
23.2 No Waiver.
|
|
67
|
23.3 Remedies
Cumulative.
|
|
67
|
iv
23.4 Severability.
|
|
68
|
23.5 Acceptance
of Surrender.
|
|
68
|
23.6 No Merger
of Title.
|
|
68
|
23.7 Conveyance
by Landlord.
|
|
68
|
23.8 Quiet
Enjoyment.
|
|
68
|
23.9 No
Recordation.
|
|
69
|
23.10 Notices.
|
|
69
|
23.11
Construction.
|
|
70
|
23.12
Counterparts; Headings.
|
|
70
|
23.13 Applicable
Law, Etc.
|
|
71
|
23.14 Right to
Make Agreement.
|
|
71
|
23.15 Attorneys
Fees.
|
|
72
|
23.16
Nonliability of Trustees.
|
|
72
|
v
LEASE AGREEMENT
THIS LEASE AGREEMENT
is entered into as of May 30, 2007, by
and among
HPT PSC PROPERTIES TRUST
,
a Maryland real estate investment trust,
and
HPT PSC PROPERTIES LLC
, a
Maryland limited liability company (collectively, jointly and severally,
Landlord
),
and
PETRO STOPPING CENTERS, L.P.
,
a Delaware limited partnership (
Tenant
).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS,
Landlord holds fee simple title to,
and/or the leasehold interest in, the Leased Property (this and other
capitalized terms used and not otherwise defined herein having the meanings
given such terms in
Article 1
); and
WHEREAS
, Landlord wishes to lease the Leased
Property to Tenant and Tenant wishes to lease the Leased Property from
Landlord, subject to and upon the terms and conditions herein set forth;
NOW, THEREFORE,
in consideration of the mutual covenants
herein contained and other good and valuable consideration, the mutual receipt
and legal sufficiency of which are hereby acknowledged, Landlord and Tenant
hereby agree as follows:
ARTICLE 1
DEFINITIONS
For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, (a) the terms defined in this Article shall have the
meanings assigned to them in this Article and include the plural as well as the
singular, (b) all accounting terms not otherwise defined herein shall have the
meanings assigned to them in accordance with GAAP, (c) all references in this
Agreement to designated Articles, Sections and other subdivisions are to
the designated Articles, Sections and other subdivisions of this Agreement, and
(d) the words herein, hereof, hereunder and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section
or other subdivision.
1.1
Additional
Charges
shall have the
meaning given such term in
Section 3.1.3
.
1.2
Additional
Rent
shall have the
meaning given such term in
Section 3.1.2(a)
.
1.3
Affiliated
Person
shall mean, with
respect to any Person, (a) in the case
of any such Person which is a partnership, any partner in such partnership, (b)
in the case of any such Person which is a limited liability company, any member
of such company, (c) any other Person which is a Parent, a Subsidiary, or a
Subsidiary of a Parent with respect to such Person or to one or more of the
Persons referred to in the preceding clauses (a) and (b), (d) any other Person
who is an officer, director, trustee or employee of, or partner in or member
of, such Person or any Person referred to in the preceding clauses (a), (b) and
(c), and (e) any other Person who is a member of the Immediate Family of such
Person or of any Person referred to in the preceding clauses (a) through (d).
1.4
Agreement
shall mean this Lease Agreement,
including all exhibits attached hereto, as it and they may be amended from time
to time as herein provided.
1.5
Applicable
Laws
shall mean all
applicable laws, statutes, regulations, rules, ordinances, codes, licenses,
permits, notices and orders, from time to time in existence, of all courts of
competent jurisdiction and Government Agencies, and all applicable judicial and
administrative and regulatory decrees, judgments and orders, including common
law rulings and determinations, relating to injury to, conservation of, or the
protection of, real or personal property or human health or the Environment,
including, without limitation, all valid and lawful requirements of courts and
other Government Agencies pertaining to reporting, licensing, permitting,
investigation, remediation and removal of underground improvements (including,
without limitation, treatment or storage tanks, or water, natural gas or oil
wells), or emissions, discharges, releases or threatened releases of Hazardous
Substances, chemical substances, pesticides, petroleum or petroleum products,
pollutants, contaminants or hazardous or toxic substances, materials or wastes
whether solid, liquid or gaseous in nature, into the Environment, or relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances, underground
improvements (including, without limitation, treatment or storage tanks, or
water, gas or oil wells), or pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, liquid or gaseous in nature.
1.6
Award
shall mean all compensation, sums
or other value awarded, paid or received by virtue of a total or partial
Condemnation of any Property (after deduction of all reasonable
2
legal fees and other reasonable costs and
expenses, including, without limitation, expert witness fees, incurred by
Landlord, in connection with obtaining any such award).
1.7
Base
Fuel Gross Revenues
shall
mean, with respect to any Property, the amount of Gross Fuel Revenues for such
Property for the Base Year.
1.8
Base
Non-Fuel Gross Revenues
shall
mean, with respect to any Property, the amount of Gross Non-Fuel Revenues for
such Property for the Base Year.
1.9
Base
Year
shall mean the 2012
calendar year.
1.10
Business
Day
shall mean any day
other than Saturday, Sunday, or any other day on which banking institutions in
The Commonwealth of Massachusetts are authorized by law or executive action to
close.
1.11
Capital
Addition
shall mean,
with respect to any Property, any renovation, repair or improvement to such
Property, the cost of which constitutes a Capital Expenditure.
1.12
Capital
Expenditure
shall mean
any expenditure treated as capital in nature in accordance with GAAP.
1.13
Capital Replacements Budget
shall have the meaning given such term in
Section
5.1.1(b)
.
1.14
Change
in Control
shall mean
(a) the acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the SEC) of 9.8% or
more, or rights, options or warrants to acquire 9.8% or more, of the
outstanding shares of voting stock or other voting interests of Tenant or any
Guarantor, as the case may be, or the power to direct the management and
policies of Tenant or any Guarantor, directly or indirectly, (b) the merger or
consolidation of Tenant or any Guarantor with or into any other Person (other
than the merger or consolidation of any Person into Tenant or any Guarantor
that does not result in a Change in Control of Tenant or such Guarantor under
clauses (a), (c) or (d) of this definition), (c) any one or more sales or
conveyances to any Person of all or any material portion of its assets
(including capital stock or other equity interests) or business of Tenant or
any Guarantor, as the case may be, or (d) the cessation, for any reason, of the
individuals who at the beginning of any twenty-four (24) consecutive month
period (commencing on the Commencement Date) constituted the board of
3
directors of Tenant or any Guarantor
(together with any new directors whose election by such board or whose
nomination for election by the shareholders of Tenant or such Guarantor, as the
case may be, was approved by a vote of a majority of the directors then still
in office who were either directors at the beginning of any such period or
whose election or nomination for election was previously so approved) to
constitute a majority of the board of directors of Tenant or any Guarantor then
in office.
1.15
Claim
shall have the meaning given such
term in
Article 8
.
1.16
Code
shall mean the Internal Revenue
Code of 1986 and, to the extent applicable, the Treasury Regulations
promulgated thereunder, each as from time to time amended.
1.17
Commencement
Date
shall mean the date
hereof.
1.18
Condemnation
shall mean, with respect to any
Property, or any portion thereof, (a) the exercise of any governmental power
with respect to such Property, whether by legal proceedings or otherwise, by a
Condemnor of its power of condemnation, (b) a voluntary sale or transfer of
such Property by Landlord to any Condemnor, either under threat of condemnation
or while legal proceedings for condemnation are pending, or (c) a taking or
voluntary conveyance of such Property, or any interest therein, or right
accruing thereto or use thereof, as the result or in settlement of any
condemnation or other eminent domain proceeding affecting such Property,
whether or not the same shall have actually been commenced.
1.19
Condemnor
shall mean any public or quasi-public
Person, having the power of Condemnation.
1.20
Consolidated
Financials
shall mean,
for any Fiscal Year or other accounting period of TA, annual audited and
quarterly unaudited financial statements of TA prepared on a consolidated
basis, including TAs consolidated balance sheet and the related statements of
income and cash flows, all in reasonable detail, and setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding Fiscal Year, and prepared in accordance with GAAP throughout the
periods reflected.
1.21
Date of
Taking
shall mean, with
respect to any Property, the date the Condemnor has the right to possession of
4
such Property, or any portion thereof, in
connection with a Condemnation.
1.22
Default
shall mean any event or condition
which with the giving of notice and/or lapse of time would be an Event of
Default.
1.23
Disbursement
Rate
shall mean an
annual rate of interest, as of the date of determination, equal to the greater
of (i) the Interest Rate and (ii) the per annum rate for ten (10) year U.S.
Treasury Obligations as published in
The Wall Street Journal
plus three
hundred fifty (350) basis points.
1.24
Distribution
shall mean (a) any declaration or
payment of any dividend (except ordinary cash dividends payable in common stock
or other equity interests of Tenant) on or in respect of any shares of any
class of capital stock or other equity interests of Tenant, (b) any purchase,
redemption, retirement or other acquisition of any shares of any class of
capital stock or other equity interests of Tenant, (c) any other distribution
on or in respect of any shares of any class of capital stock or other equity
interests of Tenant or (d) any return of capital to shareholders.
1.25
Easement
Agreement
shall mean any conditions,
covenants and restrictions, easements, declarations, licenses and other
agreements which are Permitted Encumbrances and such other agreements as may be
granted in accordance with
Section 19.1
.
1.26
Encumbrance
shall have the meaning given such
term in
Section 20.1
.
1.27
Entity
shall mean any corporation,
general or limited partnership, limited liability company or partnership, stock
company or association, joint venture, association, company, trust, bank, trust
company, land trust, business trust, real estate investment trust, cooperative,
any government or agency, authority or political subdivision thereof or any
other entity.
1.28
Environment
shall mean soil, surface waters,
ground waters, land, biota, sediments, surface or subsurface strata and ambient
air.
1.29
Environmental
Obligation
shall have
the meaning given such term in
Section 4.3.1
.
5
1.30
Environmental
Notice
shall have the
meaning given such term in
Section 4.3.1
.
1.31
Environmental
Report
shall have the meaning given such term in
Section
4.3.2
.
1.32
Event
of Default
shall have
the meaning given such term in
Section 12.1
.
1.33
Excess
Fuel Gross Revenues
shall
mean, with respect to any Property, with respect to any Lease Year, or portion
thereof, the amount of Gross Fuel Revenues for such Property for such Lease
Year, or portion thereof, in excess of Base Fuel Gross Revenues for such
Property for the equivalent period during the Base Year.
1.34
Excess
Non-Fuel Gross Revenues
shall
mean, with respect to any Property, with respect to any Lease Year, or portion
thereof, the amount of Gross Non-Fuel Revenues for such Property for such Lease
Year, or portion thereof, in excess of Base Non-Fuel Gross Revenues for such
Property for the equivalent period during the Base Year.
1.35
Extended
Term
shall have the
meaning given such term in Section 2.4.
1.36
Fair
Market Value
shall mean the price an unaffiliated and
willing buyer would pay for the interest of Landlord in the applicable Property
in its existing condition as of the date of determination, with all relevant
factors being known to both parties, under terms and conditions customary for
like transactions in the area in which the Property is located.
1.37
Fair
Market Value Rent
shall mean the per annum minimum rent which
would be payable monthly in advance for the applicable Property in its then
current condition and for its then current use, on the terms and conditions of
this Agreement (including, without limitation, the obligation to pay Additional
Rent).
1.38
Financial
Officers Certificate
shall
mean, as to any Person, a certificate of the chief executive officer, chief
financial officer or chief accounting officer (or such officers authorized
designee) of such Person, duly authorized, accompanying the financial
statements required to be delivered by such Person pursuant to
Section 17.2
,
in which such officer shall certify (a) that such statements have been properly
prepared in accordance with GAAP and are true, correct and
6
complete in all material respects and fairly
present the consolidated financial condition of such Person at and as of the
dates thereof and the results of its operations for the periods covered
thereby, and (b) in the event that the certifying party is an officer of Tenant
and the certificate is being given in such capacity, that no Event of Default
has occurred and is continuing hereunder.
1.39
Fiscal
Year
shall mean the
calendar year or such other annual period designated by Tenant and approved by
Landlord.
1.40
Fixed
Term
shall have the
meaning given such term in Section 2.3.
1.41
Fixtures
shall have the meaning given such
term in
Section 2.1(d)
.
1.42
Fuel
Sales Cap
shall
mean, for the 2012 Lease Year, three tenths of one percent (0.3%) of the
aggregate Base Fuel Gross Revenues for the Leased Property; and, for each Lease
Year thereafter, (x) the Additional Rent on account of Excess Fuel Gross
Revenues for the prior Lease Year multiplied by (y) the greater of one, or a
fraction, the numerator of which is the Index for January of the then current
Lease Year and the denominator of which is the Index for January of the
preceding Lease Year.
1.43
GAAP
shall mean generally accepted
accounting principles consistently applied.
1.44
Government
Agencies
shall mean any
court, agency, authority, board (including, without limitation, environmental
protection, planning and zoning), bureau, commission, department, office or
instrumentality of any nature whatsoever of any governmental or
quasi-governmental unit of the United States or any State or any county or any
political subdivision of any of the foregoing, whether now or hereafter in
existence, having jurisdiction over Tenant or any Property, or any portion
thereof, or any Travel Center operated thereon.
1.45
Gross
Fuel Revenues
shall mean, with respect to any Property, for
each Fiscal Year during the Term, all revenues and receipts (determined on an
accrual basis and in all material respects in accordance with GAAP) of every kind
derived from the provision, sale or trade of motor fuel and gasoline at such
Property;
provided
,
however
, that Gross Fuel Revenues shall not
include the following: allowances
according to GAAP for
7
uncollectible accounts, including credit card accounts and other
administrative discounts; federal, state or municipal excise, sales, use,
occupancy or similar taxes included as part of the sales price of any goods or
services; insurance proceeds (other than proceeds from business interruption or
other loss of income insurance); and any amounts included in Gross Non-Fuel
Revenues.
1.46
Gross
Non-Fuel Revenues
shall mean, with respect to any Property, for
each Fiscal Year during the Term, all revenues and receipts (determined on an
accrual basis and in all material respects in accordance with GAAP) of every
kind derived from renting, using and/or operating such Property and parts
thereof, including, but not limited to:
all rents and revenues received or receivable for the use of or
otherwise by reason of all goods sold, services performed, space or facilities
subleased on such Property, or any portion thereof, including, without
limitation, any other arrangements with third parties relating to the
possession or use of any portion of such Property; and proceeds, if any, from
business interruption or other loss of income insurance;
provided
,
however
,
that Gross Non-Fuel Revenues shall not include the following: allowances according to GAAP for
uncollectible accounts, including credit card accounts and other administrative
discounts; federal, state or municipal excise, sales, use, occupancy or similar
taxes included as part of the sales price of any goods or services; insurance
proceeds (other than proceeds from business interruption or other loss of
income insurance); Award proceeds (other than for a temporary Condemnation);
any proceeds from any sale of such Property or from the refinancing of any debt
encumbering such Property; proceeds from the disposition of furnishings,
fixture and equipment no longer necessary for the operation of the Travel
Center located thereon; any security deposits and other advance deposits, until
and unless the same are forfeited to Tenant or applied for the purpose for
which they were collected; interest income from any bank account or investment
of Tenant; and any amounts included in Gross Fuel Revenues; and further
provided that Gross Non-Fuel Revenues shall not include any amount based on the
income or profits of any Person if as a consequence thereof the Rent or other
amounts payable by Tenant hereunder would fail to qualify, in whole or in part,
as rents from real property within the meaning of Section 856(d) of the Code.
1.47
Ground Leases
shall mean, collectively, any and all ground
leases in effect with respect to any portion of the Leased Property.
8
1.48
Guarantor
shall mean TA and each and every other
guarantor of Tenants obligations under this Agreement, and each such guarantors
successors and assigns, jointly and severally.
1.49
Guaranty
shall mean any guaranty agreement executed by
a Guarantor in favor of Landlord pursuant to which the payment or performance
of Tenants obligations under this Agreement are guaranteed, together with all
modifications, amendments and supplements thereto.
1.50
Hazardous Substances
shall mean any substance:
(a) the presence of which requires or may
hereafter require notification, investigation or remediation under any
Applicable Law; or
(b) which is or becomes defined as a hazardous
waste, hazardous material or hazardous substance or pollutant or contaminant
under any Applicable Law including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et
seq
.) and the Resource Conservation and Recovery Act (42 U.S.C. Section
6901
et
seq
.) and the regulations promulgated thereunder; or
(c) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is or becomes regulated by any Governmental Agencies; or
(d) the presence of which on any
Property, or any portion thereof, causes or materially threatens to cause an
unlawful nuisance upon such Property, or any portion thereof, or to adjacent
properties or poses or materially threatens to pose a hazard to such Property,
or any portion thereof, or to the health or safety of persons; or
(e) without limitation, which contains
gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic
compounds; or
(f) without limitation, which contains
polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde foam
insulation; or
(g) without limitation, which contains or
emits radioactive particles, waves or material.
9
1.51
Immediate
Family
shall mean, with
respect to any individual, such individuals spouse, parents, brothers,
sisters, children (natural or adopted), stepchildren, grandchildren,
grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews and
nieces.
1.52
Impositions
shall mean, collectively, all
taxes (including, without limitation, all taxes imposed under the laws of any
State, as such laws may be amended from time to time, and all ad valorem, sales
and use, occupancy, or similar taxes as the same relate to or are imposed upon
Landlord, Tenant or the business conducted upon the Leased Property),
assessments (including, without limitation, all assessments for public
improvements or benefit, whether or not commenced or completed prior to the
date hereof), water, sewer or other rents and charges, excises, tax levies, fees
(including, without limitation, license, permit, inspection, authorization and
similar fees), and all other governmental charges, in each case whether general
or special, ordinary or extraordinary, foreseen or unforeseen, of every
character in respect of the Leased Property or the business conducted upon the
Leased Property by Tenant (including all interest and penalties thereon due to
any failure in payment by Tenant), which at any time prior to, during or in
respect of the Term hereof may be assessed or imposed on or in respect of or be
a lien upon (a) Landlords interest in the Leased Property, (b) the Leased
Property or any part thereof or any rent therefrom or any estate, right, title
or interest therein, or (c) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Leased Property
or the leasing or use of the Leased Property or any part thereof by Tenant;
provided
,
however
, that nothing contained herein shall be construed to require
Tenant to pay and the term Impositions shall not include (i) any tax based on
net income imposed on Landlord, (ii) any net revenue tax of Landlord, (iii) any
transfer fee (but excluding any mortgage or similar tax payable in connection
with a Property Mortgage) or other tax imposed with respect to the sale,
exchange or other disposition by Landlord of the Leased Property or the
proceeds thereof, (iv) any single business, gross receipts tax, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Landlord, (v) any interest or penalties imposed on Landlord as a result of the
failure of Landlord to file any return or report timely and in the form
prescribed by law or to pay any tax or imposition, except to the extent such
failure is a result of a breach by Tenant of its obligations pursuant to
Section
3.1.3
, (vi) any impositions imposed on Landlord that are a result of
10
Landlord not being considered a United
States person as defined in Section 7701(a)(30) of the Code, (vii) any
impositions that are enacted or adopted by their express terms as a substitute
for any tax that would not have been payable by Tenant pursuant to the terms of
this Agreement or (viii) any impositions imposed as a result of a breach of
covenant or representation by Landlord in any agreement governing Landlords
conduct or operation or as a result of the negligence or willful misconduct of
Landlord.
1.53
Indebtedness
shall mean (without duplication), (i) all obligations for
borrowed money, (ii) the maximum amount available to be drawn under all surety
bonds, letters of credit and bankers acceptances issued or created for the
account of Tenant and, without duplication, all unreimbursed drafts drawn
thereunder, (iii) all obligations to pay the deferred purchase price of
property or services, excluding trade payables incurred in the ordinary course
of business, but including all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by Tenant, (iv) all leases required, in accordance with GAAP, to be
recorded as capital leases on Tenants balance sheet, (v) the principal balance
outstanding and owing by Tenant under any synthetic lease, tax retention
operating lease or similar off-balance sheet financing product, and (vi) all
guaranties of or other liabilities with respect to the debt of another Person.
1.54
Index
shall mean the Consumer Price Index for Urban
Wage Earners and Clerical Workers, U.S., All Items, 1982-1984=100. The Index is presently published by the
Bureau of Labor Statistics of the United States Department of Labor. If publication of the Index ceases,
computations with respect to which the Index is to be applied shall be computed
on the basis of whatever index published by the United States Department of
Labor at that time is most nearly comparable.
If the Index ceases to use 1982-84=100 as the basis of calculation, then
the Index shall be converted to the amount(s) that would have resulted had the
manner of calculating the Index in effect at the Commencement Date.
1.55
Insurance
Requirements
shall mean
all terms of any insurance policy required by this Agreement and all
requirements of the issuer of any such policy and all orders, rules and
regulations and any other requirements of the National Board of Fire
Underwriters (or any other body exercising similar
11
functions) binding upon Landlord, Tenant, or
the Leased Property.
1.56
Interest
Rate
shall mean eight
and one half percent (8.5%) per annum.
1.57
Land
shall have the meaning given such
term in
Section 2.1(a)
.
1.58
Landlord
shall have the meaning given such
term in the preambles to this Agreement and shall also include their respective
permitted successors and assigns.
1.59
Landlord
Default
shall have the
meaning given such term in
Article 14
.
1.60
Landlord
Liens
shall mean liens
on or against the Leased Property or any payment of Rent (a) which result from
any act of, or any claim against, Landlord or any owner of a direct or indirect
interest in the Leased Property (other than the lessor under any ground lease
affecting any portion of the Leased Property), or which result from any
violation by Landlord of any terms of this Agreement, or (b) which result from
liens in favor of any taxing authority by reason of any tax owed by Landlord or
any fee owner of a direct or indirect interest in the Leased Property (other
than the lessor under any ground lease affecting any portion of the Leased
Property);
provided
,
however
, that
Landlord Lien
shall
not include any lien resulting from any tax for which Tenant is obligated to
pay or indemnify Landlord against until such time as Tenant shall have already
paid to or on behalf of Landlord the tax or the required indemnity with respect
to the same.
1.61
Lease
Year
shall mean any
Fiscal Year or portion thereof during the Term.
1.62
Leased
Improvements
shall have
the meaning given such term in
Section 2.1(b)
.
1.63
Leased
Intangible Property
shall mean all transferable or assignable
agreements, service contracts, equipment leases and other arrangements or
agreements affecting the ownership of Leased Property; all books, records and
files relating to the leasing or ownership of the Leased Property, or any
portion thereof; all transferable or assignable permits, certificates of
occupancy, operating permits, sign permits, development rights and approvals,
certificates, licenses, warranties and guarantees, rights to deposits and
telephone
12
exchange numbers identified
with the ownership of the Leased Property; and all other transferable
intangible property, miscellaneous rights, benefits and privileges of any kind
or character with respect to the ownership of the Leased Property.
1.64
Leased
Property
shall have the meaning given
such term in
Section 2.1
.
1.65
Legal
Requirements
shall mean
all federal, state, county, municipal and other governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions
affecting the Leased Property or the maintenance, construction, alteration or
operation thereof, whether now or hereafter enacted or in existence, including,
without limitation, (a) all permits, licenses, authorizations and regulations
necessary to operate any Property for its Permitted Use, and (b) all covenants,
agreements, restrictions and encumbrances contained in any instruments at any
time in force affecting any Property, including those which may (i) require
material repairs, modifications or alterations in or to any Property or (ii) in
any way materially and adversely affect the use and enjoyment thereof, but
excluding any requirements arising as a result of Landlords status as a real
estate investment trust.
1.66
Lien
shall mean any mortgage, security
interest, pledge, collateral assignment, or other encumbrance, lien or charge
of any kind, or any transfer of property or assets for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of general creditors.
1.67
Minimum
Rent
shall mean Sixty-Two
Million Two Hundred Twenty-Five Thousand and 00/100 Dollars ($62,225,000.00)
per annum; subject, in each case, to adjustment as provided in
Section
3.1.1(b)
.
1.68
Notice
shall mean a notice given in
accordance with
Section 23.10
.
1.69
Officers
Certificate
shall mean a
certificate signed by an officer or other duly authorized individual of the
certifying Entity duly authorized by the board of directors or other governing
body of the certifying Entity.
1.70
Overdue
Rate
shall mean, on any
date, a per annum rate of interest equal to the lesser of the Disbursement Rate
13
plus four percent (4%) and the maximum rate
then permitted under applicable law.
1.71
Parent
shall mean, with respect to any
Person, any Person which owns directly, or indirectly through one or more
Subsidiaries or Affiliated Persons, twenty percent (20%) or more of the voting
or beneficial interest in, or otherwise has the right or power (whether by
contract, through ownership of securities or otherwise) to control, such Person.
1.72
Permitted
Encumbrances
shall mean,
with respect to any Property, all rights, restrictions, and easements of record
set forth on Schedule B to the applicable owners or leasehold title insurance
policy issued to Landlord with respect to such Property, plus any other
encumbrances as may have been granted or caused by Landlord or otherwise
consented to in writing by Landlord from time to time.
1.73
Permitted
Liens
shall mean any
Liens granted in accordance with
Section 21.8(a)
.
1.74
Permitted
Use
shall mean, with
respect to any Property, any use of such Property permitted pursuant to
Section 4.1.1
.
1.75
Person
shall mean any individual or
Entity, and the heirs, executors, administrators, legal representatives,
successors and assigns of such Person where the context so admits.
1.76
Property
shall have the meaning given such
term in
Section 2.1
.
1.77
Property
Mortgage
shall mean any
Encumbrance placed upon the Leased Property, or any portion thereof, in
accordance with
Article 20
.
1.78
Property
Mortgagee
shall mean the
holder of any Property Mortgage.
1.79
Rent
shall mean, collectively, the
Minimum Rent, Additional Rent and Additional Charges.
1.80
SARA
shall mean the Superfund Amendments and
Reauthorization Act of 1986, as the same has been and may be amended, restated,
modified or supplemented from time to time.
14
1.81
SEC
shall mean the Securities and
Exchange Commission.
1.82
State
shall mean, with respect to any
Property, the state, commonwealth or district in which such Property is
located.
1.83
Subordinated
Creditor
shall mean any
creditor of Tenant which is a party to a Subordination Agreement in favor of
Landlord.
1.84
Subordination
Agreement
shall mean any
agreement (and any amendments thereto) executed by a Subordinated Creditor
pursuant to which the payment and performance of Tenants obligations to such
Subordinated Creditor are subordinated to the payment and performance of Tenants
obligations to Landlord under this Agreement.
1.85
Subsidiary
shall mean, with respect to any
Person, any Entity (a) in which such Person owns directly, or indirectly
through one or more Subsidiaries, twenty percent (20%) or more of the voting or
beneficial interest or (b) which such Person otherwise has the right or power
to control (whether by contract, through ownership of securities or otherwise).
1.86
Successor
Landlord
shall have the
meaning given such term in
Section 20.2
.
1.87
Superior
Landlord
shall have the
meaning given such term in
Section 20.2
.
1.88
Superior
Lease
shall have the
meaning given such term in
Section 20.2
.
1.89
Superior
Mortgage
shall have the
meaning given such term in
Section 20.2
.
1.90
Superior
Mortgagee
shall have the
meaning given such term in
Section 20.2
.
1.91
TA
shall mean TravelCenters of America
LLC, a Delaware limited liability company, and its permitted successors and
assigns.
1.92
Tenant
shall have the meaning given such
term in the preambles to this Agreement and shall also include its permitted
successors and assigns.
15
1.93
Tenants
Personal Property
shall
mean all motor vehicles and consumable inventory and supplies, furniture,
furnishings, movable walls and partitions, equipment and machinery and all
other tangible personal property of Tenant located at the Leased Property or
used in Tenants business at the Leased Property and all modifications,
replacements, alterations and additions to such personal property installed at
the expense of Tenant, other than any items included within the definition of
Fixtures.
1.94
Term
shall mean, collectively, the Fixed Term and
the Extended Terms, to the extent properly exercised pursuant to the provisions
of
Section 2.4
, unless sooner terminated pursuant to the provisions of
this Agreement.
1.95
Travel
Center
shall mean, with
respect to any Property, collectively, the hospitality, fuel and service
facilities located at such Property, including, hotel, food and beverage
services facilities, fuel pumps, facilities for the storage and distribution of
petroleum products, retail shops and other facilities and services being
operated or proposed to be operated on such Property.
1.96
Unsuitable for Its
Permitted Use
shall mean, with respect to any Travel
Center, a state or condition such that following any damage, destruction or
Condemnation, such Travel Center cannot be operated on a commercially
practicable basis for its Permitted Use and it cannot reasonably be expected to
be restored to substantially the same condition as existed immediately before
such damage, destruction or Condemnation, and as otherwise required by this
Agreement, within twenty-four (24) months following such damage, destruction or
Condemnation or such longer period of time as to which business interruption
insurance or Award proceeds is available to cover Rent and other costs related
to the applicable Property following such damage, destruction or Condemnation.
1.97
Work
shall have the meaning given such
term in
Section 10.2.4
.
ARTICLE 2
LEASED PROPERTY AND TERM
2.1
Leased
Property
.
Upon and
subject to the terms and conditions hereinafter set forth, Landlord leases to
Tenant and Tenant leases from Landlord all of Landlords right, title and
16
interest in and to all of the following (each
of items (a) through (f) below which, as of the Commencement Date, relates to
any single Travel Center, a
Property
and, collectively, the
Leased
Property
:
(a) those certain tracts, pieces and
parcels of land, as more particularly described in
Exhibits A-1 through A-40
,
attached hereto and made a part hereof (the
Land
);
(b) all buildings, structures and other
improvements of every kind including, but not limited to, underground storage
tanks, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and
lines (on-site and off-site), parking areas and roadways appurtenant to such
buildings and structures presently situated upon the Land (collectively, the
Leased
Improvements
);
(c) all easements, rights and
appurtenances relating to the Land and the Leased Improvements;
(d) all equipment, machinery and fixtures
integral to the operation of the Leased Improvements, and other items of
property now or hereafter permanently affixed or integral to or incorporated
into the Leased Improvements, including, without limitation, all retail fuel
pumps and piping connecting fuel storage tanks to such pumps, furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, all of which, to the
maximum extent permitted by law, are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all items
included within the category of Tenants Personal Property (collectively, the
Fixtures
);
(e) all of the Leased Intangible
Property; and
(f) any and all leases of space in the
Leased Improvements.
2.2
Condition
of Leased Property
.
Tenant acknowledges receipt and delivery of
possession of the Leased Property and Tenant accepts the Leased Property in its
as is condition, subject to the rights of parties in possession, the existing
state of title, including all covenants, conditions, restrictions,
reservations, mineral leases, easements and other
17
matters of record or that are visible or
apparent on the Leased Property, all
applicable Legal Requirements, the lien of any financing instruments, mortgages
and deeds of trust existing prior to the Commencement Date or permitted by the
terms of this Agreement, and such other matters which would be disclosed by an
inspection of the Leased Property and the record title thereto or by an
accurate survey thereof. TENANT
REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOING
AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANY
REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORDS AGENTS OR EMPLOYEES WITH
RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN
RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF,
EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR
PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY
TENANT. To the maximum extent permitted
by law, however, Landlord hereby assigns to Tenant all of Landlords rights to
proceed against any predecessor in interest or insurer for breaches of
warranties or representations or for latent defects in the Leased
Property. Landlord shall fully cooperate
with Tenant in the prosecution of any such claims, in Landlords or Tenants
name, all at Tenants sole cost and expense.
Tenant shall indemnify, defend, and hold harmless Landlord from and
against any loss, cost, damage or liability (including reasonable attorneys
fees) incurred by Landlord in connection with such cooperation.
2.3
Fixed
Term
.
The initial term of
this Agreement (the
Fixed Term
) shall commence on the Commencement
Date and shall expire on June 30, 2024.
2.4
Extended
Terms
. Provided that no
Event of Default shall have occurred and be continuing, Tenant shall have the
right to extend the Term for two (2) consecutive renewal terms of fifteen (15)
years each (each, an
Extended Term
, and collectively, the
Extended
Terms
) with respect to all, but not less than all of the Properties.
Each Extended Term shall
commence on the day succeeding the expiration of the Fixed Term or the
preceding Extended Term, as the case may be.
All of the terms, covenants and provisions of this Agreement shall apply
to each such Extended Term, except that (x) the Minimum Rent payable during
such Extended Term shall be the greater of the Prior Rent and the Fair Market
Value
18
Rent for the Leased
Property (such Fair Market Value Rent to be determined by agreement of the parties
or, absent agreement, by an appraiser designated by Landlord) (taking into
account that the Base Year shall remain unchanged) and (y) Tenant shall have no
right to extend the Term beyond the expiration of the Extended Terms. For purposes of this
Section 2.4
,
Prior
Rent
shall mean an amount equal to the per annum Minimum Rent in effect on
the last day of the Fixed Term or Extended Term immediately preceding such
Extended Term. If Tenant shall elect to
exercise either of the aforesaid options, it shall do so by giving Landlord
Notice thereof not later than one (1) year prior to the scheduled expiration of
the then current Term of this Agreement (Fixed or Extended, as the case may
be), it being understood and agreed that time shall be of the essence with
respect to the giving of such Notice.
Tenant may not exercise its option for more than one such Extended Term
at a time. If Tenant shall fail to give
any such Notice timely, this Agreement shall automatically terminate at the end
of the Term then in effect and Tenant shall have no further option to extend
the Term of this Agreement. If Tenant
shall give such Notice, the extension of this Agreement shall be automatically
effected without the execution of any additional documents; it being understood
and agreed, however, that Tenant and Landlord shall execute such documents and
agreements as either party shall reasonably require to evidence the same.
ARTICLE 3
RENT
3.1
Rent
.
Tenant shall pay, in lawful money of
the United States of America which shall be legal tender for the payment of
public and private debts, without offset, abatement, demand or deduction
(unless otherwise expressly provided in this Agreement), Minimum Rent and
Additional Rent to Landlord and Additional Charges to the party to whom such
Additional Charges are payable, during the Term. All payments to Landlord shall be made by
wire transfer of immediately available federal funds or by other means
acceptable to Landlord in its sole discretion.
Rent for any partial calendar month shall be prorated on a per diem
basis.
3.1.1
Minimum
Rent
.
(a)
Payments
. Minimum Rent shall be paid in equal monthly
installments in arrears on the first Business Day
19
of each calendar month during the Term for the preceding calendar
month.
(b)
Adjustments of Minimum Rent Following Disbursements
Under Sections 5.1.2(b), 10.2.3 and 11.2
.
Effective on the date of each disbursement to
pay for the cost of any repairs, maintenance, renovations, improvements or
replacements pursuant to
Sections 5.1.2(b), 10.2.3 or 11.2
, the annual
Minimum Rent shall be increased by a
per
annum
amount equal to
the Disbursement Rate times the amount so disbursed.
3.1.2
Additional
Rent
.
(a)
Amount
.
Tenant shall pay additional rent (
Additional
Rent
) with respect to each Lease Year during the Term subsequent to the
Base Year, with respect to each Property, in an amount equal to the sum of (x)
three-tenths of one percent (0.3%) of Excess Fuel Gross Revenues at such
Property
and
(y) three percent (3%) of Excess Non-Fuel Gross Revenues at such Property;
provided
,
however
, that in no Lease Year shall Tenant be obligated to
pay an aggregate amount on account of Excess Fuel Gross Revenues at the Leased
Property in excess of the Fuel Sales Cap.
(b)
Quarterly Installments
.
Installments of Additional Rent for each Lease
Year during the Term, or portion thereof, shall be calculated and paid
quarterly in arrears, on the first Business Day of the subsequent quarter,
together with an Officers Certificate setting forth the calculation of
Additional Rent due and payable for such quarter.
(c)
Reconciliation of Additional Rent
.
In addition, within seventy-five (75) days
after the end of the Base Year and each Lease Year thereafter (or any portion
thereof occurring during the Term), Tenant shall deliver, or cause to be
delivered, to Landlord (i) a financial report setting forth the Gross Fuel
Revenues and Gross Non-Fuel Revenues for each Property for such preceding Lease
Year, or portion thereof, together with an Officers Certificate from Tenants
chief financial or accounting officer certifying that such report is true and
correct, (ii) if requested and reasonably required by Landlord, an audit of
Gross Fuel Revenues and Gross Non-Fuel Revenues prepared by a firm of
independent certified public accountants proposed by Tenant and approved by
Landlord (which approval shall not be
20
unreasonably withheld, delayed or conditioned), and (iii) a statement
showing Tenants calculation of Additional Rent due for such preceding Lease
Year based on the Gross Fuel Revenues and Gross Non-Fuel Revenues set forth in
such financial report, together with an Officers Certificate from Tenants
chief financial or accounting officer certifying that such statement is true
and correct.
If the annual
Additional Rent for such preceding Lease Year as set forth in Tenants
statement thereof exceeds the amount previously paid with respect thereto by
Tenant, Tenant shall pay such excess to Landlord at such time as the statement
is delivered, together with interest at the Interest Rate, which interest shall
accrue from the close of such preceding Lease Year until the date that such
statement is required to be delivered and, thereafter, such interest shall
accrue at the Overdue Rate, until the amount of such difference shall be paid
or otherwise discharged. If the annual
Additional Rent for such preceding Lease Year as shown in such statement is
less than the amount previously paid with respect thereto by Tenant, Landlord
shall promptly refund such amount to Tenant, provided no Event of Default has
occurred and is continuing.
(d)
Confirmation of Additional Rent
.
Tenant shall utilize, or cause to be utilized,
an accounting system for the Leased Property in accordance with its usual and
customary practices and in all material respects in accordance with GAAP, which
will accurately record all Gross Fuel Revenues and all Gross Non-Fuel Revenues
and Tenant shall retain, for at least three (3) years after the expiration of
each Lease Year, reasonably adequate records conforming to such accounting
system showing all Gross Fuel Revenues and Gross Non-Fuel Revenues for such
Lease Year. Landlord, at its own
expense, shall have the right, exercisable by Notice to Tenant, by its
accountants or representatives, to audit the information set forth in the
Officers Certificate referred to in subparagraph (c) above and, in connection
with any such audit, to examine Tenants books and records with respect thereto
(including supporting data and sales and excise tax returns). Landlord shall begin such audit as soon as
reasonably possible following its receipt of the applicable Officers
Certificate and shall complete such audit as soon as reasonably possible
thereafter. All such audits shall be
performed at the location where such books and records are customarily kept and
in such a manner so as to minimize any
21
interference with Tenants business operations. If any such audit discloses a deficiency in
the payment of Additional Rent and, either Tenant agrees with the result of
such audit or the matter is otherwise determined, Tenant shall forthwith pay to
Landlord the amount of the deficiency, as finally agreed or determined,
together with interest at the Interest Rate, from the date such payment should
have been made to the date of payment thereof.
If any such audit discloses that Tenant paid more Additional Rent for
any Lease Year than was due hereunder, and either Landlord agrees with the
result of such audit or the matter is otherwise determined, Landlord shall, at
Landlords option, either grant Tenant a credit or pay to Tenant an amount
equal to the amount of such overpayment against Additional Rent next coming due
in the amount of such difference, as finally agreed or determined, together
with interest at the Interest Rate, which interest shall accrue from the time
of payment by Tenant until the date such credit is applied or paid, as the case
may be;
provided
,
however
, that, upon the expiration or sooner
termination of the Term, Landlord shall pay the unapplied balance of such
credit to Tenant, together with interest at the Interest Rate, which interest
shall accrue from the date of payment by Tenant until the date of payment from
Landlord. Any dispute concerning the
correctness of an audit shall be settled by arbitration pursuant to the
provisions of
Article 22
.
Any proprietary
information obtained by Landlord with respect to Tenant pursuant to the
provisions of this Agreement shall be treated as confidential, except that such
information may be disclosed or used, subject to appropriate confidentiality safeguards,
pursuant to court order or in any litigation between the parties and except
further that Landlord may disclose such information to its prospective lenders,
provided that Landlord shall direct such lenders to maintain such information
as confidential. The obligations of
Tenant and Landlord contained in this
Section 3.1.2
shall survive the
expiration or earlier termination of this Agreement.
3.1.3
Additional
Charges
.
In addition to
the Minimum Rent and Additional Rent payable hereunder, Tenant shall pay (or
cause to be paid) to the appropriate parties and discharge (or cause to be
discharged) as and when due and payable the following (collectively,
Additional
Charges
):
22
(a)
Impositions
.
Subject to
Article 8
relating to
permitted contests, Tenant shall pay, or cause to be paid, all Impositions
before any fine, penalty, interest or cost (other than any opportunity cost as
a result of a failure to take advantage of any discount for early payment) may
be added for non-payment, such payments to be made directly to the taxing
authorities where feasible, and shall promptly, upon request, furnish to
Landlord copies of official receipts or other reasonably satisfactory proof
evidencing such payments. If any such Imposition
may, at the option of the taxpayer, lawfully be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition), Tenant
may exercise the option to pay the same (and any accrued interest on the unpaid
balance of such Imposition) in installments and, in such event, shall pay, or
cause to pay, such installments during the Term as the same become due and
before any fine, penalty, premium, further interest or cost may be added
thereto. Landlord, at its expense, shall,
to the extent required or permitted by Applicable Law, prepare and file, or
cause to be prepared and filed, all tax returns and pay all taxes due in
respect of Landlords net income, gross receipts, sales and use, single
business, transaction privilege, rent, ad valorem, franchise taxes and taxes on
its capital stock or other equity interests, and Tenant, at its expense, shall,
to the extent required or permitted by Applicable Laws and regulations, prepare
and file all other tax returns and reports in respect of any Imposition as may
be required by Government Agencies. If
any refund shall be due from any taxing authority in respect of any Imposition
paid by or on behalf of Tenant, the same shall be paid over to or retained by
Tenant. Landlord and Tenant shall, upon
request of the other, provide such data as is maintained by the party to whom
the request is made with respect to the Leased Property as may be necessary to
prepare any required returns and reports.
In the event Government Agencies classify any property covered by this
Agreement as personal property, Tenant shall file, or cause to be filed, all
personal property tax returns in such jurisdictions where it may legally so
file. Each party shall, to the extent it
possesses the same, provide the other, upon request, with cost and depreciation
records necessary for filing returns for any property so classified as personal
property. Where Landlord is legally
required to file personal property tax returns for property covered by this
Agreement, Landlord shall provide Tenant with copies of assessment notices in
sufficient time for Tenant to file a protest.
All
23
Impositions assessed against such personal property shall be
(irrespective of whether Landlord or Tenant shall file the relevant return)
paid by Tenant not later than the last date on which the same may be made
without interest or penalty, subject to the provisions of
Article 8
.
Landlord shall
give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of
which Landlord at any time has knowledge;
provided
,
however
, that
Landlords failure to give any such notice shall in no way diminish Tenants
obligation hereunder to pay such Impositions.
(b)
Utility Charges
.
Tenant shall pay or cause to be paid all
charges for electricity, power, gas, oil, water and other utilities used in
connection with the Leased Property.
(c)
Insurance Premiums
.
Tenant shall pay or cause to be paid all
premiums for the insurance coverage required to be maintained pursuant to
Article
9
.
(d)
Other Charges
.
Tenant shall pay or cause to be paid all other
amounts, liabilities and obligations, including, without limitation, all
amounts payable under any equipment leases and all agreements to indemnify
Landlord under
Section 9.5
.
(e)
Reimbursement for Additional Charges
.
If Tenant pays or causes to be paid property
taxes or similar or other Additional Charges attributable to periods after the
end of the Term, whether upon expiration or sooner termination of this
Agreement, Tenant may, within a reasonable time after the end of the Term,
provide Notice to Landlord of its estimate of such amounts. Landlord shall promptly reimburse Tenant for
all payments of such taxes and other similar Additional Charges that are
attributable to any period after the Term of this Agreement.
3.2
Late
Payment of Rent, Etc.
If
any installment of Minimum Rent, Additional Rent or Additional Charges (but
only as to those Additional Charges which are payable directly to Landlord)
shall not be paid by the due date, Tenant shall pay Landlord, on demand, as
Additional Charges, a late charge (to the extent permitted by law) computed at
the Overdue Rate on the amount of such installment, from the due date of such
24
installment to the date of payment thereof.
To the extent that Tenant pays any Additional Charges directly to Landlord or
any Property Mortgagee pursuant to any requirement of this Agreement, Tenant
shall be relieved of its obligation to pay such Additional Charges to the
Entity to which they would otherwise be due.
If any payments due from Landlord to Tenant shall not be paid within ten
(10) days after its due date, Landlord shall pay to Tenant, on demand, a late
charge (to the extent permitted by law) computed at the Overdue Rate on the
amount of such installment from the due date of such installment to the date of
payment thereof.
In the event of any
failure by Tenant to pay any Additional Charges when due, Tenant shall promptly
pay and discharge, as Additional Charges, every fine, penalty, interest and
cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Agreement or by
statute or otherwise in the case of non-payment of the Additional Charges as in
the case of non-payment of the Minimum Rent and Additional Rent.
3.3
Net
Lease, Etc.
The Rent
shall be absolutely net to Landlord so that this Agreement shall yield to
Landlord the full amount of the installments or amounts of the Rent throughout
the Term, subject to any other provisions of this Agreement which expressly
provide otherwise, including those provisions for adjustment or abatement of
such Rent.
Landlord and Tenant acknowledge and agree
that none of the Rent provided for under this Agreement is allocable to any
personal property included in the Leased Property.
3.4
No
Termination, Abatement, Etc.
Except as otherwise specifically provided in
this Agreement, each of Landlord and Tenant, to the maximum extent permitted by
law, shall remain bound by this Agreement in accordance with its terms and
shall not take any action without the consent of the other to modify, surrender
or terminate this Agreement. In
addition, except as otherwise expressly provided in this Agreement, Tenant
shall not seek, or be entitled to, any abatement, deduction, deferment or
reduction of the Rent, or set-off against the Rent, nor shall the
respective obligations of Landlord and Tenant be otherwise affected by reason
of (a) any damage to or destruction of the Leased Property, or any portion
thereof, from whatever cause or any Condemnation; (b) the lawful or unlawful
prohibition of, or restriction upon, Tenants use of the Leased Property, or
any portion thereof, or the interference with such use by any Person
25
or by reason of eviction by paramount title;
(c) any claim which Tenant may have against Landlord by reason of any default
(other than a monetary default) or breach of any warranty by Landlord under
this Agreement or any other agreement between Landlord and Tenant, or to which
Landlord and Tenant are parties; (d) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceedings affecting Landlord or any assignee or transferee of
Landlord; or (e) for any other cause whether similar or dissimilar to any of the
foregoing (other than a monetary default by Landlord). Except as otherwise specifically provided in
this Agreement, Tenant hereby waives all rights arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law (a) to modify,
surrender or terminate this Agreement or quit or surrender the Leased Property,
or any portion thereof, or (b) which would entitle Tenant to any abatement,
reduction, suspension or deferment of the Rent or other sums payable or other
obligations to be performed by Tenant hereunder. The obligations of Tenant hereunder shall be
separate and independent covenants and agreements, and the Rent and all other
sums payable by Tenant hereunder shall continue to be payable in all events
unless the obligations to pay the same shall be terminated pursuant to the
express provisions of this Agreement.
ARTICLE 4
USE OF THE LEASED PROPERTY
4.1
Permitted
Use
.
4.1.1
Permitted
Use
.
(a) Tenant
shall, at all times during the Term, and at any other time that Tenant shall be
in possession of any Property, continuously use and operate, or cause to be
used and operated, such Property as a Travel Center, as currently operated, and
any uses incidental thereto. Tenant
shall operate the Travel Centers under the names Travel Centers of America,
Goasis or Petro, or such other name as TA shall use for the travel center
locations operated by it and its Affiliated Persons. Tenant shall not use (and shall not permit
any Person to use) any Property, or any portion thereof, for any other use
without the prior written consent of Landlord, which approval shall not be
unreasonably withheld, delayed or conditioned.
No use shall be made or permitted to be made of any Property
26
and no acts shall be done thereon which will cause the cancellation of
any insurance policy covering such Property or any part thereof (unless another
adequate policy is available) or which would constitute a default under any
ground lease affecting such Property, nor shall Tenant sell or otherwise
provide, or permit to be kept, used or sold in or about any Property any
article which may be prohibited by law or by the standard form of fire
insurance policies, or any other insurance policies required to be carried
hereunder, or fire underwriters regulations.
Tenant shall, at its sole cost (except as expressly provided in
Section
5.1.2(b)
), comply or cause to be complied with all Insurance
Requirements. Tenant shall not take or
omit to take, or permit to be taken or omitted to be taken, any action, the
taking or omission of which materially impairs the value or the usefulness of
any Property or any part thereof for its Permitted Use.
(b) In
the event that, in the reasonable determination of Tenant, it shall no longer
be economically practical to operate any Property as currently operated,
Tenant shall give Landlord Notice thereof,
which Notice shall set forth in reasonable detail the reasons therefor. Thereafter, Landlord and Tenant shall
negotiate in good faith to agree on an alternative use for such Property,
appropriate adjustments to the Additional Rent and other related matters;
provided
,
however
, in no event shall the Minimum Rent be reduced or abated as a
result thereof. If Landlord and Tenant
fail to agree on an alternative use for such Property within sixty (60) days
after commencing negotiations as aforesaid, Tenant may market such Property for
sale to a third party. If Tenant
receives a bona fide offer (an
Offer
) to purchase such Property from a
Person having the financial capacity to implement the terms of such Offer,
Tenant shall give Landlord Notice thereof, which Notice shall include a copy of
the Offer executed by such third party.
In the event that Landlord shall fail to accept or reject such Offer
within thirty (30) days after receipt of such Notice, such Offer shall be
deemed to be rejected by Landlord. If
Landlord shall sell the Property pursuant to such Offer, then, effective as of
the date of such sale, this
27
Agreement shall terminate with respect to such Property, and the
Minimum Rent shall be reduced by an amount equal to eight and one half percent
(8.5%) of the net proceeds of sale received by Landlord. If Landlord shall reject (or be deemed to
have rejected) such Offer, then, effective as of the proposed date of such
sale, this Agreement shall terminate with respect to such Property, and the
Minimum Rent shall be reduced by an amount equal to eight and one half percent
(8.5%) of the projected net proceeds determined by reference to such Offer
(and, at Landlords request, Tenant shall cause TA (or its Affiliated Persons)
to enter into a franchise agreement on market terms with Landlord or Landlords
designee providing for the operation of such Property by Landlord or such
designee as a Travel Center under the TA brand at the Property). Notwithstanding the foregoing, Tenant shall
not have the right to invoke the provisions of this
Section 4.1.1(b)
with respect to more than five(5) Properties during the Term.
4.1.2
Necessary
Approvals
.
Tenant shall
proceed with all due diligence and exercise reasonable efforts to obtain and
maintain, or cause to be obtained and maintained, all approvals necessary to
use and operate, for its Permitted Use, each Property and the Travel Center
located thereon under applicable law.
4.1.3
Lawful
Use, Etc.
Tenant shall
not, and shall not permit any Person to, use or suffer or permit the use of any
Property or Tenants Personal Property, if any, for any unlawful purpose. Tenant shall not, and shall not permit any
Person to, commit or suffer to be committed any waste on any Property, or in
any Travel Center, nor shall Tenant cause or permit any unlawful nuisance
thereon or therein. Tenant shall not,
and shall not permit any Person to, suffer nor permit any Property, or any
portion thereof, to be used in such a manner as (i) may materially and
adversely impair Landlords title thereto or to any portion thereof, or (ii)
may reasonably allow a claim or claims for adverse usage or adverse possession
by the public, as such, or of implied dedication of such Property, or any portion
thereof.
4.2
Compliance
with Legal/Insurance Requirements, Etc.
Subject to the provisions of
Section
5.1.2(b)
and
Article 8
, Tenant, at its sole expense, shall (i)
comply with (or cause to be complied with) all material Legal Requirements and
Insurance Requirements in respect of the use, operation, maintenance, repair,
alteration and restoration of any Property and with the terms and conditions of
any ground lease affecting any Property, and (ii) procure, maintain and comply
with (or cause to be procured, maintained and complied with) all material
licenses, permits and other authorizations and agreements required for any use
of any Property and Tenants Personal Property, if any, then
28
being made, and for the proper erection,
installation, operation and maintenance of the Leased Property or any part
thereof.
4.3
Environmental
Matters
.
4.3.1
Restriction
on Use, Etc.
During the
Term and any other time that Tenant shall be in possession of any Property,
Tenant shall not, and shall not permit any Person to, store on, release or
spill upon, dispose of or transfer to or from such Property any Hazardous
Substance, except in compliance with all Applicable Laws. During the Term and any other time that
Tenant shall be in possession of any Property, Tenant shall maintain (or shall
cause to be maintained) such Property at all times free of any Hazardous
Substance (except in compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt of
notice or knowledge, notify Landlord in writing of any material change in the
nature or extent of Hazardous Substances at any Property, (b) transmit to
Landlord a copy of any report which is required to be filed by Tenant with
respect to any Property pursuant to SARA Title III or any other Applicable Law,
(c) transmit to Landlord copies of any citations, orders, notices or other
governmental communications received by Tenant or its agents or representatives
with respect to Hazardous Substances or violations or alleged violations of
Applicable Law (each an
Environmental Notice
), which Environmental
Notice requires a written response or any action to be taken and/or if such
Environmental Notice gives notice of and/or presents a material risk of any
material violation of any Applicable Law and/or presents a material risk of any
material cost, expense, loss or damage (an
Environmental Obligation
),
(d) observe and comply with (or cause to be observed and complied with) all
Applicable Laws relating to the use, storage, maintenance and disposal of
Hazardous Substances and all orders or directives from any official, court or
agency of competent jurisdiction relating to the use, storage or maintenance,
or requiring the removal, treatment, containment or other disposition of
Hazardous Substances, and (e) pay or otherwise dispose (or cause to be paid or
otherwise disposed) of any fine, charge or Imposition related to Hazardous
Substances or violations of Applicable Law for which Tenant or any Person
claiming by, through or under Tenant and/or Landlord are legally liable, unless
Tenant shall contest the same in good faith and by appropriate proceedings and
the right to use and the value of any of the Leased Property is not materially
and adversely affected thereby.
29
If, at any time prior to
the termination of this Agreement, Hazardous Substances (other than those
maintained in accordance with Applicable Laws) are discovered on any Property,
subject to Tenants right to contest the same in accordance with
Article 8
,
Tenant shall take (and shall cause to be taken) all actions and incur any and
all expenses, as are required by any Government Agency and by Applicable Law,
(i) to clean up and remove from and about such Property all Hazardous
Substances thereon, (ii) to contain and prevent any further discharge, release
or threat of discharge or release of Hazardous Substances on or about such
Property and (iii) to use good faith efforts to eliminate any further
discharge, release or threat of discharge or release of Hazardous Substances on
or about such Property.
4.3.2
Environmental
Report
. Tenant shall, at
its sole cost and expense, provide Landlord with an Environmental Report (as
hereinafter defined), prepared by an environmental consultant reasonably
acceptable to Landlord and dated within sixty (60) days of the expiration or
sooner termination of this Agreement concluding, subject to customary
limitations and standards, that Tenant shall have complied with all of its
obligations under
Section 4.3
of this Agreement to date and that the
Leased Property does not contain any Hazardous Substances, other than in
compliance with Applicable Laws, and which, at Landlords request, Tenant shall
remove from the Leased Property on or before the expiration or sooner
termination hereof. An Environmental
Report shall be a so-called Phase I report or such other level of
investigation which shall be the standard of diligence in the purchase or lease
of similar property at the time, together with any additional investigation and
report which would be needed to make the conclusions required above or which
would customarily follow any discovery contained in any initial report(s), and
for which the investigation and testing on which the conclusions shall have
been based shall have been performed not earlier than thirty (30) days prior to
the date of such report.
4.3.3
Underground
Storage Tanks
. It is
expressly understood and agreed that Tenants obligations under this Agreement
shall include the maintenance and, if necessary, replacement of underground
storage tanks at the Leased Property.
Upon the expiration or sooner termination of this Agreement, Tenant
shall pay to Landlord the amount of any Asset Retirement Obligation Reserve on
Tenants books and records pursuant to GAAP for underground storage tanks
located at the Leased Property. Upon
such payment, Tenants obligations under this
30
Agreement with respect to the
maintenance and replacement of underground storage tanks shall terminate.
4.3.4
Survival
.
The provisions of this
Section
4.3
shall survive the expiration or sooner termination of this Agreement.
4.4
Ground
Leases
. Tenant shall pay
and perform all of Landlords obligations as tenant under the Ground
Leases. If Landlord has the right, under
the provisions of any of the Ground Leases, to elect to renew or extend the
term of such Ground Leases or to purchase the ground leased property, Tenant
shall so notify Landlord at least one hundred eighty (180) days (but no more
than one (1) year) prior to the expiration of the period within which Landlord
is obligated to notify the landlord under such Ground Leases of its election to
renew, extend or purchase, as the case may be.
Such notice from Tenant shall contain all of the relevant facts about
the impending election to renew, extend or purchase, including, as applicable,
the length of the period of renewal, the rental rate and/or the purchase
price. In the event of the expiration or
termination of any Ground Lease, this Agreement shall terminate with respect to
such Property as of the date of such expiration or termination;
provided
,
however
, in such event, there shall be no reduction in the Minimum
Rent. Upon Landlords request following
receipt of any required consent thereto, Tenant shall, in consideration of one
dollar in each case, assign to Landlord Tenants leasehold interest in property
adjacent to the West Memphis, Arkansas Property and the York, Nebraska
Property, whereupon such leasehold interests so assigned shall become part of
the Leased Property and each lease thereof shall be a Ground Lease.
ARTICLE 5
MAINTENANCE AND REPAIRS
5.1
Maintenance
and Repair
.
5.1.1
Tenants
General Obligations
.
(a) Tenant shall keep (or
cause to be kept), at Tenants sole cost and expense, the Leased Property and
all private roadways, sidewalks and curbs appurtenant thereto (and Tenants
Personal Property) in good order and repair, reasonable wear and tear excepted
(whether or not the need for such repairs occurs as a result of Tenants use,
any
31
prior
use, the elements or the age of the Leased Property or Tenants Personal
Property or any portion thereof), and shall promptly make or cause to be made
all necessary and appropriate repairs and replacements thereto of every kind
and nature, whether interior or exterior, structural or nonstructural, ordinary
or extraordinary, foreseen or unforeseen or arising by reason of a condition
existing prior to the commencement of the Term (concealed or otherwise). All repairs shall be made in a good,
workmanlike manner, consistent with industry standards for comparable Travel
Centers in like locales, in accordance with all applicable federal, state and
local statutes, ordinances, codes, rules and regulations relating to any such
work. Tenant shall not take or omit to
take (or permit any Person to take or omit to take) any action, the taking or
omission of which would materially and adversely impair the value or the
usefulness of the Leased Property or any material part thereof for its
Permitted Use. Tenants use, occupancy
and maintenance of the Leased Property shall comply with all published
requirements imposed from time to time on a system-wide basis for TA Travel
Centers. Tenants obligations under this
Section 5.1.1
shall be limited in the event of any casualty or
Condemnation as set forth in
Article 10
and
Article 11
and Tenants
obligations with respect to Hazardous Substances are as set forth in
Section
4.3
.
(b) Tenant shall prepare
and submit to Landlord for Landlords approval, on or before December 1 of each
Lease Year during the Term hereof and for the next following Lease Year, a
detailed budget (the
Capital Replacements Budget
) for each Property,
projecting all costs, expenses and expenditures expected to be incurred at such
Property during the following Lease Year for Capital Additions. Each Capital Replacements Budget shall be
supplemented by such information as Landlord shall reasonably request from time
to time.
5.1.2
Landlords
Obligations
.
(a) Except
as otherwise expressly provided in this Agreement, Landlord shall not, under
any circumstances, be required to build or rebuild any improvement on the
Leased Property, or to make any repairs, replacements, alterations,
restorations or renewals of any nature or description to the Leased Property,
whether ordinary or extraordinary, structural or nonstructural, foreseen or
32
unforeseen, or to make any expenditure whatsoever with respect thereto,
or to maintain the Leased Property in any way.
Except as otherwise expressly provided in this Agreement, Tenant hereby
waives, to the maximum extent permitted by law, the right to make repairs at
the expense of Landlord pursuant to any law in effect on the Commencement Date
or thereafter. Landlord shall have the
right to give, record and post, as appropriate, notices of nonresponsibility
under any mechanics lien laws now or hereafter existing.
(b) If,
pursuant to the terms of this Agreement, Tenant is required to make any Capital
Expenditures, including, without limitation, the Capital Expenditures
identified in any Capital Replacements Budget, Tenant may, at its election,
advance such funds or give Landlord Notice thereof, which Notice shall set
forth, in reasonable detail, the nature of the required Capital Expenditure,
the estimated cost thereof and such other information with respect thereto as Landlord
may reasonably require. Provided that no
Event of Default shall have occurred and be continuing and Tenant shall
otherwise comply with the applicable provisions of
Article 6
, Landlord
shall, within ten (10) Business Days after such Notice, subject to and in
accordance with the applicable provisions of
Article 6
, disburse such
required funds to Tenant (or, if Tenant shall so elect, directly to any other
Person performing the required work) and, upon such disbursement, the Minimum
Rent shall be adjusted as provided in
Section 3.1.1(b)
. Notwithstanding the foregoing, Landlord may
elect not to disburse such required funds to Tenant; provided, however, that if
Landlord shall elect not to disburse such required funds as aforesaid, Tenants
obligation to make such required Capital Expenditure shall be deemed waived by
Landlord, and, notwithstanding anything contained in this Agreement to the
contrary, Tenant shall have no obligation to make such Capital Expenditure.
5.1.3
Nonresponsibility
of Landlord, Etc.
All
materialmen, contractors, artisans, mechanics and laborers and other persons
contracting with Tenant with respect to the Leased Property, or any part
thereof, are hereby charged with notice that liens on the Leased Property or on
Landlords interest therein are expressly prohibited and that they must look
solely to Tenant to secure payment for any work done or material furnished to
Tenant or for any other purpose during the term of this Agreement.
33
Nothing contained in this
Agreement shall be deemed or construed in any way as constituting the consent
or request of Landlord, express or implied, by inference or otherwise, to any
contractor, subcontractor, laborer or materialmen for the performance of any
labor or the furnishing of any materials for any alteration, addition,
improvement or repair to the Leased Property or any part thereof or as giving
Tenant any right, power or authority to contract for or permit the rendering of
any services or the furnishing of any materials that would give rise to the
filing of any lien against the Leased Property or any part thereof nor to
subject Landlords estate in the Leased Property or any part thereof to
liability under any mechanics lien law of any State in any way, it being
expressly understood Landlords estate shall not be subject to any such
liability.
5.2
Tenants
Personal Property
.
Tenant
shall provide and maintain (or cause to be provided and maintained) throughout
the Term all such Tenants Personal Property as shall be necessary in order to
operate in compliance with applicable material Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the
industry for the Permitted Use.
5.3
Yield Up
.
Upon the expiration or sooner
termination of this Agreement, Tenant shall remove all of Tenants Personal
Property (other than that purchased by Landlord pursuant to
Article 15
)
and vacate and surrender the Leased Property to Landlord in substantially the
same condition in which the Leased Property was in on the Commencement Date,
except as repaired, rebuilt, restored, altered or added to as permitted or
required by the provisions of this Agreement, reasonable wear and tear excepted
(and casualty damage and Condemnation, in the event that this Agreement is
terminated following a casualty or Condemnation in accordance with
Article
10
or
Article 11
, excepted).
In
addition, upon the expiration or earlier termination of this Agreement, Tenant
shall, at Landlords sole cost and expense, use its good faith efforts to
transfer and/or assign (or cause to be transferred or assigned) to Landlord or
Landlords nominee, and to cooperate with Landlord or Landlords nominee in
connection with, the processing of all applications for licenses, operating
permits and other governmental authorizations and all contracts, including
contracts with governmental or quasi-governmental entities, which may be
necessary for the use and operation of the Travel Centers as then
operated.
If requested by Landlord, Tenant shall continue
34
to manage one or more of
the Travel Centers after the expiration of the Term for up to one hundred
eighty (180) days, on such reasonable terms (including receipt by Tenant of a
market management fee), as Landlord shall reasonably request.
ARTICLE 6
IMPROVEMENTS, ETC.
6.1
Improvements
to the Leased Property
.
Tenant
shall not make, construct or install (or permit to be made, constructed or
installed) any Capital Additions without, in each instance, obtaining Landlords
prior written consent, which consent shall not be unreasonably withheld,
delayed or conditioned provided that (a) construction or installation of the
same would not adversely affect or violate any material Legal Requirement or
Insurance Requirement applicable to any Property and (b) Landlord shall have
received an Officers Certificate certifying as to the satisfaction of the
conditions set out in clause (a) above;
provided
,
however
, that
no such consent shall be required in the event immediate action is required to
prevent imminent harm to person or property. Prior to commencing construction of any
Capital Addition, Tenant shall submit to Landlord, in writing, a proposal
setting forth, in reasonable detail, any such proposed improvement and shall
provide to Landlord such plans and specifications, and such permits, licenses,
contracts and such other information concerning the same as Landlord may
reasonably request. Landlord shall have
thirty (30) days to review all materials submitted to Landlord in connection
with any such proposal. Failure of
Landlord to respond to Tenants proposal within thirty (30) days after receipt
of all information and materials requested by Landlord in connection with the
proposed improvement shall be deemed to constitute approval of the same. Without limiting the generality of the foregoing,
such proposal shall indicate the approximate projected cost of constructing
such proposed improvement and the use or uses to which it will be put. No Capital Addition shall be made which would
tie in or connect any Leased Improvements with any other improvements on
property adjacent to any Property (and not part of the Land) including, without
limitation, tie-ins of buildings or other structures or utilities. Except as permitted herein, Tenant shall not
finance the cost of any construction of such improvement by the granting of a
lien on or security interest in the Leased Property or such improvement, or
Tenants interest therein, without the prior written consent of Landlord, which
consent may be withheld by Landlord in Landlords sole discretion. Any such improvements shall, upon
35
the expiration or sooner termination of this
Agreement, remain or pass to and become the property of Landlord, free and
clear of all encumbrances other than Permitted Encumbrances.
6.2
Salvage
.
All materials which are scrapped or
removed in connection with the making of either Capital Additions or non-Capital
Additions or repairs required by
Article 5
shall be or become the
property of the party that paid for such work.
ARTICLE 7
LIENS
Subject to
Article 8
,
Tenant shall use its best efforts not, directly or indirectly, to create or
allow to remain and shall promptly discharge (or cause to be discharged), at
its expense, any lien, encumbrance, attachment, title retention agreement or
claim upon the Leased Property, or any portion thereof, or Tenants leasehold
interest therein or any attachment, levy, claim or encumbrance in respect of
the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and
other encumbrances which are consented to in writing by Landlord, (c) liens for
those taxes of Landlord which Tenant is not required to pay hereunder, (d)
subleases permitted by
Article 16
, (e) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (i) the same
are not yet due and payable, or (ii) are being contested in accordance with
Article
8
, (f) liens of mechanics, laborers, materialmen, suppliers or vendors
incurred in the ordinary course of business that are not yet due and payable or
are for sums that are being contested in accordance with
Article 8
, (g)
any Property Mortgages or other liens which are the responsibility of Landlord
pursuant to the provisions of
Article 20
and (h) Landlord Liens and any
other voluntary liens created by Landlord.
ARTICLE 8
PERMITTED CONTESTS
Tenant shall have the
right to contest the amount or validity of any Imposition, Legal Requirement,
Insurance Requirement, Environmental Obligation, lien, attachment, levy,
encumbrance, charge or claim (collectively,
Claims
) as to the Leased
Property, by appropriate legal proceedings, conducted in good faith and with
due diligence, provided that (a) the foregoing shall in no way be construed as
relieving, modifying
36
or extending Tenants
obligation to pay (or cause to be paid) any Claims as finally determined, (b)
such contest shall not cause Landlord or Tenant to be in default under any
ground lease, mortgage or deed of trust encumbering the Leased Property, or any
portion thereof (Landlord agreeing that any such ground lease, mortgage or deed
of trust shall permit Tenant to exercise the rights granted pursuant to this
Article
8
) or any interest therein or result in or reasonably be expected to result
in a lien attaching to the Leased Property, or any portion thereof, (c) no part
of the Leased Property nor any Rent therefrom shall be in any immediate danger
of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and
hold harmless Landlord from and against any cost, claim, damage, penalty or
reasonable expense, including reasonable attorneys fees, incurred by Landlord
in connection therewith or as a result thereof.
Landlord agrees to join in any such proceedings if required legally to
prosecute such contest, provided that Landlord shall not thereby be subjected
to any liability therefor (including, without limitation, for the payment of
any costs or expenses in connection therewith) unless Tenant agrees by
agreement in form and substance reasonably satisfactory to Landlord, to assume
and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any
Claims and such charges and penalties or interest thereon which have been paid
by Tenant or paid by Landlord to the extent that Landlord has been fully
reimbursed by Tenant. If Tenant shall
fail (x) to pay or cause to be paid any Claims when finally determined, (y) to
provide reasonable security therefor or (z) to prosecute or cause to be
prosecuted any such contest diligently and in good faith, Landlord may, upon
reasonable notice to Tenant (which notice shall not be required if Landlord
shall reasonably determine that the same is not practicable), pay such charges,
together with interest and penalties due with respect thereto, and Tenant shall
reimburse Landlord therefor, upon demand, as Additional Charges.
ARTICLE 9
INSURANCE AND INDEMNIFICATION
9.1
General
Insurance Requirements
.
Tenant shall, at all times during the Term and
at any other time Tenant shall be in possession of any Property, or any portion
thereof, keep (or cause to be kept) such Property and all property located
therein or thereon, insured against the risks and in such amounts as shall be
commercially reasonable. Tenant shall
prepare a proposal setting forth the insurance Tenant proposes to be
37
maintained with respect to each Property
during the ensuing Lease Year, and shall submit such proposal to Landlord on or
before December 1
st
of the preceding Lease Year, for Landlords
review and approval, which approval shall not be unreasonably withheld, delayed
or conditioned. In the event that Landlord
shall fail to respond within thirty (30) days after receipt of such proposal,
such proposal shall be deemed approved.
9.2
Waiver
of Subrogation
.
Landlord
and Tenant agree that (insofar as and to the extent that such agreement may be
effective without invalidating or making it impossible to secure insurance
coverage from responsible insurance companies doing business in any State) with
respect to any property loss which is covered by insurance then being carried
by Landlord or Tenant, the party carrying such insurance and suffering said
loss releases the others of and from any and all claims with respect to such
loss; and they further agree that their respective insurance companies (and, if
Landlord or Tenant shall self insure in accordance with the terms hereof,
Landlord or Tenant, as the case may be) shall have no right of subrogation
against the other on account thereof, even though extra premium may result
therefrom. In the event that any extra
premium is payable by Tenant as a result of this provision, Landlord shall not
be liable for reimbursement to Tenant for such extra premium.
9.3
Form
Satisfactory, Etc.
All
insurance policies and endorsements required pursuant to this
Article 9
shall be fully paid for, nonassessable, and issued by reputable insurance
companies authorized to do business in the State and having a general policy
holders rating of no less than A in Bests latest rating guide. All property, business interruption,
liability and flood insurance policies with respect to each Property shall
include no deductible in excess of Five Hundred Thousand Dollars
($500,000). At all times, all property,
business interruption, liability and flood insurance policies, with the
exception of workers compensation insurance coverage, shall name Landlord and
any Property Mortgagee as additional insureds, as their interests may
appear. All loss adjustments shall be
payable as provided in
Article 10
, except that losses under liability
and workers compensation insurance policies shall be payable directly to the
party entitled thereto. Tenant shall
cause all insurance premiums to be paid and shall deliver (or cause to be
delivered) policies or certificates thereof to Landlord prior to their
effective date (and, with respect to any renewal policy, prior to the
expiration of the existing policy). All
such policies shall provide Landlord (and any Property
38
Mortgagee if required by the same) thirty
(30) days prior written notice of any material change or cancellation of such
policy. In the event Tenant shall fail
to effect (or cause to be effected) such insurance as herein required, to pay
(or cause to be paid) the premiums therefor or to deliver (or cause to be
delivered) such policies or certificates to Landlord or any Property Mortgagee
at the times required, Landlord shall have the right, upon Notice to Tenant,
but not the obligation, to acquire such insurance and pay the premiums
therefor, which amounts shall be payable to Landlord, upon demand, as
Additional Charges, together with interest accrued thereon at the Overdue Rate
from the date such payment is made until (but excluding) the date repaid.
9.4
No
Separate Insurance; Self-Insurance
.
Tenant shall not take (or permit any Person to
take) out separate insurance, concurrent in form or contributing in the event
of loss with that required by this
Article 9
, or increase the amount of
any existing insurance by securing an additional policy or additional policies,
unless all parties having an insurable interest in the subject matter of such
insurance, including Landlord and all Property Mortgagees, are included therein
as additional insureds and the loss is payable under such insurance in the same
manner as losses are payable under this Agreement. In the event Tenant shall take out any such
separate insurance or increase any of the amounts of the then existing
insurance, Tenant shall give Landlord prompt Notice thereof. Tenant shall not self-insure (or permit any
Person to self-insure).
9.5
Indemnification
of Landlord
.
Notwithstanding the existence of any insurance
provided for herein and without regard to the policy limits of any such
insurance, Tenant shall protect, indemnify and hold harmless Landlord for, from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and reasonable expenses (including, without limitation,
reasonable attorneys fees), to the maximum extent permitted by law, imposed
upon or incurred by or asserted against Landlord by reason of the following,
except to the extent caused by Landlords gross negligence or willful
misconduct: (a) any accident or injury
to, or death of, persons or loss of or damage to property occurring on or about
any Property or portion thereof or adjoining sidewalks or rights of way during
the Term, (b) any past, present or future condition or use, misuse, non-use,
management, maintenance or repair by Tenant or anyone claiming under any of
them, of any Property or Tenants Personal Property, or any litigation,
proceeding or claim by governmental entities (other than Condemnation
39
proceedings) or other third parties to which
Landlord is made a party or participant relating to any Property or portion
thereof or Tenants Personal Property or such use, misuse, non-use, condition,
management, maintenance, or repair thereof, including failure to perform
obligations under this Agreement, to which Landlord is made a party during the
Term, (c) any Impositions that are the obligations of Tenant to pay pursuant to
the applicable provisions of this Agreement, and (d) any failure on the part of
Tenant or anyone claiming under Tenant to perform or comply with any of the
terms of this Agreement. Tenant, at its
expense, shall contest, resist and defend any such claim, action or proceeding
asserted or instituted against Landlord (and shall not be responsible for any
duplicative attorneys fees incurred by Landlord) or may compromise or
otherwise dispose of the same, with Landlords prior written consent (which
consent may not be unreasonably withheld, delayed or conditioned). The obligations of Tenant under this
Section
9.5
shall survive the termination of this Agreement.
ARTICLE 10
CASUALTY
10.1
Insurance
Proceeds
.
Except as
provided in the last clause of this sentence, all proceeds payable by reason of
any loss or damage to any Property, or any portion thereof, and insured under
any policy of insurance required by
Article 9
(other than the proceeds
of any business interruption insurance or insurance proceeds for Tenants
Personal Property) shall be paid directly to Landlord (subject to the
provisions of
Section 10.2
) and all loss adjustments with respect to
losses payable to Landlord shall require the prior written consent of Landlord,
which consent shall not be unreasonably withheld, delayed or conditioned;
provided
,
however
, that, so long as no Event of Default shall have occurred and be
continuing, all such proceeds less than or equal to Two Hundred Fifty Thousand
Dollars ($250,000) shall be paid directly to Tenant and such losses may be
adjusted without Landlords consent. If
Tenant is required to reconstruct or repair any Property as provided herein,
such proceeds shall be paid out by Landlord from time to time for the
reasonable costs of reconstruction or repair of such Property necessitated by
such damage or destruction, subject to and in accordance with the provisions of
Section 10.2.4
. Any excess
proceeds of insurance remaining after the completion of the restoration shall
be paid to Tenant. In the event that the
provisions of
Section 10.2.1
are applicable, the insurance
40
proceeds shall be retained by the party
entitled thereto pursuant to
Section 10.2.1
.
10.2
Damage
or Destruction
.
10.2.1
Damage or Destruction of
Leased Property
. If, during the Term, any Property shall be
totally or partially destroyed and the Travel Center located thereon is thereby
rendered Unsuitable for Its Permitted Use, either Landlord or Tenant may, by
the giving of Notice thereof to the other, terminate this Agreement with
respect to such affected Property, whereupon, this Agreement shall terminate with
respect to such affected Property, Landlord shall be entitled to retain the
insurance proceeds payable on account of such damage, Tenant shall pay to
Landlord the amount of any deductible under the insurance policies covering
such Travel Center, the amount of any uninsured loss and any difference between
the replacement cost of the affected Property and the casualty insurance
proceeds therefor, and the Minimum Rent shall be reduced by the sum of eight
and one-half percent (8.5%) of the total amount received by Landlord plus the
Fair Market Value of the Land, such Fair Market Value to be determined by
agreement of the parties or, absent agreement, an appraiser designated by
Landlord.
10.2.2
Partial
Damage or Destruction
.
If, during the Term, any Property shall be
totally or partially destroyed but the Travel Center located thereon is not
rendered Unsuitable for Its Permitted Use, Tenant shall, subject to
Section
10.2.3
, promptly restore such Travel Center as provided in
Section
10.2.4
.
10.2.3
Insufficient
Insurance Proceeds
.
If
the cost of the repair or restoration of the applicable Travel Center exceeds
the amount of insurance proceeds received by Landlord and Tenant pursuant to
Section
9.1
, Tenant shall give Landlord Notice thereof which notice shall set forth
in reasonable detail the nature of such deficiency and whether Tenant shall pay
and assume the amount of such deficiency (Tenant having no obligation to do so,
except that, if Tenant shall elect to make such funds available, the same shall
become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay
and assume the amount of such deficiency, Landlord shall have the right (but
not the obligation), exercisable in Landlords sole discretion by Notice to
Tenant, given within sixty (60) days after Tenants notice of the deficiency,
to elect to make available for application to
41
the cost of repair or
restoration the amount of such deficiency;
provided
,
however
, in
such event, upon any disbursement by Landlord thereof, the Minimum Rent shall
be adjusted as provided in
Section 3.1.1(b)
. In the event that neither Landlord nor Tenant
shall elect to make such deficiency available for restoration, either Landlord
or Tenant may terminate this Agreement with respect to the affected Property by
Notice to the other, whereupon, this Agreement shall so terminate and insurance
proceeds shall be distributed as provided in
Section 10.2.1
. It is expressly understood and agreed,
however, that, notwithstanding anything in this Agreement to the contrary,
Tenant shall be strictly liable and solely responsible for the amount of any
deductible and shall, upon any insurable loss, pay over the amount of such
deductible to Landlord at the time and in the manner herein provided for
payment of the applicable proceeds to Landlord.
10.2.4
Disbursement
of Proceeds
.
In the event
Tenant is required to restore any Property pursuant to
Section 10.2
and
this Agreement is not terminated as to such Property pursuant to this
Article
10
, Tenant shall commence (or cause to be commenced) promptly and continue
diligently to perform (or cause to be performed) the repair and restoration of
such Property (hereinafter called the
Work
), so as to restore (or
cause to be restored) the applicable Property in material compliance with all
Legal Requirements and so that such Property shall be, to the extent
practicable, substantially equivalent in value and general utility to its
general utility and value immediately prior to such damage or destruction. Subject to the terms hereof, Landlord shall
advance the insurance proceeds and any additional amounts payable by Landlord
pursuant to
Section 10.2.3
or otherwise deposited with Landlord to
Tenant regularly during the repair and restoration period so as to permit
payment for the cost of any such restoration and repair. Any such advances shall be made not more
often than monthly within ten (10) Business Days after Tenant submits to
Landlord a written requisition and substantiation therefor on AIA Forms G702
and G703 (or on such other form or forms as may be reasonably acceptable to
Landlord). Landlord may, at its option,
condition advancement of such insurance proceeds and other amounts on (i) its
approval of plans and specifications of an architect satisfactory to Landlord
(which approval shall not be unreasonably withheld, delayed or conditioned),
(ii) general contractors estimates, (iii) architects certificates, (iv)
conditional lien waivers of general contractors, if available, (v) evidence of
approval by all governmental authorities and other regulatory bodies whose
approval is required, (vi) if
42
Tenant has elected to advance
deficiency funds pursuant to
Section 10.2.3
, Tenant depositing the
amount thereof with Landlord and (vii) such other certificates as Landlord may,
from time to time, reasonably require.
Landlords obligation to
disburse insurance proceeds under this
Article 10
shall be subject to
the release of such proceeds by any Property Mortgagee to Landlord.
Tenants obligation to
restore the applicable Property pursuant to this
Article 10
shall be
subject to the release of available insurance proceeds by the applicable
Property Mortgagee to Landlord or directly to Tenant and, in the event such
proceeds are insufficient, Landlord electing to make such deficiency available
therefor (and disbursement of such deficiency).
10.3
Damage
Near End of Term
.
Notwithstanding any provisions of
Section
10.1 or 10.2
to the contrary, if damage to or destruction of any Property
occurs during the last twelve (12) months of the Term and if such damage or
destruction cannot reasonably be expected to be fully repaired and restored
prior to the date that is six (6) months prior to the end of the Term, the
provisions of
Section 10.2.1
shall apply as if such Property had
been totally or partially destroyed and the Travel Center thereon rendered
Unsuitable for Its Permitted Use.
10.4
Tenants
Personal Property
.
All
insurance proceeds payable by reason of any loss of or damage to any of Tenants
Personal Property shall be paid to Tenant and, to the extent necessary to
repair or replace Tenants Personal Property in accordance with
Section 10.5
,
Tenant shall hold such proceeds in trust to pay the cost of repairing or
replacing damaged Tenants Personal Property.
10.5
Restoration
of Tenants Personal Property
.
If Tenant is required to restore any Property
as hereinabove provided, Tenant shall either (a) restore all alterations and
improvements made by Tenant and Tenants Personal Property, or (b) replace such
alterations and improvements and Tenants Personal Property with improvements
or items of the same or better quality and utility in the operation of such
Property.
10.6
No
Abatement of Rent
.
This
Agreement shall remain in full force and effect and Tenants obligation to make
all payments of Rent and to pay all other charges as and when required under
this Agreement shall remain unabated during the
43
Term notwithstanding any damage involving the
Leased Property, or any portion thereof (provided that Landlord shall credit
against such payments any amounts paid to Landlord as a consequence of such
damage under any business interruption insurance obtained by Tenant
hereunder). The provisions of this
Article
10
shall be considered an express agreement governing any cause of damage
or destruction to the Leased Property, or any portion thereof, and, to the
maximum extent permitted by law, no local or State statute, laws, rules,
regulation or ordinance in effect during the Term which provide for such a
contingency shall have any application in such case.
10.7
Waiver
.
Tenant hereby waives any statutory
rights of termination which may arise by reason of any damage or destruction of
the Leased Property, or any portion thereof.
ARTICLE 11
CONDEMNATION
11.1
Total Condemnation, Etc.
If
either (i) the whole of any Property shall be taken by Condemnation or (ii) a
Condemnation of less than the whole of any Property renders any Property
Unsuitable for Its Permitted Use, this Agreement shall terminate with respect
to such Property, and Tenant and Landlord shall seek the Award for their
interests in the applicable Property as provided in
Section 11.5
. Upon payment to Landlord of any such Award,
the Minimum Rent shall be reduced by eight and one-half percent (8.5%) of the
amount of such Award received by Landlord.
11.2
Partial
Condemnation
.
In the
event of a Condemnation of less than the whole of any Property such that such
Property is still suitable for its Permitted Use, Tenant shall, to the extent
of the Award and any additional amounts disbursed by Landlord as hereinafter
provided, commence (or cause to be commenced) promptly and continue diligently
to restore (or cause to be restored) the untaken portion of the applicable
Leased Improvements so that such Leased Improvements shall constitute a
complete architectural unit of the same general character and condition (as
nearly as may be possible under the circumstances) as such Leased Improvements
existing immediately prior to such Condemnation, in material compliance with
all Legal Requirements, subject to the provisions of this
Section 11.2
. If the cost of the repair or restoration of
the affected Property exceeds the amount of the Award, Tenant shall give
Landlord Notice thereof which notice shall set forth in
44
reasonable detail the nature of such
deficiency and whether Tenant shall pay and assume the amount of such
deficiency (Tenant having no obligation to do so, except that if Tenant shall
elect to make such funds available, the same shall become an irrevocable
obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay
and assume the amount of such deficiency, Landlord shall have the right (but
not the obligation), exercisable at Landlords sole election by Notice to
Tenant given within sixty (60) days after Tenants Notice of the deficiency, to
elect to make available for application to the cost of repair or restoration
the amount of such deficiency;
provided
,
however
, in such event,
upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted
as provided in
Section 3.1.1(b)
.
In the event that neither Landlord nor Tenant shall elect to make such
deficiency available for restoration, either Landlord or Tenant may terminate
this Agreement with respect to the affected Property and the entire Award shall
be allocated as set forth in
Section 11.5
.
Subject to the terms
hereof, Landlord shall contribute to the cost of restoration that part of the
Award received by Landlord and necessary to complete such repair or
restoration, together with severance and other damages awarded to Landlord for
the taken Leased Improvements and any deficiency Landlord has agreed to
disburse, to Tenant regularly during the restoration period so as to permit
payment for the cost of such repair or restoration. Landlord may, at its option, condition
advancement of such portion of the Award and other amounts on (a) its approval
of plans and specifications of an architect satisfactory to Landlord (which
approval shall not be unreasonably withheld, delayed or conditioned), (b)
general contractors estimates, (c) architects certificates, (d) conditional
lien waivers of general contractors, if available, (e) evidence of approval by
all governmental authorities and other regulatory bodies whose approval is
required, (f) if Tenant has elected to advance deficiency funds pursuant to the
preceding paragraph, Tenant depositing the amount thereof with Landlord and (g)
such other certificates as Landlord may, from time to time, reasonably require. Landlords obligation under this
Section
11.2
to disburse the Award and such other amounts shall be subject to (x)
the collection thereof by Landlord and (y) the satisfaction of any applicable
requirements of any Property Mortgage, and the release of such Award by the
applicable Property Mortgagee. Tenants
obligation to restore the Leased Property shall be subject to the release of
any portion of the Award by the applicable Property Mortgagee to Landlord.
45
11.3
Abatement
of Rent
.
Other than as
specifically provided in this Agreement, this Agreement shall remain in full
force and effect and Tenants obligation to make all payments of Rent and to
pay all other charges as and when required under this Agreement shall remain
unabated during the Term notwithstanding any Condemnation involving the Leased
Property, or any portion thereof. The
provisions of this
Article 11
shall be considered an express agreement
governing any Condemnation involving the Leased Property and, to the maximum
extent permitted by law, no local or State statute, law, rule, regulation or
ordinance in effect during the Term which provides for such a contingency shall
have any application in such case.
11.4
Temporary
Condemnation
.
In the event
of any temporary Condemnation of any Property or Tenants interest therein,
this Agreement shall continue in full force and effect and Tenant shall
continue to pay (or cause to be paid), in the manner and on the terms herein
specified, the full amount of the Rent.
Tenant shall continue to perform and observe (or cause to be performed
and observed) all of the other terms and conditions of this Agreement on the
part of the Tenant to be performed and observed. The entire amount of any Award made for such
temporary Condemnation allocable to the Term, whether paid by way of damages,
rent or otherwise, shall be paid to Tenant.
Tenant shall, promptly upon the termination of any such period of
temporary Condemnation, at its sole cost and expense, restore the affected
Property to the condition that existed immediately prior to such Condemnation,
in material compliance with all applicable Legal Requirements, unless such
period of temporary Condemnation shall extend beyond the expiration of the
Term, in which event Tenant shall not be required to make such restoration.
11.5
Allocation
of Award
.
Except as
provided in
Section 11.4
and the second sentence of this
Section 11.5
,
the total Award shall be solely the property of and payable to Landlord. Any portion of the Award made for the taking
of Tenants leasehold interest in the Leased Property, loss of business during
the remainder of the Term, the taking of Tenants Personal Property, the taking
of Capital Additions paid for by Tenant and Tenants removal and relocation
expenses shall be the sole property of and payable to Tenant. In any Condemnation proceedings, Landlord and
Tenant shall each seek its own Award in conformity herewith, at its own
expense.
46
ARTICLE 12
DEFAULTS AND REMEDIES
12.1
Events
of Default
.
The
occurrence of any one or more of the following events shall constitute an
Event
of Default
hereunder:
(a) should Tenant fail to make any payment of the Rent or any
other sum payable hereunder when due which failure shall continue for a period
of five (5) Business Days after Notice thereof from Landlord to Tenant; or
(b) should Tenant default in the due observance or performance
of any of the terms, covenants or agreements contained herein to be performed
or observed by it (other than as specified in clause (a) above) and should such
default continue for a period of thirty (30) days after Notice thereof from
Landlord to Tenant;
provided
,
however
, that if such default is
susceptible of cure but such cure cannot be accomplished with due diligence
within such period of time and if, in addition, Tenant commences to cure or
cause to be cured such default within thirty (30) days after Notice thereof
from Landlord and thereafter prosecutes the curing of such default with all due
diligence, such period of time shall be extended to such period of time (not to
exceed an additional ninety (90) days in the aggregate) as may be necessary to
cure such default with all due diligence; or
(c) should any obligation of Tenant or any Guarantor in
respect of any Indebtedness of Twenty Million Dollars ($20,000,000) or more for
money borrowed or for any material property or services, or any guaranty
relating thereto, be declared to be or become due and payable prior to the
stated maturity thereof, or should there occur and be continuing with respect
to any such Indebtedness any event of default under any instrument or agreement
evidencing or securing the same, the effect of which is to permit the holder or
holders of such instrument or agreement or a trustee, agent or other representative
on behalf of such holder or holders, to cause any such obligations to become
due prior to its stated maturity; or
(d) should an event of default occur and be continuing beyond
the expiration of any applicable cure period under any Guaranty; or
47
(e) should Tenant or any Guarantor generally not be paying its
debts as they become due or should Tenant or any Guarantor make a general
assignment for the benefit of creditors; or
(f) should any petition be filed by or against Tenant or any
Guarantor under the Federal bankruptcy laws, or should any other proceeding be
instituted by or against Tenant or any Guarantor seeking to adjudicate Tenant
or any Guarantor a bankrupt or insolvent, or seeking liquidation,
reorganization, arrangement, adjustment or composition of Tenants or any
Guarantors debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for Tenant or any Guarantor or for any substantial part of the
property of Tenant or any Guarantor and such proceeding is not dismissed within
one hundred eighty (180) days after institution thereof; or
(g) should Tenant or any Guarantor cause or institute any
proceeding for its dissolution or termination; or
(h) should the estate or interest of Tenant in the Leased
Property or any part thereof be levied upon or attached in any proceeding and
the same shall not be vacated or discharged within the later of (x) ninety (90)
days after commencement thereof, unless the amount in dispute is less than
$250,000, in which case Tenant shall give Notice to Landlord of the dispute but
Tenant may defend in any suitable way, and (y) two hundred seventy (270) days
after receipt by Tenant of Notice thereof from Landlord (unless Tenant shall be
contesting such lien or attachment in good faith in accordance with
Article
8
); or
(i) should there occur any direct or indirect Change in
Control of Tenant or any Guarantor, except as otherwise permitted by
Article
16
;
then, and in any such
event, Landlord, in addition to all other remedies available to it, may
terminate this Agreement with respect to any or all of the Leased Property by
giving Notice thereof to Tenant and upon the expiration of the time, if any,
fixed in such Notice, this Agreement shall terminate with respect to all or the
designated portion of the Leased Property and all rights of Tenant under this
Agreement with respect thereto shall cease.
Landlord shall have and may exercise all rights and remedies available
at law and in equity to Landlord as a result of Tenants breach of this
Agreement.
48
Upon the termination of
this Agreement in connection with any Event of Default, Landlord may, in
addition to any other remedies provided herein, enter upon the Leased Property,
or any portion thereof and take possession of any and all of Tenants Personal
Property, if any, without liability for trespass or conversion (Tenant hereby
waiving any right to notice or hearing prior to such taking of possession by
Landlord) and sell the same at public or private sale, after giving Tenant
reasonable Notice of the time and place of any public or private sale, at which
sale Landlord or its assigns may purchase all or any portion of Tenants
Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without
intending to exclude any other manner of giving Tenant reasonable notice, the
requirement of reasonable Notice shall be met if such Notice is given at least
ten (10) days before the date of sale.
12.2
Remedies
.
None of (a) the termination of this
Agreement pursuant to
Section 12.1
, (b) the repossession of the Leased
Property, or any portion thereof, (c) the failure of Landlord to relet the Leased
Property, or any portion thereof, nor (d) the reletting of all or any of
portion of the Leased Property, shall relieve Tenant of its liability and
obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In the event
of any such termination, Tenant shall forthwith pay to Landlord all Rent due
and payable with respect to the Leased Property, or terminated portion thereof,
through and including the date of such termination. Thereafter, Tenant, until the end of what
would have been the Term of this Agreement in the absence of such termination,
and whether or not the Leased Property, or any portion thereof, shall have been
relet, shall be liable to Landlord for, and shall pay to Landlord, as current
damages, the Rent (Additional Rent to be reasonably calculated by Landlord) and
other charges which would be payable hereunder for the remainder of the Term
had such termination not occurred, less the net proceeds, if any, of any
reletting of the Leased Property, or any portion thereof, after deducting all
reasonable expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commissions, legal expenses,
attorneys fees, advertising, expenses of employees, alteration costs and
expenses of preparation for such reletting.
Tenant shall pay such current damages to Landlord monthly on the days on
which the Minimum Rent would have been payable hereunder if this Agreement had
not been so terminated with respect to such of the Leased Property.
49
At any time after such
termination, whether or not Landlord shall have collected any such current
damages, as liquidated final damages beyond the date of such termination, at
Landlords election, Tenant shall pay to Landlord an amount equal to the
present value (as reasonably determined by Landlord using a discount rate equal
to five percent (5%) per annum) of the excess, if any, of the Rent and other
charges which would be payable hereunder from the date of such termination
(assuming that, for the purposes of this paragraph, annual payments by Tenant
on account of Impositions and Additional Rent would be the same as payments
required for the immediately preceding twelve calendar months, or if less than
twelve calendar months have expired since the Commencement Date, the payments
required for such lesser period projected to an annual amount) for what would
be the then unexpired term of this Agreement if the same remained in effect,
over the fair market rental for the same period. Nothing contained in this Agreement shall,
however, limit or prejudice the right of Landlord to prove and obtain in
proceedings for bankruptcy or insolvency an amount equal to the maximum allowed
by any statute or rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount
be greater than, equal to, or less than the amount of the loss or damages
referred to above.
In case of any Event of
Default, re-entry, expiration and dispossession by summary proceedings or
otherwise, Landlord may, (a) relet the Leased Property or any part or parts
thereof, either in the name of Landlord or otherwise, for a term or terms which
may at Landlords option, be equal to, less than or exceed the period which
would otherwise have constituted the balance of the Term and may grant
concessions or free rent to the extent that Landlord considers advisable and
necessary to relet the same, and (b) may make such reasonable alterations,
repairs and decorations in the Leased Property, or any portion thereof, as
Landlord, in its sole and absolute discretion, considers advisable and
necessary for the purpose of reletting the Leased Property; and the making of
such alterations, repairs and decorations shall not operate or be construed to
release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any
way whatsoever for any failure to relet all or any portion of the Leased
Property, or, in the event that the Leased Property is relet, for failure to collect
the rent under such reletting. To the
maximum extent permitted by law, Tenant hereby expressly waives any and all
rights of redemption granted under any present or future laws in the event of
Tenant being evicted or dispossessed, or in the event of Landlord
50
obtaining possession of
the Leased Property, by reason of the occurrence and continuation of an Event
of Default hereunder.
12.3
Tenants
Waiver
.
IF THIS AGREEMENT
IS TERMINATED PURSUANT TO
SECTION 12.1 OR 12.2
, TENANT WAIVES, TO THE
EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY
PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS
ARTICLE 12
, AND
THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM
LIABILITY FOR RENT OR FOR DEBT.
12.4
Application
of Funds
.
Any payments
received by Landlord under any of the provisions of this Agreement during the
existence or continuance of any Event of Default (and any payment made to
Landlord rather than Tenant due to the existence of any Event of Default) shall
be applied to Tenants current and past due obligations under this Agreement in
such order as Landlord may determine or as may be prescribed by the laws of the
State. Any balance shall be paid to
Tenant.
12.5
Landlords
Right to Cure Tenants Default
.
If an Event of Default shall have occurred and
be continuing, Landlord, after Notice to Tenant (which Notice shall not be
required if Landlord shall reasonably determine immediate action is necessary
to protect person or property), without waiving or releasing any obligation of
Tenant and without waiving or releasing any Event of Default, may (but shall
not be obligated to), at any time thereafter, make such payment or perform such
act for the account and at the expense of Tenant, and may, to the maximum
extent permitted by law, enter upon the Leased Property, or any portion
thereof, for such purpose and take all such action thereon as, in Landlords
sole and absolute discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of
Tenant. All reasonable costs and
expenses (including, without limitation, reasonable attorneys fees) incurred
by Landlord in connection therewith, together with interest thereon (to the
extent permitted by law) at the Overdue Rate from the date such sums are paid
by Landlord until repaid, shall be paid by Tenant to Landlord, on demand.
ARTICLE 13
HOLDING OVER
Any holding over by
Tenant after the expiration or sooner termination of this Agreement shall be
treated as a daily tenancy at sufferance at a rate equal to two (2) times the
Minimum Rent and other charges herein provided (prorated on a
51
daily basis). Tenant shall also pay to Landlord all damages
(direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the
terms and conditions set forth in this Agreement, to the extent
applicable. Nothing contained herein
shall constitute the consent, express or implied, of Landlord to the holding
over of Tenant after the expiration or earlier termination of this Agreement.
ARTICLE 14
LANDLORD DEFAULT
If Landlord shall default
in the performance or observance of any of its covenants or obligations set
forth in this Agreement or any obligation of Landlord, if any, under any
agreement affecting the Leased Property, the performance of which is not Tenants
obligation pursuant to this Agreement, and any such default shall continue for
a period of thirty (30) days after Notice thereof from Tenant to Landlord and
any applicable Property Mortgagee, or such additional period as may be
reasonably required to correct the same, Tenant may declare the occurrence of a
Landlord Default
by a second Notice to Landlord and to such Property
Mortgagee. Thereafter, Tenant may
forthwith cure the same and, subject to the provisions of the following
paragraph, invoice Landlord for costs and expenses (including reasonable
attorneys fees and court costs) incurred by Tenant in curing the same,
together with interest thereon (to the extent permitted by law) from the date
Landlord receives Tenants invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this
Agreement for any default by Landlord hereunder and no right, for any such
default, to offset or counterclaim against any Rent or other charges due hereunder.
If Landlord shall in good
faith dispute the occurrence of any Landlord Default and Landlord, before the
expiration of the applicable cure period, shall give Notice thereof to Tenant,
setting forth, in reasonable detail, the basis therefor, no Landlord Default
shall be deemed to have occurred and Landlord shall have no obligation with
respect thereto until final adverse determination thereof. If Tenant and Landlord shall fail, in good
faith, to resolve any such dispute within ten (10) days after Landlords Notice
of dispute, either may submit the matter for resolution in accordance with
Article
22
.
52
ARTICLE 15
PURCHASE OF TENANTS PERSONAL PROPERTY
Landlord shall have the
option to purchase Tenants Personal Property, at the expiration or sooner termination
of this Agreement, for an amount equal to the then fair market value thereof
(current replacement cost as determined by agreement of the parties or, in the
absence of such agreement, appraisal), subject to, and with appropriate price
adjustments for, all liabilities assumed such as equipment leases, conditional
sale contracts and other encumbrances securing such liabilities to which such
Personal Property is subject.
ARTICLE 16
SUBLETTING AND ASSIGNMENT
16.1
Subletting
and Assignment
.
Except as
provided in
Section 16.3
, Tenant shall not, without Landlords prior
written consent (which consent may be given or withheld in Landlords sole and
absolute discretion), assign, mortgage, pledge, hypothecate, encumber or
otherwise transfer this Agreement or sublease or permit the sublease (which
term shall be deemed to include the granting of concessions, licenses, and the
like), of the Leased Property, or any portion thereof, or suffer or permit this
Agreement or the leasehold estate created hereby or any other rights arising
under this Agreement to be assigned, transferred, mortgaged, pledged,
hypothecated or encumbered, in whole or in part, whether voluntarily,
involuntarily or by operation of law, or permit the use or operation of the
Leased Property, or any portion thereof, by anyone other than Tenant to be
offered or advertised for assignment or subletting.
For purposes of this
Section
16.1
, an assignment of this Agreement shall be deemed to include, without
limitation, any direct or indirect Change in Control of Tenant.
If this Agreement is
assigned or if the Leased Property, or any portion thereof is sublet (or
occupied by anybody other than Tenant and its employees), after termination of
this Agreement, Landlord may collect the rents from such assignee, subtenant or
occupant, as the case may be, but no such collection shall be deemed a waiver
of the provisions set forth in the first paragraph of this
Section 16.1
,
the acceptance by Landlord of such assignee, subtenant or occupant, as the case
may be, as a tenant, or a release of Tenant from the future performance by
53
Tenant of its covenants,
agreements or obligations contained in this Agreement.
Any assignment or
transfer of Tenants interest under this Agreement shall be subject to such
assignees or transferees delivery to Landlord of a Guaranty, which Guaranty
shall be in form and substance satisfactory to Landlord in its sole discretion
and which Guaranty shall constitute a Guaranty hereunder.
No subletting or
assignment shall in any way impair the continuing primary liability of Tenant
hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant
shall be released from all obligations hereunder), and no consent to any
subletting or assignment in a particular instance shall be deemed to be a
waiver of the prohibition set forth in this
Section 16.1
. No assignment, subletting or occupancy shall
affect any Permitted Use. Any
subletting, assignment or other transfer of Tenants interest under this
Agreement in contravention of this
Section 16.1
shall be voidable at
Landlords option.
16.2
Required
Sublease Provisions
.
Any
sublease of all or any portion of the Leased Property entered into on or after
the Commencement Date shall provide (a) that it is subject and subordinate to
this Agreement and to the matters to which this Agreement is or shall be
subject or subordinate; (b) that in the event of termination of this Agreement
or reentry or dispossession of Tenant by Landlord under this Agreement,
Landlord may, at its option, terminate such sublease or take over all of the
right, title and interest of Tenant, as sublessor under such sublease, and such
subtenant shall, at Landlords option, attorn to Landlord pursuant to the then
executory provisions of such sublease, except that neither Landlord nor any
Property Mortgagee, as holder of a mortgage or as Landlord under this
Agreement, if such mortgagee succeeds to that position, shall (i) be liable for
any act or omission of Tenant under such sublease, (ii) be subject to any
credit, counterclaim, offset or defense which theretofore accrued to such
subtenant against Tenant, (iii) be bound by any previous modification of such
sublease not consented to in writing by Landlord or by any previous prepayment
of more than one (1) months rent, (iv) be bound by any covenant of Tenant to
undertake or complete any construction of the applicable Property, or any
portion thereof, (v) be required to account for any security deposit of the
subtenant other than any security deposit actually delivered to Landlord by
Tenant, (vi) be bound
54
by any obligation to make any payment to such subtenant or grant any
credits, except for services, repairs, maintenance and restoration provided for
under the sublease that are performed after the date of such attornment, (vii)
be responsible for any monies owing by Tenant to the credit of such subtenant
unless actually delivered to Landlord by Tenant, or (viii) be required to
remove any Person occupying any portion of the Leased Property; and (c) in the
event that such subtenant receives a written Notice from Landlord or any
Property Mortgagee stating that this Agreement has terminated, such subtenant
shall thereafter be obligated to pay all rentals accruing under such sublease
directly to the party giving such Notice or as such party may direct. Such sublease shall provide that the
subtenant thereunder shall, at the request of Landlord, execute a suitable
instrument in confirmation of such agreement to attorn. An original counterpart of each such sublease
and assignment and assumption, duly executed by Tenant and such subtenant or
assignee, as the case may be, in form and substance reasonably satisfactory to
Landlord, shall be delivered promptly to Landlord and (a) in the case of an
assignment, the assignee shall assume in writing and agree to keep and perform
all of the terms of this Agreement on the part of Tenant to be kept and
performed and shall be, and become, jointly and severally liable with Tenant
for the performance thereof and (b) in case of either an assignment or subletting,
Tenant shall remain primarily liable, as principal rather than as surety, for
the prompt payment of the Rent and for the performance and observance of all of
the covenants and conditions to be performed by Tenant hereunder.
The provisions of this
Section
16.2
shall not be deemed a waiver of the provisions set forth in the first
paragraph of
Section 16.1
.
16.3
Permitted
Sublease
.
Subject to the
provisions of
Section 16.2
and
Section 16.4
and any other express
conditions or limitations set forth herein, Tenant may, in each instance after
Notice to Landlord and without consent, (a) enter into third party agreements
or sublease space at any Property for fuel station, restaurant/food service or
mechanical repair purposes or other concessions in furtherance of the Permitted
Use, so long as such subleases will not violate or affect any Legal Requirement
or Insurance Requirement, and Tenant shall provide such additional insurance
coverage applicable to the activities to be conducted in such subleased space as
Landlord and any Property Mortgagee may reasonably require, and (b) enter into
one or more subleases or licenses with Affiliated Persons
55
of Tenant with respect to the Leased Property, or any portion thereof,
provided
Tenant gives Landlord Notice of the material terms and conditions thereof. Landlord and Tenant acknowledge and agree
that if Tenant enters into one or more subleases or licenses with Affiliated
Persons of Tenant with respect to any Property, or any portion thereof, in
accordance with the preceding clause (b), Tenant may allocate the rent and
other charges with respect to the affected Property in any reasonable manner;
provided
,
however
, that such allocation shall not affect Tenants (nor any
Guarantors) liability for the Rent and other obligations of Tenant under this
Agreement; and,
provided
,
further
, that Tenant shall give
Landlord prompt written notice of any allocation or reallocation of the rent
and other charges with respect to the affected Property and, in any event,
Tenant shall give Landlord written notice of the amount of such allocations at
least ten (10) Business Days prior to the date that Landlord or Hospitality
Properties Trust is required to file any tax returns in any State where such
affected Leased Property is located.
16.4
Sublease
Limitation
.
Anything
contained in this Agreement to the contrary notwithstanding, Tenant shall not
sublet or license the Leased Property, or any portion thereof, on any basis
such that the rental to be paid by any sublessee or licensee thereunder would
be based, in whole or in part, on the net income or profits derived by the
business activities of such sublessee or licensee, any other formula such that
any portion of such sublease rental or license would fail to qualify as rents
from real property within the meaning of Section 856(d) of the Code, or any
similar or successor provision thereto or would otherwise disqualify Landlord
or any Affiliated Person for treatment as a real estate investment trust
under the Code.
ARTICLE 17
ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS
17.1
Estoppel
Certificates
.
At any time
and from time to time, but not more than a reasonable number of times per year,
upon not less than ten (10) Business Days prior Notice by either party, the
party receiving such Notice shall furnish to the other an Officers Certificate
certifying that this Agreement is unmodified and in full force and effect (or
that this Agreement is in full force and effect as modified and setting forth
the modifications), the date to which the Rent has been paid, that no Default
or an Event of Default has occurred and is continuing or, if a Default or an
Event of Default shall exist, specifying
56
in reasonable detail the nature thereof, and the steps being taken to
remedy the same, and such additional information as the requesting party may
reasonably request. Any such certificate
furnished pursuant to this
Section 17.1
may be relied upon by the
requesting party, its lenders and any prospective purchaser or mortgagee of the
Leased Property, or any portion thereof, or the leasehold estate created
hereby.
17.2
Financial
Statements
.
Tenant shall
furnish or cause TA to furnish, as applicable, the following statements to
Landlord:
(a) within forty-five (45) days after each of the first three
fiscal quarters of any Fiscal Year, the most recent Consolidated Financials,
accompanied by the Financial Officers Certificate;
(b) within ninety (90) days after the end of each Fiscal Year,
the most recent Consolidated Financials and financials of Tenant for such year,
certified by an independent certified public accountant reasonably satisfactory
to Landlord and accompanied by a Financial Officers Certificate;
(c) within forty-five (45) days after the end of each month,
an unaudited operating statement and statement of Capital Expenditures prepared
on a Property by Property basis and a combined basis, accompanied by a
Financial Officers Certificate;
(d) at any time and from time to time upon not less than
twenty (20) days Notice from Landlord or such additional period as may be
reasonable under the circumstances, any Consolidated Financials, Tenant
financials or any other audited or unaudited financial reporting information
required to be filed by Landlord with any securities and exchange commission,
the SEC or any successor agency, or any other governmental authority, or
required pursuant to any order issued by any court, governmental authority or
arbitrator in any litigation to which Landlord is a party, for purposes of
compliance therewith; and
(e) promptly upon Notice from Landlord, such other information
concerning the business, financial condition and affairs of Tenant, any
Guarantor, and/or any Affiliated Person of Tenant as Landlord reasonably may
request from time to time.
Landlord shall treat any
non-public information which it receives from Tenant pursuant to this Section
17.2 as confidential, but Landlord may at any time, and from time to
57
time, provide any
Property Mortgagee with copies of any of the foregoing statements, subject to
Landlord obtaining the agreement of such Property Mortgagee to maintain such
statements and the information therein as confidential.
ARTICLE 18
LANDLORDS RIGHT TO INSPECT
Tenant shall permit
Landlord and its authorized representatives to inspect the Leased Property, or
any portion thereof, during usual business hours upon not less than forty-eight
(48) hours notice and to make such repairs as Landlord is permitted or
required to make pursuant to the terms of this Agreement, provided that any
inspection or repair by Landlord or its representatives will not unreasonably
interfere with Tenants use and operation of the Leased Property and further
provided that in the event of an emergency, as determined by Landlord in its
reasonable discretion, prior Notice shall not be necessary.
ARTICLE 19
EASEMENTS
19.1
Grant of
Easements
.
Provided no
Event of Default has occurred and is continuing, Landlord will join in granting
and, if necessary, modifying or abandoning such rights-of-way, easements and
other interests as may be reasonably requested by Tenant for ingress and
egress, and electric, telephone, gas, water, sewer and other utilities so long
as:
(a) the instrument creating, modifying or abandoning any such
easement, right-of-way or other interest is satisfactory to and approved by
Landlord (which approval shall not be unreasonably withheld, delayed or
conditioned); and
(b) Landlord receives an Officers Certificate from Tenant
stating (i) that such grant, modification or abandonment is not detrimental to
the proper conduct of business on such Property, (ii) the consideration, if
any, being paid for such grant, modification or abandonment (which
consideration shall be paid by Tenant), (iii) that such grant, modification or
abandonment does not impair the use or value of such Property for the Permitted
Use, and (iv) that, for as long as this Agreement shall be in effect, Tenant
will perform all obligations, if any, of Landlord under any such instrument.
58
19.2
Exercise
of Rights by Tenant
.
So
long as no Event of Default has occurred and is continuing, Tenant shall have
the right to exercise all rights of Landlord under the Easement Agreements and,
in connection therewith, Landlord shall execute and promptly return to Tenant
such documents as Tenant shall reasonably request. Tenant shall perform all obligations of
Landlord under the Easement Agreements.
19.3
Permitted
Encumbrances
.
Any
agreements entered into in accordance with this
Article 19
shall be
deemed a Permitted Encumbrance.
ARTICLE 20
PROPERTY MORTGAGES
20.1
Landlord
May Grant Liens
.
Without
the consent of Tenant, Landlord may, from time to time, directly or indirectly,
create or otherwise cause to exist any lien, encumbrance or title retention
agreement (
Encumbrance
) upon the Leased Property, or any portion
thereof, or interest therein, whether to secure any borrowing or other means of
financing or refinancing.
20.2
Subordination
of Lease
.
This Agreement
and any and all rights of Tenant hereunder are and shall be subject and
subordinate to any ground or master lease, and all renewals, extensions,
modifications and replacements thereof, and to all mortgages and deeds of
trust, which may now or hereafter affect the Leased Property, or any portion
thereof, or any improvements thereon and/or any of such leases, whether or not
such mortgages or deeds of trust shall also cover other lands and/or buildings
and/or leases, to each and every advance made or hereafter to be made under
such mortgages and deeds of trust, and to all renewals, modifications,
replacements and extensions of such leases and such mortgages and deeds of
trust and all consolidations of such mortgages and deeds of trust. This section shall be self-operative and no
further instrument of subordination shall be required. In confirmation of such subordination, Tenant
shall promptly execute, acknowledge and deliver any instrument that Landlord,
the lessor under any such lease or the holder of any such mortgage or the
trustee or beneficiary of any deed of trust or any of their respective
successors in interest may reasonably request to evidence such
subordination. Any lease to which this
Agreement is, at the time referred to, subject and subordinate is herein called
Superior Lease
and the lessor of a Superior Lease or its
59
successor in interest at the time referred to is herein called
Superior
Landlord
and any mortgage or deed of trust to which this Agreement is, at
the time referred to, subject and subordinate is herein called
Superior
Mortgage
and the holder, trustee or beneficiary of a Superior Mortgage is herein
called
Superior Mortgagee
.
Tenant shall have no obligations under any Superior Lease or Superior
Mortgage other than those expressly set forth in this
Section 20.2
.
If any Superior Landlord
or Superior Mortgagee or the nominee or designee of any Superior Landlord or
Superior Mortgagee shall succeed to the rights of Landlord under this Agreement
(any such person,
Successor Landlord
), whether through possession or
foreclosure action or delivery of a new lease or deed, or otherwise, at such
Successor Landlords request, Tenant shall attorn to and recognize the
Successor Landlord as Tenants landlord under this Agreement and Tenant shall
promptly execute and deliver any instrument that such Successor Landlord may
reasonably request to evidence such attornment (provided that such instrument
does not alter the terms of this Agreement), whereupon, this Agreement shall
continue in full force and effect as a direct lease between the Successor
Landlord and Tenant upon all of the terms, conditions and covenants as are set
forth in this Agreement, except that the Successor Landlord (unless formerly
the landlord under this Agreement or its nominee or designee) shall not be (a)
liable in any way to Tenant for any act or omission, neglect or default on the
part of any prior Landlord under this Agreement, (b) responsible for any monies
owing by or on deposit with any prior Landlord to the credit of Tenant (except
to the extent actually paid or delivered to the Successor Landlord), (c)
subject to any counterclaim or setoff which theretofore accrued to Tenant
against any prior Landlord, (d) bound by any modification of this Agreement
subsequent to such Superior Lease or Mortgage, or by any previous prepayment of
Rent for more than one (1) month in advance of the date due hereunder, which
was not approved in writing by the Superior Landlord or the Superior Mortgagee
thereto, (e) liable to Tenant beyond the Successor Landlords interest in the
Leased Property and the rents, income, receipts, revenues, issues and profits issuing
from the Leased Property, (f) responsible for the performance of any work to be
done by the Landlord under this Agreement to render the Leased Property ready
for occupancy by Tenant (subject to Landlords obligations under
Section
5.1.2(b)
or with respect to any insurance or Condemnation proceeds), or (g)
required to remove any Person occupying the Leased Property or any part
thereof, except if such person claims by, through or under the Successor
Landlord.
60
Tenant agrees at any time
and from time to time to execute a suitable instrument in confirmation of
Tenants agreement to attorn, as aforesaid, and Landlord agrees to provide
Tenant with an instrument of nondisturbance and attornment from each such
Superior Mortgagee and Superior Landlord (other than the lessors under any
ground leases with respect to the Leased Property, or any portion thereof) in
form and substance reasonably satisfactory to Tenant. Notwithstanding the foregoing, any Successor
Landlord shall be liable (a) to pay to Tenant any amounts owed under
Section
5.1.2(b)
, and (b) to pay to Tenant any portions of insurance proceeds or
Awards received by Landlord or the Successor Landlord required to be paid to
Tenant pursuant to the terms of this Agreement, and, as a condition to any
mortgage, lien or lease in respect of the Leased Property, or any portion
thereof, and the subordination of this Agreement thereto, the mortgagee,
lienholder or lessor, as applicable, shall expressly agree, for the benefit of
Tenant, to make such payments, which agreement shall be embodied in an
instrument in form reasonably satisfactory to Tenant.
20.3
Notice
to Mortgagee and Superior Landlord
.
Subsequent to the receipt by Tenant of Notice
from Landlord as to the identity of any Property Mortgagee or Superior Landlord
under a lease with Landlord, as ground lessee, which includes the Leased
Property, or any portion thereof, as part of the demised premises and which
complies with
Section 20.1
(which Notice shall be accompanied by a copy
of the applicable mortgage or lease), no Notice from Tenant to Landlord as to a
default by Landlord under this Agreement shall be effective with respect to a
Property Mortgagee or Superior Landlord unless and until a copy of the same is
given to such Property Mortgagee or Superior Landlord at the address set forth
in the above described Notice, and the curing of any of Landlords defaults
within the applicable notice and cure periods set forth in
Article 14
by such Property Mortgagee or Superior Landlord shall be treated as performance
by Landlord.
ARTICLE 21
ADDITIONAL COVENANTS OF LANDLORD AND TENANT
21.1
Prompt
Payment of Indebtedness
.
Tenant shall (a) pay or cause to be paid when
due all payments of principal of and premium and interest on Tenants
Indebtedness for money borrowed and shall not permit or suffer any such
Indebtedness to become or remain in default beyond any applicable grace or cure
period, (b) pay or cause to be paid when due all lawful claims for labor
61
and rents with respect to the Leased Property, (c) pay or cause to be
paid when due all trade payables and (d) pay or cause to be paid when due all
other of Tenants Indebtedness upon which it is or becomes obligated, except,
in each case, other than that referred to in clause (a), to the extent payment
is being contested in good faith by appropriate proceedings in accordance with
Article
8
and if Tenant shall have set aside on its books adequate reserves with
respect thereto in accordance with GAAP, if appropriate, or unless and until
foreclosure, distraint sale or other similar proceedings shall have been
commenced.
21.2
Conduct
of Business
.
Tenant shall
not engage in any business other than the leasing and operation of the Leased
Property (including any incidental or ancillary business relating thereto) and
shall do or cause to be done all things necessary to preserve, renew and keep
in full force and effect and in good standing its legal existence and its
rights and licenses necessary to conduct such business.
21.3
Maintenance
of Accounts and Records
.
Tenant shall keep true records and books of
account of Tenant in which full, true and correct entries will be made of
dealings and transactions in relation to the business and affairs of Tenant in
accordance with GAAP. Tenant shall apply
accounting principles in the preparation of the financial statements of Tenant
which, in the judgment of and the opinion of its independent public
accountants, are in accordance with GAAP, where applicable, except for changes
approved by such independent public accountants. Tenant shall provide to Landlord either in a
footnote to the financial statements delivered under
Section 17.2
which
relate to the period in which such change occurs, or in separate schedules to
such financial statements, information sufficient to show the effect of any
such changes on such financial statements.
21.4
Notice
of Litigation, Etc.
Tenant
shall give prompt Notice to Landlord of any litigation or any administrative
proceeding to which it may hereafter become a party of which Tenant has notice
or actual knowledge which involves a potential liability equal to or greater
than Two Hundred Fifty Thousand Dollars ($250,000) or which may otherwise
result in any material adverse change in the business, operations, property,
prospects, results of operation or condition, financial or other, of
Tenant. Forthwith upon Tenant obtaining
knowledge of any Default, Event of Default or any default or event of default
under any agreement relating to Indebtedness for money borrowed in an aggregate
amount exceeding, at any one time, Two Hundred
62
Fifty Thousand Dollars ($250,000), or any event or condition that would
be required to be disclosed in a current report filed by Tenant on Form 8-K
or in Part II of a quarterly report on Form 10-Q if Tenant were required
to file such reports under the Securities Exchange Act of 1934, as amended,
Tenant shall furnish Notice thereof to Landlord specifying the nature and
period of existence thereof and what action Tenant has taken or is taking or
proposes to take with respect thereto.
21.5
Indebtedness
of Tenant
.
Tenant shall
not create, incur, assume or guarantee, or permit to exist, or become or remain
liable directly or indirectly upon, any Indebtedness except the following:
(a) Indebtedness of Tenant to Landlord;
(b) Indebtedness of Tenant for Impositions, to the extent that
payment thereof shall not at the time be required to be made in accordance with
the provisions of
Article 8
;
(c) Indebtedness of Tenant in respect of judgments or awards
(i) which have been in force for less than the applicable appeal period and in
respect of which execution thereof shall have been stayed pending such appeal
or review, or (ii) which are fully covered by insurance payable to Tenant, or
(iii) which are for an amount not in excess of $250,000 in the aggregate at any
one time outstanding and (x) which have been in force for not longer than the
applicable appeal period, so long as execution is not levied thereunder or (y)
in respect of which an appeal or proceedings for review shall at the time be prosecuted
in good faith in accordance with the provisions of
Article 8
, and in
respect of which execution thereof shall have been stayed pending such appeal
or review;
(d) unsecured borrowings of Tenant from its Affiliated Persons
which are by their terms expressly subordinate pursuant to a Subordination
Agreement to the payment and performance of Tenants obligations under this
Agreement; or
(e) Indebtedness for purchase money financing in accordance
with
Section 21.8(a)
and other operating liabilities incurred in the
ordinary course of Tenants business;
(f) Indebtedness of Tenant as guarantor or borrower secured
by Liens permitted under
Section 21.8(c)
; or
63
(g)
A
guaranty of TAs obligations under its revolving line of credit and for any
privately placed or publicly issued debt.
21.6
Distributions,
Payments to Affiliated Persons, Etc.
Tenant shall not declare, order, pay or make,
directly or indirectly, any Distributions or any payment to any Affiliated
Person of Tenant (including payments in the ordinary course of business) or set
apart any sum or property therefor, or agree to do so, if, at the time of such
proposed action, or immediately after giving effect thereto, any Event of
Default shall have occurred and be continuing.
Otherwise, as long as no Event of Default shall have occurred and be
continuing, Tenant may make Distributions and payments to Affiliated Persons;
provided
,
however
, that any such payments shall at all times be subordinate to
Tenants obligations under this Agreement.
21.7
Prohibited
Transactions
.
Tenant
shall not permit to exist or enter into any agreement or arrangement whereby it
engages in a transaction of any kind with any Affiliated Person as to Tenant or
any Guarantor, except on terms and conditions which are commercially
reasonable.
21.8
Liens
and Encumbrances
.
Except
as permitted by
Article 7
and
Section 21.5
, Tenant shall not
create or incur or suffer to be created or incurred or to exist any Lien on
this Agreement or any of Tenants assets, properties, rights or income, or any
of its interest therein, now or at any time hereafter owned, other than:
(a)
Security
interests securing the purchase price of equipment or personal property whether
acquired before or after the Commencement Date;
provided
,
however
,
that (i) such Lien shall at all times be confined solely to the asset in
question and (ii) the aggregate principal amount of Indebtedness secured by any
such Lien shall not exceed the cost of acquisition or construction of the
property subject thereto;
(b)
Permitted
Encumbrances;
(c)
Security interests in Accounts or Chattel Paper,
in Support Obligations, General Intangibles or Deposit Accounts relating to
such Accounts or Chattel Paper, in any Instruments or Investment Property
evidencing or arising from such Accounts or Chattel Paper, in any documents,
books, records or other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and related
64
property and rights) maintained
with respect to any property described in this
Section 21.8(c)
or in any
Proceeds of any of the foregoing (capitalized terms used in this
Section
21.8(c)
without definition being used as defined in or for purposes of
Article 9 of the Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts); or
(d)
As
permitted pursuant to
Section 21.5
.
21.9
Merger;
Sale of Assets; Etc.
Without Landlords prior written consent
(which consent may be given or withheld in Landlords sole discretion), Tenant
shall not (i) sell, lease (as lessor or sublessor), transfer or otherwise
dispose of, or abandon, all or any material portion of its assets (including
capital stock or other equity interests) or business to any Person, (ii) merge
into or with or consolidate with any other Entity, or (iii) sell, lease (as
lessor or sublessor), transfer or otherwise dispose of, or abandon, any
personal property or fixtures or any real property;
provided
,
however
,
that, notwithstanding the provisions of clause (iii) preceding, Tenant may
dispose of equipment or fixtures which have become inadequate, obsolete, worn-out,
unsuitable, undesirable or unnecessary, provided substitute equipment or
fixtures having equal or greater value and utility (but not necessarily having
the same function) have been provided.
21.10
Bankruptcy
Remote Entities
. At
Landlords request, Tenant shall make such amendments, modifications or other
changes to its charter documents and governing bodies (including, without
limitation, Tenants board of directors), and take such other actions, as may
from time to time be necessary to qualify Tenant as a bankruptcy remote entity,
provided
that
Landlord shall reimburse Tenant for all costs and
expenses reasonably incurred by Tenant in connection with the making of such
amendments or modifications.
21.11
Trade Area Restriction
. Notwithstanding anything to
the contrary in this Agreement, neither Tenant nor any Affiliated Person of
Tenant shall acquire, own, franchise, finance, lease, manage, operate or open
any Travel Center or similar business (other than any Travel Center leased to
Tenant or any Affiliated Person of Tenant by Landlord or any Affiliated Person
of Landlord) within seventy-five (75) miles in either direction along the
primary interstate on which any Property is located without Landlords consent,
which consent may be given or withheld in Landlords sole discretion.
65
ARTICLE 22
ARBITRATION
Landlord or Tenant may
elect to submit any dispute hereunder that has an amount in controversy in
excess of $250,000 to arbitration hereunder.
Any such arbitration shall be conducted in Boston, Massachusetts in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then pertaining and the decision of the arbitrators with respect to
such dispute shall be binding, final and conclusive on the parties.
In the event Landlord or
Tenant shall elect to submit any such dispute to arbitration hereunder,
Landlord and Tenant shall each appoint and pay all fees of a fit and impartial
person as arbitrator with at least ten (10) years recent professional
experience in the general subject matter of the dispute. Notice of such appointment shall be sent in
writing by each party to the other, and the arbitrators so appointed, in the
event of their failure to agree within thirty (30) days after the appointment
of the second arbitrator upon the matter so submitted, shall appoint a third
arbitrator. If either Landlord or Tenant
shall fail to appoint an arbitrator, as aforesaid, for a period of twenty (20)
days after written notice from the other party to make such appointment, then
the arbitrator appointed by the party having made such appointment shall
appoint a second arbitrator and the two (2) so appointed shall, in the event of
their failure to agree upon any decision within thirty (30) days thereafter,
appoint a third arbitrator. If such
arbitrators fail to agree upon a third arbitrator within forty five (45) days
after the appointment of the second arbitrator, then such third arbitrator
shall be appointed by the American Arbitration Association from its qualified
panel of arbitrators, and shall be a person having at least ten (10) years
recent professional experience as to the subject matter in question. The fees of the third arbitrator and the
expenses incident to the proceedings shall be borne equally between Landlord
and Tenant, unless the arbitrators decide otherwise. The fees of respective counsel engaged by the
parties, and the fees of expert witnesses and other witnesses called for the
parties, shall be paid by the respective party engaging such counsel or calling
or engaging such witnesses.
The decision of the
arbitrators shall be rendered within thirty (30) days after appointment of the
third arbitrator. Such decision shall be
in writing and in duplicate, one
66
counterpart thereof to be
delivered to Landlord and one to Tenant.
A judgment of a court of competent jurisdiction may be entered upon the
award of the arbitrators in accordance with the rules and statutes applicable
thereto then obtaining.
ARTICLE 23
MISCELLANEOUS
23.1
Limitation
on Payment of Rent
.
All
agreements between Landlord and Tenant herein are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of acceleration
of Rent, or otherwise, shall the Rent or any other amounts payable to Landlord
under this Agreement exceed the maximum permissible under applicable law, the
benefit of which may be asserted by Tenant as a defense, and if, from any
circumstance whatsoever, fulfillment of any provision of this Agreement, at the
time performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law, or if from any circumstances Landlord should
ever receive as fulfillment of such provision such an excessive amount, then,
ipso
facto
, the amount which would be excessive shall be applied to the
reduction of the installment(s) of Minimum Rent next due and not to the payment
of such excessive amount. This provision
shall control every other provision of this Agreement and any other agreements
between Landlord and Tenant.
23.2
No
Waiver
.
No failure by
Landlord or Tenant to insist upon the strict performance of any term hereof or
to exercise any right, power or remedy consequent upon a breach thereof, and no
acceptance of full or partial payment of Rent during the continuance of any
such breach, shall constitute a waiver of any such breach or of any such
term. To the maximum extent permitted by
law, no waiver of any breach shall affect or alter this Agreement, which shall
continue in full force and effect with respect to any other then existing or
subsequent breach.
23.3
Remedies
Cumulative
.
To the
maximum extent permitted by law, each legal, equitable or contractual right,
power and remedy of Landlord or Tenant, now or hereafter provided either in
this Agreement or by statute or otherwise, shall be cumulative and concurrent
and shall be in addition to every other right, power and remedy and the exercise
or beginning of the exercise by Landlord or Tenant (as applicable) of any one
or more of such rights, powers and remedies shall not preclude the
67
simultaneous or subsequent exercise by
Landlord of any or all of such other rights, powers and remedies.
23.4
Severability
.
Any clause, sentence, paragraph,
section or provision of this Agreement held by a court of competent
jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate
or nullify the remainder of this Agreement, but rather the effect thereof shall
be confined to the clause, sentence, paragraph, section or provision so held to
be invalid, illegal or ineffective, and this Agreement shall be construed as if
such invalid, illegal or ineffective provisions had never been contained
therein.
23.5
Acceptance
of Surrender
.
No
surrender to Landlord of this Agreement or of the Leased Property or any part
thereof, or of any interest therein, shall be valid or effective unless agreed
to and accepted in writing by Landlord and no act by Landlord or any
representative or agent of Landlord, other than such a written acceptance by
Landlord, shall constitute an acceptance of any such surrender.
23.6
No
Merger of Title
.
It is
expressly acknowledged and agreed that it is the intent of the parties that
there shall be no merger of this Agreement or of the leasehold estate created
hereby by reason of the fact that the same Person may acquire, own or hold,
directly or indirectly, this Agreement or the leasehold estate created hereby
and the fee estate or ground landlords interest in the Leased Property.
23.7
Conveyance
by Landlord
.
If Landlord
or any successor owner of all or any portion of the Leased Property shall
convey all or any portion of the Leased Property in accordance with the terms hereof
other than as security for a debt, and the grantee or transferee of such of the
Leased Property shall expressly assume all obligations of Landlord hereunder
arising or accruing from and after the date of such conveyance or transfer,
Landlord or such successor owner, as the case may be, shall thereupon be
released from all future liabilities and obligations of Landlord under this
Agreement with respect to such of the Leased Property arising or accruing from
and after the date of such conveyance or other transfer and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
23.8
Quiet
Enjoyment
.
Tenant shall
peaceably and quietly have, hold and enjoy the Leased Property for the Term,
free of hindrance or molestation by Landlord or anyone claiming by, through or
under Landlord, but subject to (a) any Encumbrance
68
permitted under
Article 20
or
otherwise permitted to be created by Landlord hereunder, (b) all Permitted
Encumbrances, (c) liens as to obligations of Landlord that are either not yet
due or which are being contested in good faith and by proper proceedings,
provided the same do not materially interfere with Tenants ability to operate
any Travel Center and (d) liens that have been consented to in writing by
Tenant. Except as otherwise provided in
this Agreement, no failure by Landlord to comply with the foregoing covenant
shall give Tenant any right to cancel or terminate this Agreement or abate,
reduce or make a deduction from or offset against the Rent or any other sum
payable under this Agreement, or to fail to perform any other obligation of
Tenant hereunder.
23.9
No
Recordation
.
Neither
Landlord nor Tenant shall record this Agreement.
23.10
Notices
.
(a)
Any
and all notices, demands, consents, approvals, offers, elections and other
communications required or permitted under this Agreement shall be deemed
adequately given if in writing and the same shall be delivered either in hand,
by telecopier with written acknowledgment of receipt, or by mail or Federal Express
or similar expedited commercial carrier, addressed to the recipient of the
notice, postpaid and registered or certified with return receipt requested (if
by mail), or with all freight charges prepaid (if by Federal Express or similar
carrier).
(b)
All
notices required or permitted to be sent hereunder shall be deemed to have been
given for all purposes of this Agreement upon the date of acknowledged receipt,
in the case of a notice by telecopier, and, in all other cases, upon the date
of receipt or refusal, except that whenever under this Agreement a notice is
either received on a day which is not a Business Day or is required to be
delivered on or before a specific day which is not a Business Day, the day of
receipt or required delivery shall automatically be extended to the next
Business Day.
(c)
All
such notices shall be addressed,
if to Landlord:
c/o
Hospitality Properties Trust
400
Centre Street
Newton,
Massachusetts 02458
Attn: Mr. John G. Murray
Telecopier
No. (617) 969-5730
69
if to Tenant:
c/o TravelCenters
of America LLC
24601
Center Ridge Road
Westlake,
Ohio 44145
Attn: Mr. Thomas M. OBrien
Telecopier No. (440)808-3301
(d)
By
notice given as herein provided, the parties hereto and their respective
successors and assigns shall have the right from time to time and at any time
during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
23.11
Construction
.
Anything contained in this Agreement to the
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination or expiration of this
Agreement with respect to the Leased Property shall survive such termination or
expiration. In no event shall Landlord
be liable for any consequential damages suffered by Tenant as the result of a
breach of this Agreement by Landlord.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
to be charged. All the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Each term or
provision of this Agreement to be performed by Tenant shall be construed as an
independent covenant and condition. Time
is of the essence with respect to the provisions of this Agreement. Tenant hereby acknowledges that the agreement
between Landlord and Tenant to treat this Agreement as a single lease in all
respects was and is of primary importance, and a material inducement, to
Landlord to enter into this Agreement. Without
limiting the generality of the foregoing, the parties hereto acknowledge that
this Agreement constitutes a single lease of the Leased Property and is not
divisible notwithstanding any references herein to any individual Property and
notwithstanding the possibility that certain individual Properties may be
deleted herefrom pursuant to the express provisions of this Agreement.
23.12
Counterparts;
Headings
.
This Agreement
may be executed in two or more counterparts, each of which shall
70
constitute an original, but
which, when taken together, shall constitute but one instrument and shall
become effective as of the date hereof when copies hereof, which, when taken
together, bear the signatures of each of the parties hereto shall have been
signed. Headings in this Agreement are
for purposes of reference only and shall not limit or affect the meaning of the
provisions hereof.
23.13
Applicable
Law, Etc.
Except as to
matters regarding the internal affairs of Landlord and issues of or limitations
on any personal liability of the shareholders and trustees or directors of
Landlord for obligations of Landlord, as to which the laws of the State of
Maryland shall govern, this Agreement shall be interpreted, construed, applied
and enforced in accordance with the laws of The Commonwealth of Massachusetts
applicable to contracts between residents of Massachusetts which are to be
performed entirely within Massachusetts, regardless of (i) where this Agreement
is executed or delivered; or (ii) where any payment or other performance
required by this Agreement is made or required to be made; or (iii) where any
breach of any provision of this Agreement occurs, or any cause of action
otherwise accrues; or (iv) where any action or other proceeding is instituted
or pending; or (v) the nationality, citizenship, domicile, principal place of
business, or jurisdiction of organization or domestication of any party; or
(vi) whether the laws of the forum jurisdiction otherwise would apply the laws
of a jurisdiction other than Massachusetts; or (vii) any combination of the foregoing. Notwithstanding the foregoing, the laws of
the State shall apply to the perfection and priority of liens upon and the
disposition of any Property.
23.14
Right to
Make Agreement
.
Each
party warrants, with respect to itself, that neither the execution of this
Agreement, nor the consummation of any transaction contemplated hereby, shall
violate any provision of any law, or any judgment, writ, injunction, order or
decree of any court or governmental authority having jurisdiction over it; nor
result in or constitute a breach or default under any indenture, contract,
other commitment or restriction to which it is a party or by which it is bound;
nor require any consent, vote or approval which has not been given or taken, or
at the time of the transaction involved shall not have been given or
taken. Each party covenants that it has
and will continue to have throughout the term of this Agreement and any
extensions thereof, the full right to enter into this Agreement and perform its
obligations hereunder.
71
23.15
Attorneys Fees
. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing partys costs and expenses, including reasonable
attorneys fees incurred in connection therewith, in preparation therefor and
on appeal therefrom, which amounts shall be included in any judgment therein.
23.16
Nonliability
of Trustees
. THE
DECLARATION OF TRUST ESTABLISHING HPT PSC PROPERTIES TRUST, A COPY OF WHICH,
TOGETHER WITH ALL AMENDMENTS THERETO (THE
DECLARATION
), IS DULY FILED
WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND,
PROVIDES THAT THE NAME OF SUCH ENTITY REFERS TO THE TRUSTEES UNDER SUCH
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITY SHALL
BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF,
OR CLAIM AGAINST, SUCH ENTITY. ALL
PERSONS DEALING WITH SUCH ENTITY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
SUCH ENTITY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
72
IN WITNESS WHEREOF
, the parties have executed this Agreement as a sealed
instrument as of the date above first written.
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LANDLORD:
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HPT PSC PROPERTIES TRUST
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By:
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/s/ John G. Murray
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John G. Murray
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President
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HPT PSC PROPERTIES LLC
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By:
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/s/ John G. Murray
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John G. Murray
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President
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TENANT:
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PETRO STOPPING CENTERS, L.P.
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By:
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/s/ Thomas M. OBrien
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Thomas M.
OBrien
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President
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EXHIBITS A-1 through A-40
EXHIBITS A-1 THROUGH A-40 HAVE BEEN OMITTED AND WILL BE SUPPLEMENTALLY
FURNISHED TO
THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
Exhibit
10.2
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT
(this
Agreement
) is made and
given as of May 30, 2007 by
TRAVELCENTERS OF
AMERICA LLC
,
a Delaware
limited liability company (the
Guarantor
), for the benefit of
HPT PSC PROPERTIES TRUST,
a Maryland real estate investment
trust and
HPT PSC PROPERTIES LLC,
a
Maryland limited liability company (collectively, the
Landlord
).
W
I
T
N
E
S
S
E
T
H
:
WHEREAS
, pursuant to a Lease Agreement, dated as of the date
hereof (the
Lease
), the Landlord has agreed to lease to Petro Stopping
Centers, L.P., a subsidiary of the Guarantor (the
Tenant
), and the
Tenant has agreed to lease from the Landlord, certain real property, together
with certain related improvements and other property, as more particularly
described in the Lease; and
WHEREAS
, it is a condition precedent to the Landlords
entering into the Lease that the Guarantor guarantees all of the payment and
performance obligations of the Tenant with respect to the Lease; and
WHEREAS
, the transactions contemplated by the Lease are of
direct material benefit to the Guarantor;
NOW, THEREFORE
, in consideration of the foregoing and for other good
and valuable consideration, the mutual receipt and legal sufficiency of which
are hereby acknowledged, the Guarantor hereby agrees as follows:
1.
Certain Terms
. Capitalized terms used and not
otherwise defined in this Agreement shall have the meanings ascribed to such
terms in the Lease.
2.
Guaranteed Obligations
. For purposes
of this Agreement, the term
Guaranteed Obligations
shall mean the
payment and performance of each and every obligation of the Tenant to the
Landlord under the Lease or relating thereto, whether now existing or hereafter
arising, and including, without limitation, the payment of the full amount of the
Rent payable under the Lease.
3.
Representations and Covenants
. The Guarantor
represents, warrants, covenants, and agrees that:
3.1
Performance of Covenants and Agreements
. The Guarantor hereby agrees to take all
lawful action in its power to cause the Tenant duly and punctually to perform
all of the covenants and agreements set forth in the Lease.
3.2
Validity of Agreement
. The Guarantor has duly and validly executed
and delivered this Agreement; this Agreement constitutes the legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as the enforceability thereof may be subject
to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors rights generally and subject
to general equitable principles, regardless of whether enforceability is
considered in a proceeding at law or in equity; and the execution, delivery and
performance of this Agreement have been duly authorized by all requisite action
of the Guarantor and such execution, delivery and performance by the Guarantor
will not result in any breach of the terms, conditions or provisions of, or
conflict with or constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any of the property or assets of the Guarantor
pursuant to the terms of, any indenture, mortgage, deed of trust, note, other
evidence of indebtedness, agreement or other instrument to which it may be a
party or by which it or any of its property or assets may be bound, or violate
any provision of law, or any applicable order, writ, injunction, judgment or
decree of any court or any order or other public regulation of any governmental
commission, bureau or administrative agency.
3.3
Payment of Expenses
. The Guarantor agrees, as principal obligor
and not as guarantor only, to pay to the Landlord forthwith, upon demand, in
immediately available federal funds, all costs and expenses (including
reasonable attorneys fees and disbursements) incurred or expended by the
Landlord in connection with the enforcement of this Agreement, together with
interest on amounts recoverable under this Agreement from the time such amounts
become due until payment at the Overdue Rate.
The Guarantors covenants and agreements set forth in this
Section
3.3
shall survive the termination of this Agreement.
3.5
Notices
. The Guarantor shall promptly give notice to
the Landlord of any event known to it which might reasonably result in a
material adverse change in its financial condition.
2
3.6
Reports
. The Guarantor shall promptly provide to the
Landlord each of the financial reports, certificates and other documents
required of it under the Lease.
3.7
Books and Records
. The Guarantor shall at all times keep proper
books of record and account in which full, true and correct entries shall be
made of its transactions in accordance with generally accepted accounting
principles and shall set aside on its books from its earnings for each fiscal
year all such proper reserves, including reserves for depreciation, depletion,
obsolescence and amortization of its properties during such fiscal year, as
shall be required in accordance with generally accepted accounting principles,
consistently applied, in connection with its business. The Guarantor shall permit access by the
Landlord and its agents to the books and records maintained by the Guarantor
during normal business hours and upon reasonable notice. The Landlord shall treat any non-public
information which it receives from the Guarantor pursuant to this Agreement as
confidential.
3.8
Taxes, Etc
. The Guarantor shall pay and discharge
promptly as they become due and payable all taxes, assessments and other
governmental charges or levies imposed upon the Guarantor or the income of the
Guarantor or upon any of the property, real, personal or mixed, of the
Guarantor, or upon any part thereof, as well as all claims of any kind
(including claims for labor, materials and supplies) which, if unpaid, might by
law become a lien or charge upon any property and result in a material adverse
change in the financial condition of the Guarantor;
provided
,
however
,
that the Guarantor shall not be required to pay any such tax, assessment,
charge, levy or claim if the amount, applicability or validity thereof shall
currently be contested in good faith by appropriate proceedings or other
appropriate actions promptly initiated and diligently conducted and if the
Guarantor shall have set aside on its books such reserves of the Guarantor, if
any, with respect thereto as are required by generally accepted accounting
principles.
3.9
Legal Existence of the Guarantor
. The Guarantor shall do or cause to be done
all things necessary to preserve and keep in full force and effect its legal
existence.
3.10
Compliance
. The Guarantor shall use reasonable business
efforts to comply in all material respects with all applicable statutes, rules,
regulations and orders of, and all applicable restrictions imposed by, all
governmental authorities in respect of the conduct of its business and the
ownership of its property (including, without limitation, applicable
3
statutes, rules,
regulations, orders and restrictions relating to environmental, safety and
other similar standards or controls).
3.11
Insurance
. The Guarantor shall maintain, with
financially sound and reputable insurers, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by owners of established reputation engaged in the same or similar
businesses and similarly situated, in such amounts and by such methods as shall
be customary for such owners and deemed adequate by the Guarantor.
3.12
Financial
Statements, Etc.
The financial
statements previously delivered to the Landlord by the Guarantor, if any,
fairly present the financial condition of the Guarantor in accordance with
generally accepted accounting principles consistently applied and there has
been no material adverse change from the date thereof through the date hereof.
3.13
No Change in Control
. The Guarantor shall not permit the occurrence
of any direct or indirect Change in Control of the Tenant or of the Guarantor.
4.
Guarantee
. The Guarantor
hereby unconditionally guarantees that the Guaranteed Obligations which are
monetary obligations shall be paid in full when due and payable, whether upon
demand, at the stated or accelerated maturity thereof pursuant to the Lease, or
otherwise, and that the Guaranteed Obligations which are performance
obligations shall be fully performed at the times and in the manner such
performance is required by the Lease.
With respect to the Guaranteed Obligations which are monetary
obligations, this guarantee is a guarantee of payment and not of collectibility
and is absolute and in no way conditional or contingent. In case any part of the Guaranteed
Obligations shall not have been paid when due and payable or performed at the
time performance is required, the Guarantor shall, within five (5) Business
Days after receipt of notice from the Landlord, pay or cause to be paid to the
Landlord the amount thereof as is then due and payable and unpaid (including
interest and other charges, if any, due thereon through the date of payment in
accordance with the applicable provisions of the Lease) or perform or cause to
be performed such obligations in accordance with the Lease.
5.
Unenforceability of Guaranteed
Obligations, Etc.
If the Tenant is for any reason under no
legal obligation to discharge any of the Guaranteed Obligations (other than
because
4
the same have been previously discharged in accordance
with the terms of the Lease), or if any other moneys included in the Guaranteed
Obligations have become unrecoverable from the Tenant by operation of law or
for any other reason, including, without limitation, the invalidity or
irregularity in whole or in part of any Guaranteed Obligation or of the Lease
or any limitation on the liability of the Tenant thereunder not contemplated by
the Lease or any limitation on the method or terms of payment thereunder which
may now or hereafter be caused or imposed in any manner whatsoever, the
guarantees contained in this Agreement shall nevertheless remain in full force
and effect and shall be binding upon the Guarantor to the same extent as if the
Guarantor at all times had been the principal debtor on all such Guaranteed
Obligations.
6.
Additional Guarantees
.
This Agreement shall be in addition to any other guarantee or other
security for the Guaranteed Obligations and it shall not be prejudiced or rendered
unenforceable by the invalidity of any such other guarantee or security or by
any waiver, amendment, release or modification thereof.
7.
Consents and Waivers, Etc.
The Guarantor hereby acknowledges receipt of correct and complete copies
of the Lease, and consents to all of the terms and provisions thereof, as the
same may be from time to time hereafter amended or changed in accordance with
the terms and conditions thereof, and, except as otherwise provided herein, to
the maximum extent permitted by applicable law, waives (a) presentment,
demand for payment, and protest of nonpayment, of any of the Guaranteed
Obligations, (b) notice of acceptance of this Agreement and of diligence,
presentment, demand and protest, (c) notice of any default hereunder and any
default, breach or nonperformance or Event of Default under any of the
Guaranteed Obligations or the Lease, (d) notice of the terms, time and place of
any private or public sale of collateral (if any) held as security for the
Guaranteed Obligations, (e) demand for performance or observance of, and any
enforcement of any provision of, or any pursuit or exhaustion of rights or
remedies against the Tenant or any other guarantor of the Guaranteed
Obligations, under or pursuant to the Lease, or any agreement directly or
indirectly relating thereto and any requirements of diligence or promptness on
the part of the holders of the Guaranteed Obligations in connection therewith,
and (f) any and all demands and notices of every kind and description with respect
to the foregoing or which may be required to be given by any statute or rule of
law and any defense of any kind which it may now or hereafter have with
5
respect to this Agreement, or the Lease or the
Guaranteed Obligations (other than that the same have been discharged in
accordance with the Lease).
8.
No Impairment, Etc.
The obligations, covenants, agreements and duties of the Guarantor under
this Agreement shall not be affected or impaired by any assignment or transfer
in whole or in part of any of the Guaranteed Obligations without notice to the
Guarantor, or any waiver by the Landlord of any of the Guaranteed Obligations
or of the performance or observance by the Tenant or any other guarantor of any
of the agreements, covenants, terms or conditions contained in the Guaranteed
Obligations or the Lease or any indulgence in or the extension of the time for
payment by the Tenant or any other guarantor of any amounts payable under or in
connection with the Guaranteed Obligations or of the time for performance by
the Tenant or any other guarantor of the Guaranteed Obligations or the
extension or renewal thereof (except that with respect to any extension of time
for payment or performance of any of the Guaranteed Obligations granted by the
Landlord to the Tenant, the Guarantors obligations to pay or perform such
Guaranteed Obligation shall be subject to the same extension of time for
performance), or the modification or amendment (whether material or otherwise)
of the Lease or any of the Guaranteed Obligations, or the voluntary or
involuntary sale or other disposition of all or substantially all the assets of
the Tenant or any other guarantor or insolvency, bankruptcy, or other similar
proceedings affecting the Tenant or any other guarantor or any assets of the
Tenant or any such other guarantor, or the release or discharge of the Tenant
or any such other guarantor from the performance or observance of the
Guaranteed Obligations, without the consent of the Landlord, by operation of
law, or any other cause, whether similar or dissimilar to the foregoing.
9.
Reimbursement, Subrogation, Etc.
The Guarantor hereby covenants and agrees that it will not enforce or
otherwise exercise any rights of reimbursement, subrogation, contribution or
other similar rights against the Tenant (or any other person against whom the
Landlord may proceed) with respect to the Guaranteed Obligations prior to the
payment in full of all amounts owing with respect to the Lease, and until all
such amounts shall have been paid in full, the Guarantor shall have no right of
subrogation, and the Guarantor waives any defense it may have based upon any
election of remedies by the Landlord which destroys its subrogation rights or
its rights to proceed against the Tenant for reimbursement, including, without
limitation, any loss of rights the Guarantor may suffer by
6
reason of any rights, powers or remedies of the Tenant
in connection with any anti-deficiency laws or any other laws limiting,
qualifying or discharging the indebtedness to the Landlord. Until all Guaranteed Obligations shall have
been paid and performed in full, the Guarantor further waives any right to
enforce any remedy which the Landlord now has or may in the future have against
the Tenant, any other guarantor or any other person and any benefit of, or any
right to participate in, any security whatsoever now or in the future held by
the Landlord.
10.
Defeasance
.
This Agreement shall terminate at such time as the Guaranteed
Obligations have been paid and performed in full and all other obligations of
the Guarantor to the Landlord under this Agreement have been satisfied in full;
provided
,
however
, if at any time, all or any part of any payment
applied on account of the Guaranteed Obligations is or must be rescinded or
returned for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Tenant), this Agreement, to the
extent such payment is or must be rescinded or returned, shall be deemed to
have continued in existence notwithstanding any such termination.
11.
Notices
. (a)
Any and all notices, demands, consents, approvals, offers, elections and
other communications required or permitted under this Agreement shall be deemed
adequately given if in writing and the same shall be delivered either in hand,
by telecopier with written acknowledgment of receipt, or by mail or Federal
Express or similar expedited commercial carrier, addressed to the recipient of
the notice, postpaid and registered or certified with return receipt requested
(if by mail), or with all freight charges prepaid (if by Federal Express or
similar carrier).
(b)
All notices
required or permitted to be sent hereunder shall be deemed to have been given
for all purposes of this Agreement upon the date of acknowledged receipt, in the
case of a notice by telecopier, and, in all other cases, upon the date of
receipt or refusal, except that whenever under this Agreement a notice is
either received on a day which is not a Business Day or is required to be
delivered on or before a specific day which is not a Business Day, the day of
receipt or required delivery shall automatically be extended to the next
Business Day.
(c)
All such notices shall be addressed,
if to the Landlord to the Landlord:
7
c/o Hospitality
Properties Trust
400 Centre Street
Newton,
Massachusetts 02458
Attn: Mr. John G. Murray
Telecopier No. (617) 969-5730
if to the Guarantor to:
TravelCenters of America
LLC
24601 Center Ridge Road
Westlake, Ohio 44145
Attn: Mr. Thomas M. OBrien
Telecopier No. (440)808-3301
(d)
By notice
given as herein provided, the parties hereto and their respective successors
and assigns shall have the right from time to time and at any time during the
term of this Agreement to change their respective addresses effective upon
receipt by the other parties of such notice and each shall have the right to
specify as its address any other address within the United States of America.
12.
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, including,
without limitation, the holders, from time to time, of the Guaranteed
Obligations; and all representations, warranties, covenants and agreements by
or on behalf of the Guarantor which are contained in this Agreement shall inure
to the benefit of the Landlords successors and assigns, including, without
limitation, said holders, whether so expressed or not.
13.
Applicable Law
. Except as to
matters regarding the internal affairs of the Landlord and issues of or
limitations on any personal liability of the shareholders and trustees or
directors of the Landlord for obligations of the Landlord, as to which the laws
of the State of Maryland shall govern, this Agreement, the Lease and any other
instruments executed and delivered to evidence, complete or perfect the
transactions contemplated hereby and thereby shall be interpreted, construed,
applied and enforced in accordance with the laws of The Commonwealth of
Massachusetts applicable to contracts between residents of Massachusetts which
are to be performed entirely within Massachusetts, regardless of (i) where any
such instrument is executed or delivered; or (ii) where any payment or other
performance required by any such instrument is made or required to be made; or
(iii) where any breach of any provision of any such instrument occurs, or any
cause of action otherwise
8
accrues; or (iv) where any action or other proceeding
is instituted or pending; or (v) the nationality, citizenship, domicile,
principal place of business, or jurisdiction of organization or domestication
of any party; or (vi) whether the laws of the forum jurisdiction otherwise
would apply the laws of a jurisdiction other than The Commonwealth of
Massachusetts; or (vii) any combination of the foregoing. Notwithstanding the
foregoing, the laws of the State shall apply to the perfection and priority of
liens upon and the disposition of any Property.
14.
Arbitration
. The
Landlord, on the one hand, or the Guarantor, on the
other hand, may elect to submit to arbitration any dispute hereunder that has
an amount in controversy in excess of $250,000.
Any such dispute shall be conducted in Boston, Massachusetts and be
resolved in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then pertaining and the decision of the arbitrators
with respect to such dispute shall be binding, final and conclusive on all of
the parties.
In the event that any such dispute is submitted to arbitration
hereunder, the Landlord, on the one hand, and the Guarantor, on the other hand,
shall each appoint and pay all fees of a fit and impartial person as arbitrator
with at least ten (10) years recent professional experience in the general
subject matter of the dispute. Notice of
such appointment shall be sent in writing by each party to the other, and the
arbitrators so appointed, in the event of their failure to agree within thirty
(30) days after the appointment of the second arbitrator upon the matter so
submitted, shall appoint a third arbitrator.
If either the Landlord or the Guarantor shall fail to appoint an
arbitrator as aforesaid for a period of twenty (20) days after written notice
from the other party to make such appointment, then the arbitrator appointed by
the party having made such appointment shall appoint a second arbitrator and
the two (2) so appointed shall, in the event of their failure to agree upon any
decision within thirty (30) days thereafter, appoint a third arbitrator. If such arbitrators fail to agree upon a
third arbitrator within forty five (45) days after the appointment of the
second arbitrator, then such third arbitrator shall be appointed by the
American Arbitration Association from its qualified panel of arbitrators, and
shall be a person having at least ten (10) years recent professional
experience as to the subject matter in question. The fees of the third arbitrator and the
expenses incident to the proceedings shall be borne equally between the
Landlord and the Guarantor, unless the arbitrators decide otherwise. The fees of respective counsel
9
engaged by the parties, and the fees of expert
witnesses and other witnesses called for the parties, shall be paid by the
respective party engaging such counsel or calling or engaging such witnesses.
The decision of the arbitrators shall be rendered within thirty (30)
days after appointment of the third arbitrator.
Such decision shall be in writing and in duplicate, one counterpart
thereof to be delivered to Landlord and one to the Guarantor. A judgment of a court of competent
jurisdiction may be entered upon the award of the arbitrators in accordance
with the rules and statutes applicable thereto then obtaining.
15.
Modification of Agreement
.
No modification or waiver of any provision of this Agreement, nor any
consent to any departure by the Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Landlord, and
such modification, waiver or consent shall be effective only in the specific
instances and for the purpose for which given.
No notice to or demand on the Guarantor in any case shall entitle the
Guarantor to any other or further notice or demand in the same, similar or
other circumstances. This Agreement may
not be amended except by an instrument in writing executed by or on behalf of
the party against whom enforcement of such amendment is sought.
16.
Waiver of Rights by the Landlord
.
Neither any failure nor any delay on the Landlords part in exercising
any right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise or the exercise of any other right, power or privilege.
17.
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, but this Agreement shall be reformed and
construed and enforced to the maximum extent permitted by applicable law.
18.
Entire Contract
. This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and shall supersede and take the place of
any other instruments purporting to be an agreement of the parties hereto
relating to the subject matter hereof.
10
19.
Headings; Counterparts
. Headings in
this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof.
20.
Remedies Cumulative
. No remedy
herein conferred upon the Landlord is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
[Remainder of page
intentionally left blank.]
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WITNESS
the execution hereof under seal as of the date above first written.
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TRAVELCENTERS OF AMERICA LLC
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By:
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/s/ Thomas M. OBrien
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Thomas M. OBrien
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President and
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Chief Executive Officer
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